As Filed With The Securities And Exchange Commission On December 23, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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
INTERACTIVE TECHNOLOGIES.COM, LTD.
(Exact name of Small Business Issuer in its charter)
Delaware 06-1460654
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
11336 Wiles Road, Coral Springs, Florida 33076
(Address of principal executive offices) (Zip Code)
(954) 340-1240
(Issuer's telephone number)
Copies to:
Steven D. Dreyer, Esq.
Hall Dickler Kent Friedman & Wood, LLP
909 Third Avenue
New York, New York 10022
(212) 339-5400
Fax: (212) 935-3121
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
(Title of Class)
<PAGE>
PART I
Item 1. Description of Business
CORPORATE HISTORY
Prior to February 26, 1999, Interactive Technologies.com, Ltd. (the
"Company"), a Delaware corporation, was known as Interfund Resources, Ltd. On
February 26, 1999, the name of the Company was changed to Interactive
Technologies.com, Ltd. in connection with a reverse acquisition consummated on
that date by which the shareholders of Ubuy.Com, Ltd., Web Classified.Net, Inc.,
Integrated Merchant Services, Inc. and United Interactive Technologies, Inc.,
each of which is described below, exchanged 80% of the shares of the capital
stock of each of those corporations for 89.5% of the Company's Common Stock (the
"Reverse Acquisition"). On June 30,1999 the Company acquired 100% of the
outstanding shares of Express Financial Corp. (see below).
BUSINESS
The Company and Its Subsidiaries
The Company conducts business through each of the following wholly owned
subsidiaries:
o Ubuy.Com, Ltd. ("Ubuy"), a Delaware corporation which offers an
ever-expanding portfolio of benefits and services that provide
privileged access to goods and services to companies, businesses,
fund raising organizations, large associations, affinity groups,
their members and customers. Through its agreements, Ubuy has access
to over 1,500 Organizations having a total membership/employment
base in excess of 14,000,000 households and 500,000 businesses.
o United Interactive Technologies, Inc. ("United Interactive"), a
Delaware corporation, serves as a provider of mass-scale web site
hosting, high-speed Internet access, secure virtual private networks
and Internet electronic commerce solutions to its sister
subsidiaries and others through the Internet Network Access Point
("NAP") that it operates in Florida.
o Integrated Merchant Services, Inc. ("IMS"), a Delaware corporation
which provides Visa and MasterCard network credit card processing,
check and debit card processing as well as credit card gateway
services for Internet e-commerce credit card transactions.
o Web Classified.net, Inc. ("Web Classified"), a Delaware corporation
which provides to businesses, through its dynamic database driven
Web site generation application, the ability to quickly and
inexpensively generate three-page Web sites which are indexed at a
Yellow Pages directory and registered with the top
2
<PAGE>
five Internet search engines.
o Express Financial Corp. ("Express Financial"), a Florida corporation
which is a licensed mortgage lender located in Florida, and which
provides online mortgage lending services through the "Net Branch"
it maintains at www.efcol.com.
Ubuy's Business
Ubuy is a membership based consumer and business benefit and service
company. Ubuy offers more than 30 different benefit and service programs which
include home shopping, travel, automobile, dining, health, discount coupon,
investment, other lifestyle enhancement programs, as well as a variety of
business benefits and services. All of the Ubuy benefits and services are
accessible via the Internet. Ubuy packages benefits and services which are
either provided directly by it or by third party providers into programs and it
offers these programs principally to affinity groups (trade group and
professional associations), businesses and charitable organizations which in
turn make Ubuy's programs available to their members, employees and/or
customers. To a lesser degree, Ubuy markets its programs directly to individual
consumers and businesses. The key to Ubuy's marketing strategy is that its
programs are "value added." This is due to the fact that the members of
participating affinity groups or the customers of participating businesses
obtain access to Ubuy's programs as part of their membership dues or in
conjunction with a purchased product or service. All fees associated with
membership in Ubuy's programs are paid directly by the participating affinity
group or business. Through Ubuy's numerous long standing relationships and its
bulk purchasing capabilities it is able to provide an ever expanding portfolio
of benefits and services that offer privileged access to goods and services with
tremendous buying power for Ubuy's members. Such goods include hundreds of
thousands of name brand items and products. Since the commencement of Ubuy's
business operations in 1990, it has established relationships with over 1,500
affinity groups with combined memberships in excess of 14 million households and
500,000 businesses. On average, Ubuy's consumer programs offer participants
$2,500 or more in annual savings, and its business programs can save
participating companies $4,000 or more annually.
Ubuy derives its revenues from the up-front enrollment fees that it
charges its clients, and from utilization fees paid by many of the program
benefits and service providers who provide goods and services to the members of
Ubuy's clients who enroll in such programs. The pricing of Ubuy's programs range
from free to $4.95 per month per member. The costs to Ubuy's clients are based
upon the type of program designed for the client. Ubuy's gross revenues and its
net income before income tax and minority interest during each of the periods
described below were, as follows:
<TABLE>
<CAPTION>
Years Ended December 31, Nine Months Ended September 30,
------------------------ -------------------------------
1997 1998 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross Revenues ............ $2,882,085 $3,416,821 $2,404,243 $3,706,254
Net Income Before Income
Tax and Minority Interest . $1,395,780 $2,047,005 $ 819,284 $1,537,852
</TABLE>
3
<PAGE>
Ubuy's Target Markets
Each of Ubuy's five primary customer markets are:
o Consumers
o Merchants and local retailers
o Charitable, neighborhood and alumni organizations
o Affinity groups and associations
o Telecommunications companies
Ubuy's five primary benefit programs are:
o Consumer benefits and services
o Business and employee benefits
o Fund raising benefits
o Value-added benefits
o Internet Portal programs
One of Ubuy's customers, RRV Enterprises, Inc., was responsible for 62% of
Ubuy's revenues in 1997, 42% of such revenues in 1998, and 72% of such revenues
during the three months ended March 31, 1999.
Ubuy's Marketing
Ubuy has historically focused its marketing activities almost exclusively
through trade shows. However, it has begun adding, as a new marketing channel, a
direct sales force of marketing agents drawn from the pool of independent agents
that work for several of the telecommunications companies who participate as
providers in Ubuy's benefits programs.
The Ubuy's Web Site
The Ubuy.Com web site is available to members of those affinity groups who have
contracted to make Ubuy's programs available to their members, and is accessible
through either a link on the affinity group's web site or by logging on directly
to the Ubuy.Com home page. Members can access program benefits and services by
clicking the appropriate buttons which appear on pages of the web site.
Ubuy's New Join Us OnLine Internet Portal
Ubuy's newest benefits distribution channel is its JoinUsOnline.com Internet
portal site. It will be available to members of participating affinity groups
and businesses as well as non-members who would like to purchase Ubuy's
programs. The key to JoinUsOnline is that, in addition to providing a link to
Ubuy's programs, JoinUsOnline also acts as a portal which Ubuy anticipates will
include direct links to some of the largest companies engaged in e-commerce.
Members utilizing JoinUsOnline will be able to purchase goods and services
offered by participating companies by accessing their web sites through the
JoinUsOnline portal.
Ubuy has already leased three of its JoinUsOnline portal links to one of the
world's largest providers of on-line products and services, pursuant to an
agreement which provides Ubuy with both periodic lease income, and a revenue
stream which is based upon a percentage of the sales
4
<PAGE>
generated through those portal links.
Ubuy anticipates that many of its portal links will be leased on a similar basis
to providers of the following products and services:
<TABLE>
<S> <C> <C>
o Dial Up Internet Access o Personal Financial Services o New Car Buying
o Travel Services o Mortgage Loans o Online Stock Trading
o Automobile Rental o Real Estate Services o CD's and Tapes
o Moving Services o Telephone Services o Auctions
o Consumer and Health Services o Classified Advertising o Fund Raising
o Personal Web Pages o WebClassified.net o Merchant Accounts
</TABLE>
Ubuy's Competition
The membership benefits and service industry serves a market of consumers
and businesses nationwide. Benefits companies have traditionally marketed their
benefits programs via direct sales, credit card issuers, airline services, oil
companies, banking institutions, and most recently Internet web sales. The
majority of customers for these programs are considered to be consumers, with a
small percentage of small business owners. Individual benefit and service
program offerings vary dramatically from Company to Company. Ubuy's major
competitors are The Signature Group and Cendant Corp.
The Signature Group commenced operations in 1966 and has estimated annual
revenues of more than $900 million. They sell their benefit and service programs
exclusively to end-users, i.e., consumers, who pay annual membership fees. These
membership fees represent a small segment of the potential annual revenues which
The Signature Group can derive from a consumer because additional benefit
program offerings, at additional costs over the basic membership fee are
available to the consumer. Some examples of these additional programs are
health, dental, vision, pharmacy and chiropractic programs. Therefore the annual
savings that Signature Group members can receive can vary dramatically depending
on the programs in which they enroll. The Signature Group markets its various
benefits to a community of banks, oil companies and retailers through
telemarketing, as well as to a more general consumer market via the Internet.
Cendant Corp. offers 20 individual membership programs, has annual
revenues exceeding $5 billion and claims to have access to over 30 million
customers. It derives most of its earnings from the $69.00 annual membership fee
that it charges its customers. Cendant has a multi-tiered membership fee that
starts at $69.00 and increases depending on the benefits selected. As in the
case of The Signature Group, the actual saving to the end-user varies depending
on the consumer programs in which the end-user chooses to participate. Like The
Signature Group, Cendant's marketing focus consists mainly of telemarketing
through credit card companies, oil companies and retailers. Cendant is in the
process of establishing a marketing presence on the Internet, but does not
currently market via the Internet.
Ubuy's most important competitors have longer operating histories, larger
client bases, longer relationships with clients, greater brand or name
recognition and significantly greater
5
<PAGE>
financial, technical, marketing and public relations resources than we possess.
However, Ubuy believes that it provides one of the most comprehensive benefits
and service programs that the industry affords, and that one factor which
separates Ubuy from its competition and provides it with a significant
competitive advantage over them is that the members of Ubuy's client
organizations pay no membership fee to Ubuy.
Ubuy's Employees
Ubuy currently has nine employees. None of its employees is represented by
a labor union and Ubuy believes its employee relations are excellent.
United Interactive's Business
United Interactive is an Internet service solution provider, committed to
end-user satisfaction through exceptional customer service and technical
support. United Interactive specializes in the development and implementation of
Internet technologies that enable next generation mass Web site hosting and
electronic commerce ("e-commerce") Internet business to business and business to
consumer solutions, throughout the range of small, mid-market and enterprise
level applications. United Interactive's management believes that United
Interactive is one of the world's leading providers of mass scale web site
hosting, high-speed Internet access, virtual private networks and e-commerce
solutions. United Interactive conducts its operations at Florida's only Internet
Network Access Point ("NAP") - one of only seven NAPs located in the continental
United States. United Interactive is responsible for the creation of the
e-commerce and software development strategies employed by the Company's
subsidiaries, and by hundreds of other United Interactive client companies.
United Interactive's business activities generate revenues in the form of
development fees, residual hosting fees and royalty fees. The pricing of United
Interactive's various product and service offerings is based upon the time,
effort and resources United Interactive utilizes for each project. Most of the
projects United Interactive works on will have a long term effect on its
revenues, as most the fees it receives consist of a combination of project
development fees, coupled with residual royalty fees paid by the users of the
products it creates. United Interactive's gross revenues and its net loss before
application of the minority interest during each of the periods described below
were, as follows:
<TABLE>
<CAPTION>
Years Ended December 31, Nine Months Ended September 30,
------------------------ -------------------------------
1997 1998 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross Revenues ...................... $ 28,390 $ 89,259 $ 54,948 $ 123,109
Net (Loss) Before Minority Interest . $(75,581) $(265,661) $(165,298) $(255,924)
</TABLE>
United Interactive's Target Markets and Marketing
United Interactive's three primary customer markets are small to mid size
companies, affinity groups and associations and the Company's subsidiaries.
United Interactive markets through resellers and the Company's majority owned
companies and its subsidiaries and has
6
<PAGE>
most recently started marketing through trade shows. United Interactive receives
numerous customers from Company referrals and leads.
United Interactive's Competition
The principal competitive factors affecting the market for United
Interactive's products include product features, product performance and ease of
use, pricing and support. United Interactive's competitors include companies
with established positions in Internet hosting, e-commerce, software
development, and Internet marketing. As a result, such companies may be able to
adapt more quickly to new or emerging technologies and changes in customer
requirements or to devote greater resources to the promotion and sale of their
products. Competition could increase as new companies enter the market, and as
existing competitors intensify growth.
United Interactive competes with major Internet web site hosting
companies, e-commerce web site hosting companies, and Internet e-commerce
merchant credit card processing companies that market to small, mid-size
businesses and corporations. As ranked by Cnet, the most significant competitors
in these markets are Verio, Inc. and Concentric Network Corporation.
Verio, Inc. is a national provider of Internet services to small and
medium sized businesses. Verio provides its customers with the
telecommunications circuits that permit Internet access and also hosts their web
sites. For the nine months ended 9/30/99, revenues totaled $185.4 million, up
from $83.5 million. Net loss before extraordinary item and applicable to Common
rose 76% to $137.5 million. Results reflect acquisitions, offset by increased
amortization.
Concentric provides tailored, value-added Internet Protocol based network
services for enterprises and consumers. Services include dedicated access
facilities, Web hosting, remote access services and virtual private networks.
For the nine months ended 9/99, revenues rose 75% to $101.2 million. Net loss
before extraordinary item applicable to Common rose 11% to $78.9 million.
Results reflect acquisitions and broadened product offerings, offset by expenses
related to acquired operations.
United Interactive competes in a relatively young and rapidly growing
marketplace, and are currently unaware of any competitor with any similar
combination of their technology, affinity group consumer base, and merchant
credit card affiliations.
United Interactive's Employees
United Interactive currently has 10 employees. None of its employees is
represented by a labor union and United Interactive believes its employee
relations are excellent.
IMS's Business
IMS is a merchant services company which provides Visa and MasterCard
account
7
<PAGE>
processing, check and debit card processing as well as credit card gateway
services for Internet e-commerce credit card transactions.. In the emerging
market sectors which include business to business sales, government purchasing
cards and the explosive growth of Internet e-commerce, credit card usage is at
its all time high. Furthermore, in the opinion of IMS's management, ATM usage
and Visa check cards are changing the way traditional banking is performed. In
order to compete with vertical market Internet e-commerce companies, storefront
merchants are reinventing themselves by building e-commerce web sites. This
phenomenon has created an emerging market for secure real-time transaction
processing. Every day, more and more consumers are becoming more comfortable
with the concept of using their credit card accounts to purchase products from
e-commerce companies over the Internet. A business relationship with a merchant
services company such as IMS has become essential to any business's ability to
compete in the business to business and business to consumer market places. In
addition to providing merchant processing, IMS also serves as a supplier of a
large variety of industry related products and services, such as credit card
terminals, ATM machines, PC software, Internet shopping cart solutions, Internet
secure transaction encryption, private label debit and gift card issuance, as
well as frequency and redemption card reporting. IMS is committed to retaining
the diversification of services it currently provides as it strives to become
one of the leading full service processors in the Bankcard industry.
IMS has entered into a long-term contract for the provision of credit card
account processing services with a commercial bank possessing approximately 100
branch locations, and it recently consummated the acquisition of a bank credit
card account portfolio encompassing approximately $150 million in annual credit
card transaction volume.
IMS's gross revenues and its net income (loss) before income tax and
minority interest during each of the periods described below were, as follows:
<TABLE>
<CAPTION>
Years Ended December 31, Nine Months Ended September 30,
------------------------ -------------------------------
1997 1998 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross Revenues ................ $ 388,162 $ 548,166 $ 375,793 $ 391,800
Net Income (Loss) Before Income
Tax and Minority Interest .... $ (33,143) $ 7,443 $ (31,599) $ (17,565)
</TABLE>
IMS's Target Markets and Marketing
IMS's three primary customer markets are small to mid size companies,
Internet merchants and home based businesses. IMS employs special pricing
programs which are designed to increase its market share. IMS currently supports
a local sales force, and it intends to increase its sales volume by building, in
conjunction with the Company and its other subsidiaries, and supporting a
national sales force 1,000 representatives. IMS plans to increase its market
share by taking advantage of the synergies that the Company and its other
subsidiaries can provide by giving IMS access to their various association
clients and customers and the members of such associations. However, no
assurances can be given that IMS will be successful in regard to any of the
foregoing plans.
8
<PAGE>
IMS's Competition
The electronic transaction processing industry is intensely competitive.
Increased competition is likely from both existing competitors and new entrants
into IMS's existing or future markets. IMS believes there are low barriers to
entry in its markets. IMS may not be able to compete successfully as other
companies develop new products and services, change prices, improve customer
service and hire additional personnel. Competitors may offer new products and
services resulting in greater competition and lower market share for IMS. Many
of IMS's competitors, such as SPS Transaction Services, Card Service
International and Authorize.Net, have longer operating histories, greater name
recognition, larger customer bases and substantially greater resources than IMS
has. Competitors may be able to adapt more quickly to new technologies and
changes in customer requirements and may also be able to devote greater
resources to marketing.
IMS's Employees
IMS currently has three employees. None of its employees is represented by
a labor union and United Interactive believes its employee relations are
excellent.
Web Classified's Business
Web Classified's Internet product offering is a mass web site creation and
e-commerce development tool specifically designed to service other Internet
service providers, marketing organizations, telecommunications companies,
computer resellers, Internet consultants and local merchant and retailers.
Subscribers purchasing or receiving Web Classified's service can build their own
three page web site in under ten minutes. Subscribers to the WebClassified.Net
service also receive a directory listing in Web Classified's Classified Internet
Listings. The Classified Internet Listings contain a brief explanation of the
subscriber's business, and a hyperlink to a three page web site hosted by Web
Classified which the subscriber interactively creates by responding to a menu of
choices provided to him as he interfaces with the Webclassified program at the
Webclassified web site. Each Subscriber also chooses from a variety of
categories for the listing of his directory listing, similar to the Yellow
Pages. Potential customers of a subscriber can locate the subscriber's web site
under these categories.
Web Classified's product offerings are made to its customers under three
different pricing models. Those customers sell the WebClassified.Net product to
the retail public for a base price of $29.95 per month. Web Classified's
customers also may offer a WebClassified.Net product for resale to telephone
companies. A certificate program is also available which allows a subscriber to
enroll in WebClassified.Net for 12 months. Web Classified has no significant
revenues to date. However, Web Classified has entered into agreements which, it
believes, will generate more than 250,000 WebClassified.Net subscriber web sites
during the year 2000.
WebClassified's Competition
The principal competitive factors affecting the market for the
WebClassified.net service include product features, product performance and ease
of use, pricing and support. Web
9
<PAGE>
Classified's competitors are primarily either companies with established
positions in software development who sell their software as a third party
application for hosting companies to use for entry-level customers, or companies
which provide Internet directory listings for businesses. As a result, such
companies may be able to adapt more quickly to new or emerging technologies and
changes in customer requirements or to devote greater resources to the promotion
and sale of their products. Competition could increase as new companies enter
the market, and as existing competitors intensify growth. Web Classified
competes in a market driven by business demand, providing low obstacles to entry
and a suitable environment for its leading-edge products and services. Web
Classified competes with major Internet web site hosting entities with
entry-level service, e-commerce driven portals, and online business directories
that market to small, medium and large businesses and corporations. Web
Classified is not currently aware of any competitor that provides both a
template driven site generator combined with a massive directory listing driving
viewers to their clients' web pages, or one which has the advantages of the
technology, affinity group consumer base, and merchant credit card affiliations
available to Web Classified. The most significant competitors in Web
Classified's markets are, as follows:
Yahoo Yellow Pages which is a global Internet Media company that offers a
branded network of comprehensive information, communication and shopping
services to millions of users daily. Alta Vista, and the companies with which it
is affiliated, develop and operate Internet and fulfillment services companies.
Each of these companies has much greater financial and operational resources
than Web Classified.
Web Classified's Employees
Web Classified currently has no employees. To date, Web Classified's
business activities have been conducted by United Interactive. It is anticipated
that, commencing in January 2000, Web Classified will begin to employ its own
work force to manage and run its business operations.
Express Financial's Business
Express Financial is a mortgage banker which represents over 70 direct
lenders, and is also a fully licensed and approved lender for federal programs
including FHA, VA loans and Title-1 loans. Express Financial has online
underwriting authority from Fannie Mae and Freddie Mac that enables it to issue
approval of loan applications in minutes. Express Financial offers all types of
residential and commercial loans, including first mortgages, second mortgages,
commercial and construction loans, bridge loans, numerous specialty-financing
programs, and foreign national programs.
Express Financial maintains a virtual branch office on the Worldwide Web
at which customers can shop for and obtain mortgage financing by completing an
on-line mortgage loan application over the internet by using Express Financial's
on-line WEBAPP software. Express Financial has extended its virtual branch
concept to the states of West Virginia, Georgia, Pennsylvania, Maryland and Ohio
by permitting selected mortgage bankers licensed in those states to use Express
Financial's WEB APP software in connection with their respective mortgage
lending operations.
10
<PAGE>
Express Financial's gross revenues and its net income before income tax
during each of the periods described below were, as follows:
<TABLE>
<CAPTION>
Years Ended December 31, Nine Months Ended September 30,
------------------------ -------------------------------
1997 1998 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross Revenues ............. $1,179,051 $1,771,333 $1,416,908 $1,990,848
Net Income Before Income Tax $ 51,237 $ 135,056 $ 268,709 $ 453,325
</TABLE>
Regulation of Express Financial's Business
Express Financial's business is subject to extensive and complex rules and
regulations of, and examinations by, various federal, state and local government
authorities and government sponsored enterprises, including without limitation
HUD, FHA, VA, Fannie Mae, Freddie Mac and state regulatory authorities. These
rules and regulations impose obligations and restrictions on Express Financial's
loan origination and credit activities.
Express Financial's lending activities also are subject to various federal
laws, including the Federal Truth-in-Lending Act and Regulation Z thereunder,
the Homeownership and Equity Protection Act of 1994, the Federal Equal Credit
Opportunity Act and Regulation B thereunder, the Fair Credit Reporting Act of
1970, the Real Estate Settlement Procedures Act of 1974 and Regulation X
thereunder, the Fair Housing Act, the Home Mortgage Disclosure Act and
Regulation C thereunder and the Federal Debt Collection Practices Act, as well
as other federal statutes and regulations affecting Express Financial's
activities. Express Financial's loan origination activities also are subject to
the laws and regulations of each of the states in which Express Financial
conducts its activities.
These laws, rules, regulations and guidelines limit mortgage loan amounts
and the interest rates, finance charges and other fees Express Financial may
assess, mandate extensive disclosure and notice to its customers, prohibit
discrimination, impose qualification and licensing obligations on it, establish
eligibility criteria for mortgage loans, provide for inspections and appraisals
of properties, require credit reports on prospective borrowers, regulate payment
features, and prohibit kickbacks and referral fees, among other things.
Although Express Financial believes that it has systems and procedures in
place to ensure compliance with these requirements and believes that it
currently is in compliance in all material respects with applicable federal,
state and local laws, rules and regulations, there can be no assurance of full
compliance with current laws, rules and regulations, that more restrictive laws,
rules and regulations will not be adopted in the future, or that existing laws,
rules and regulations or the mortgage loan documents with borrowers will not be
interpreted in a different or more restrictive manner. The occurrence of any
such event could make compliance substantially more difficult or expensive,
restrict Express Financial's ability to originate, purchase, sell or service
mortgage loans, further limit or restrict the amount of interest and other fees
and charges earned from mortgage loans that Express Financial originates or
purchases, expose it to claims by borrowers and administrative enforcement
actions, or otherwise materially and adversely affect
11
<PAGE>
Express Financial's business, financial condition and prospects.
Express Financial also is performing various mortgage-related operations
on the Internet. The Internet, and the laws, rules and regulations related to
it, are new and still evolving. As such, there exist many opportunities for
Express Financial business's operations on the Internet to be challenged or to
become subject to legislation, any of which may materially and adversely affect
Express Financial business, financial condition and prospects.
Express Financial's Competition
A large number of mortgage companies transact business through retail
offices and other traditional channels. Express Financial's competitors include
other mortgage bankers (including those noted above), state and national
commercial banks, savings and loan associations, credit unions, insurance
companies and other finance companies. A great many of these competitors are
substantially larger and have considerably greater financial, technical and
marketing resources than Express Financial has.
Mortgage banking on the Internet is highly competitive. A large number of
mortgage companies currently transact business over the Internet in one form or
another. The sophistication of these companies in the Internet channel varies
from simple one-page information Web sites to Web sites with extensive on-line
content and features. Many of these mortgage companies share a business strategy
and capability similar to those employed by Express Financial. The competition
includes banks such as Chase and Bank of America, as well as mortgage
originators such as Prism Financial Corporation, E-Loan and Mortgage.com, all of
which are larger and better capitalized than Express Financial. In addition,
Express Financial also competes on the Internet with large, national mortgage
companies, such as Countrywide Credit Industries, Inc. and HomeSide Lending,
which have greater origination volumes and capitalization than Express
Financial.
Express Financial's Employees
Express Financial currently has seventeen employees. None of its employees
is represented by a labor union and United Interactive believes its employee
relations are excellent.
Intellectual Property
Neither the Company, nor any of its subsidiaries owns any registered trade
marks, patents or copyrights. Substantial elements of the Web sites maintained
by the Company's various subsidiaries, the technology underlying those Web sites
and the software applications employed by the Company's subsidiaries in
connection with various products and services offered to their respective
clients and the customers of their clients are regarded by the Company and its
subsidiaries as proprietary. The Company and its subsidiaries attempt to protect
them by relying on trade secret laws and restrictions on disclosure. Legal
standards relating to the validity, enforceability and scope of protection of
such proprietary rights are uncertain and are still evolving, especially as they
relate to Internet-related rights. In addition, the laws of some foreign
countries may not protect those rights to the same degree as the United States.
For these reasons,
12
<PAGE>
the Company cannot be sure that the steps it and its subsidiaries take will
adequately protect such proprietary rights. The company or its subsidiaries also
may be required to litigate to enforce such intellectual property rights or to
determine the validity and scope of the proprietary rights of others. This could
create substantial costs and a diversion of management's attention.
Item 2. Plan of Operation
Prior to February 26, 1999, the Company was a publicly held shell
corporation which did not conduct any material business operations. Upon
consummation of the Reverse Acquisition on February 26, 1999, the Company began
to conduct business through each of its newly acquired subsidiaries, i.e., Ubuy,
United Interactive and IMS.
During the next twelve months, the Company, through its subsidiaries,
intends to provide:
o benefits and services that provide privileged access to goods and
services to companies, businesses, fund raising organizations, large
associations, affinity groups, their members and customers;
o mass-scale web site hosting, high-speed Internet access, secure
virtual private networks and Internet electronic commerce solutions
to the Company's subsidiaries and others;
o Visa and MasterCard network credit card processing, check and debit
card processing as well as credit card gateway services for Internet
e-commerce credit card transactions;
o mass web site creation and e-commerce development tools for use by
the Company's subsidiaries and other Internet service providers,
marketing organizations, telecommunications companies, computer
resellers, Internet consultants and local merchant and retailers;
and
o traditional and online mortgage lending services to the consumer
public.
In order to meet its goals over the next 12 months, the Company's
management estimates that, in addition to the cash flows that they expect to
generate from the operations of the various subsidiaries, the Company will
require additional financing in order to expand its subsidiaries' employee bases
and marketing efforts, to create new product and service offerings and to
enhance existing product and service offerings. The Company intends to acquire
such additional funding through one or more private or public equity offerings
to be made by the Company or by one or more of its subsidiaries. No assurances
can be given that the Company or its subsidiaries will be able to obtain such
additional financing on terms acceptable to the Company, if at all. The
Company's inability to obtain such additional financing would have a material
adverse effect upon the expansion of the operations of the various subsidiaries,
and could materially adversely affect the ability of the Company and its
subsidiaries to expand their revenues and achieve greater profits.
13
<PAGE>
Item 3. Description of Property
The Company's headquarters consist of approximately 12,000 square feet of
office space in Delray Beach, Florida which are leased from an unaffiliated
landlord through 2009. The annual rental under the lease provides is $181,000,
including common area maintenance, taxes and other costs. The lease contains
rent escalation provisions which will increase the annual rent over a period of
ten years to a total of $275,245 (including common area maintenance, taxes and
other costs) for the final year.
Ubuy occupies approximately 8,400 square feet of the Delray Beach office
which has been finished as separate, secure offices for its sole use. Ubuy pays
70% of the monthly rental and other charges for such space.
IMS leases approximately 2,030 square feet of office space in Coral
Springs, Florida pursuant to a lease with an unaffiliated landlord which expires
in 2002. The lease provides for payment of annual rent in the amount of $26,429,
including common area maintenance, taxes and other costs. It also provides for a
rent escalation to $28,014.74 (including common area maintenance, taxes and
other costs) in the final year.
IMS presently occupies approximately 1,200 square feet of Ubuy's Coral
Springs, Florida office facility, and pays approximately 10% of the monthly
rental obligation for such space.
Express Financial presently leases approximately 3,600 square feet of
office space in Boca Raton, Florida. This facility is covered under a five-year
lease expiring on March 31, 2002. The monthly obligation is a gross total of
$6,207.29, including all common area maintenance, taxes and other costs.
Item 4. Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth the holdings of the Company's Common Stock
as of November 30, 1999 by (1) each person or entity known to the Company to be
the beneficial owner of more than five percent (5%) of the outstanding shares of
Common Stock; (2) each director and executive officer; and (3) all directors and
executive officers as a group. All of the holders of Common Stock are entitled
to one vote per share.
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address of Beneficial Owner(1) Beneficially Owned (2) Owned (3)
------------------------------------- ---------------------- ---------
<S> <C> <C>
William R. Becker .............................. 14,467,200(4) 60.5%
Matthew Cohen .................................. 1,000 *
Peter Tamayo ................................... 1,021,175(5) 4.2%
Charles R. McCarthy(6) ......................... 50,000 *
Lawrence J. Brady(7) ........................... 50,000 *
All Directors and Executive Officers
As a Group (5 Persons) ......................... 15,589,375(8) 63.0%
</TABLE>
- ----------
14
<PAGE>
* Represents less than 1%.
(1) Except as otherwise noted, the address of each of the persons listed below
is 11336 Wiles Road, Coral Springs, Florida 33076.
(2) Includes shares actually and beneficially owned.
(3) Based upon 24,261,091 shares outstanding on November 30, 1999, increased
by the number of shares under options which the holder(s) thereof have the
right to acquire within 60 days from November 30, 1999.
(4) Includes (a) 500,000 shares which Mr. Becker may acquire pursuant to
options exercisable within 60 days of November 30, 1999; (b) 2,967,400
shares which Mr. Becker owns jointly with his wife, Joni; and (c)
9,000,000 shares held by Joni Becker as Trustee of the William R. Becker
Irrevocable Family Trust. Does not include 1,000,800 shares held by Mrs.
Becker, as to which Mr. Becker disclaims beneficial ownership.
(5) Includes 21,175 shares held by Mrs. Tamayo. Mr. And Mrs. Tamayo share the
power to vote and dispose of such shares.
(6) The address of Mr. McCarthy is 1666 K Street, NW Washington, DC
20006-2803.
(7) The address of Mr. Brady is 480 South Orange Grove Blvd #16 Pasadena, Ca
91105.
(8) Includes 500,000 shares which all of such persons may acquire pursuant to
options exercisable within 60 days of November 30, 1999. Does not include
the shares excluded from the percentage ownership calculations made with
respect to Mr. Becker pursuant to note 4 above.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The following table sets forth the names, positions with the Company and ages of
the executive officers and directors of the Company . Directors will be elected
at the Company's annual meeting of shareholders and serve for one year or until
their successors are elected and qualify. Officers are elected by the board and
their terms of office are, except to the extent governed by employment
contracts, at the discretion by the Board.
Name Age Position
- ---- --- --------
William R. Becker 43 President, Director and Chief Operating Officer
Matthew J. Cohen 41 Director and Chief Financial Officer
Peter Tamayo, Jr. 36 Chief Technical Officer
Lawrence J. Brady 59 Director
15
<PAGE>
Charles R. McCarthy 60 Director
William R. Becker is the President and Chairman of the Board of the
Company and each of its subsidiaries. Since June 1992, Mr. Becker has served as
the Chief Executive Officer of Ubuy.Com. Mr. Becker attended the State
University of Oswego and C.W Post College. He graduated with a four year
Bachelors degree.
Matthew Cohen has served as Chief Financial Officer and as a Director of
the Company since Sept, 1999. Between April 1997 and August, 1999, he served as
Chief Financial Officer and as a Director of Legal Club of America Corporation,
a provider of the nations largest legal benefit. From 1984 to June 1996, he was
Vice President and Chief Financial Officer of Standard Brands of America, Inc.,
a $100 million publicly held retailer of consumer electronics and appliances.
Mr. Cohen is a graduate of New Paltz State University.
Peter Tamayo has served as a Senior Vice President and Chief Technical
Officer of the Company since February, 1999. Since April 1995, he has served as
the Chief Technical Officer of Ubuy.Com, Ltd. Mr. Tamayo holds several patents
in the computer industry, one in the electronics field and several dozen
copyrights. He is a graduate of Morgan Technical Institute with majors in
Industrial Electronics and Computer Science & Technology.
Lawrence J. Brady has served in senior management positions in government
and the private sector, including founder and director of Capitoline
International Group, Ltd.; a senior Vice President of Hill and Knowlton Public
Affairs Worldwide; and Director of International Marketing for Sanders
Associates, a Lockheed Corporation subsidiary. During the Reagan administration
Mr. Brady served as Assistant Secretary of Commerce for Trade Administration,
administering the government's export and import trade regulatory functions,
including the high technology export control program, as well as the U. S. laws
designed to prevent unfair sales of foreign products into the United States. He
also administered the U.S. Government foreign trade zone program. Mr. Brady
served also in senior staff roles in the Executive Office of the President in
the Nixon and Ford administrations. He has represented the U.S. in trade
negotiations in Europe, Japan and China and has been a frequent witness before
Congress on international economic and trade issues. Mr. Brady has completed all
requirements for a Ph.D. in International Economics and International Affairs
except for the dissertation.
Charles R. McCarthy has been of counsel to the law firm of O'Connor &
Hannon, a Washington, D.C. and Minneapolis, Minnesota-based law firm since 1996.
Prior thereto, he was a member of McCarthy & Burke, a Minneapolis-based law
firm. He graduated from the Georgetown Law Center and is a former trial attorney
for the U.S. Securities and Exchange Commission. His prior experience includes
serving as a Blue Sky securities commissioner for the District of Columbia and
teaching at the International School of Law (now George Mason School of Law) as
an Assistant Professor of Law. He has over twenty-five years of experience in
serving on, advising and chairing various international and domestic corporate
boards. Mr. McCarthy recently completed a four-year term as General Counsel to
the National Association of Corporate Directors.
16
<PAGE>
Item 6. Executive Compensation
None of the persons who served as officers of the Company prior to the
Reverse Acquisition is currently employed by the Company or any of its
subsidiaries. The Company has not paid any remuneration to any of its executive
officers since the closing of the Reverse Acquisition. Instead, the Company's
Chief Executive Officer and the only two executives of the Company who receive
annual compensation and bonus of $100,000 or more (collectively, the "Named
Executive Officers") have been paid by the various subsidiaries identified
below. The company anticipates that it will begin to compensate each of the
Named Executive Officers directly beginning on or about January 1, 2000.
The following table sets forth compensation awarded to, earned by or paid
to the Named Executive Officers during the period between January 1, 1999 and
November 30, 1999. The Company has not paid any compensation that would qualify
as payouts pursuant to long-term incentive plans ("LTIP Payouts"), or "All Other
Compensation" and it did not issue any SARs during such period of time.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards
------------------------------------------- ---------------------------
Restricted Securities
Name and Principal Other Annual Stock Underlying
Position Year Salary ($) Bonus ($) Compensation ($) Awards ($) Options (#)
- ------------------- ---- ---------- --------- ---------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
William R Becker, CEO 1999(1) $ 229,166 2,500,000(2)
Matthew Cohen, CFO 1999(3) $ 30,000 100,000(4)
Peter Tamayo, CTO 1999(4) $ 95,333
</TABLE>
- ----------
(1) January 1, 1999 - November 30, 1999. Salary paid by Ubuy.
(2) On February 26, 1999, the Company awarded to Mr. Becker under its 1999 Stock
Option Plan a ten year non-qualified option to purchase 2,170,000 shares of
Common Stock at an exercise price of $1.50 per share, and a five year incentive
stock option to purchase 330,000 shares of Common Stock at the same exercise
price. Both options vest at the rate of 20% per annum at the commencement of
each year during the term thereof. Accordingly, as of the date of this
Registration Statement, Mr. Becker is entitled to purchase a total of 500,000
shares pursuant to such options. See, "Employment Contracts, Termination Of
Employment And Change In Control Arrangements."
17
<PAGE>
(3) Paid between September 13, 1999, the date of commencement of Mr. Cohen's
employment, and November 30, 1999. Salary paid by Ubuy.
(4) On February 26, 1999, the Company awarded to Mr. Cohen, who was then
providing consulting services to the Company, under its 1999 Stock Option Plan a
ten year incentive stock option to purchase 100,000 shares of Common Stock at an
exercise price of $1.50 per share. The option vests at the rate of 50% per annum
at the end of each of the first two years during the term thereof. See,
"Employment Contracts, Termination Of Employment And Change In Control
Arrangements."
(5) January 1, 1999 - November 30, 1999. Salary paid by United Interactive.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant SARs to any of the Named Executives during the
Post-Closing Period. The following table describes the options granted to the
Named Executives during the Post-Closing Period.
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------
Number of % of Total Options
Securities Underlying Granted to Employees Exercise or Base
Name Options Granted (#) In Post-Closing Period Price ($/Sh) Expiration Date
- --------------------------- ------------------------ ---------------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William R. Becker, CEO 2,170,000 (1) 74.44% $1.50 2/26/2009
William R. Becker, CEO 330,000 (1) 11.32% $1.50 2/26/2009
Matthew Cohen, CFO 100,000 (2) 3.43% $1.50 2/26/2009
</TABLE>
- ----------
(1) On February 26, 1999, the Company awarded to Mr. Becker under its 1999 Stock
Option Plan a ten year non-qualified option to purchase 2,170,000 shares of
Common Stock at an exercise price of $1.50 per share, and a five year incentive
stock option to purchase 330,000 shares of Common Stock at the same exercise
price. Both options vest at the rate of 20% per annum at the commencement of
each year during the term thereof. Accordingly, as of the date of this
Registration Statement, Mr. Becker is entitled to purchase a total of 500,000
shares pursuant to such options. See, "Employment Contracts, Termination Of
Employment And Change In Control Arrangements."
(2) On February 26, 1999, the Company awarded to Mr. Cohen, who was then
providing consulting services to the Company, under its 1999 Stock Option Plan a
ten year incentive stock option to purchase 100,000 shares of Common Stock at an
exercise price of $1.50 per share. The option vests at the rate of 50% per annum
at the end of each of the first two years during the term thereof. See,
"Employment Contracts, Termination Of Employment And Change In Control
Arrangements."
18
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
None of the Named Executive Officers exercised any options during the
Post-Closing Period.
COMPENSATION OF DIRECTORS
The Company has not paid and does not presently propose to pay
compensation to any director for acting in such capacity, except for nominal
sums for attending Board of Directors meetings and reimbursement for reasonable
expenses in attending those meetings.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Effective February 26, 1999, the Company entered into a five-year
Employment Agreement with William R. Becker, the companies Chief Executive
Officer, President, and Chairman of the Board of Directors. The terms of this
agreement, which is renewable for an additional five-year term at the Company's
option, provides for an annual base salary of $250,000. Such amount may be
increased by vote of the Board of Directors in the event of a material change in
the scope of his duties as a result of a significant expansion of the Company's
business and operations; a material diversification of the Company's business
activities; one or more acquisitions or other similar long term permanent
occurrences.
Under the agreement, Mr. Becker was granted a five-year non-qualified
option (see "Stock Option Plan," below) under the Company's 1999 Stock Option
Plan (the "Plan") to purchase 2,170,000 shares of Common Stock at $1.50 per
share which such options will vest at the rate of 20% per year at the beginning
of each of said five years. Also, Mr. Becker was granted 330,000 five-year
incentive stock options (see "Stock Option Plan," below) under the Plan to
purchase 330,000 shares of Common Stock at $1.50 per share which such options
will vest in the same manner as the non-qualified options.
Under the terms of the agreement, the Company may terminate the employment
of Mr. Becker either with or without cause. If the agreement is terminated by
the Company without good cause (which requires a six month notice provision),
the Company would be obligated to pay Mr. Becker an amount equal to the unpaid
salary due an owing during the balance of the term of the agreement. If the
agreement is terminated for cause, no severance will be paid.
Effective September 12, 1999, the Company entered into a five-year
Employment Agreement with Matthew J. Cohen, the Company's Chief Financial
Officer, Treasurer and a member of the Board of Directors. The agreement, which
is renewable for an additional five-year term at the Company's option, provides
for an annual base salary of $120,000 which increases $12,000 annually for the
duration of the term.
Under this agreement, Mr. Cohen was granted 100,000 two-year incentive
stock options under the Plan to purchase shares of the Company's common stock at
1.50 per share, which such options vesting 50,000 annually at the end of each
year.
19
<PAGE>
Under the terms of the agreement, the Company may terminate the employment
of Mr. Cohen with or without cause. If the agreement is terminated by the
Company without good cause (which requires a six month notice provision), the
Company would be obligated to pay Mr. Cohen an amount equal to the unpaid salary
due an owing during the balance of the term of the agreement. If the agreement
is terminated for cause, no severance will be paid.
STOCK OPTION PLAN
In March 1999, the Company adopted a qualified stock option plan, the
Interactive Technologies. Com , Inc. 1999 Stock Option Plan (the "Plan"). The
purpose of the Plan was to increase the employees and non-employee directors'
proprietary interest in the Company and to align more closely their interests
with the interests of the Company's shareholders, as well as to enable the
Company to attract and retain the services of experienced and highly qualified
employees and non-employee directors.
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 (the "Code"), or options that do not so qualify
("Non-Qualified Options"). 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
Company's Common Stock must be at least 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 the Directors or the Committee, 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 Company's Common Stock, no more than five years after the
date of the grant. The exercise price of Non-Qualified Options shall be
determined by the Board of Directors or the Committee
The per share exercise price of shares granted under the Plan may be
adjusted in the event of certain changes in the Company's capitalization, but
any such adjustment shall not change the total purchase price payable upon the
exercise in full of Plan Options granted under the Plan. Officers, directors and
key employees of and consultants to the Company and its subsidiaries will be
eligible to receive Non-Qualified Options under the Plan. Only officers,
directors and employees of the Company who are employed by the Company or by any
subsidiary thereof are eligible to receive Incentive Options.
The Company reserved an aggregate of 5,000,000 shares of Common Stock for
issuance pursuant to options granted under the Plan ("Plan Options"). As of
November 30, 1999, an aggregate of 2,915,000 options have been granted under the
Plan. The Board of Directors or a Committee of the Board of Directors (the
"Committee") 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
20
<PAGE>
Plan Option price.
Item 7. Certain Relationships And Related Transactions
William R. Becker, the Chairman, Chief Executive and a controlling
stockholder of the Company, is the owner of a travel service business with which
the Company and its various subsidiaries conduct business. Neither the Company,
nor any of such subsidiaries pays any fees or other compensation to such travel
service. All compensation earned by the travel service is paid by the various
airlines and other travel service providers at standard industry rates.
Item 8. Description of Securities
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $0.001 per share (the "Common Stock") and 4,000,000
shares of preferred stock, par value $0.01 per share.
The following description relating to the capital stock of the Company is
a summary and is qualified in its entirety by the provisions of the Company's
certificate of incorporation and bylaws, copies of which are available from the
Company upon written request.
Common Stock
The shares of Common Stock: (i) have equal rights to dividends from funds
legally available therefor, when, as and if declared by the Board of Directors
of the Company; (ii) are entitled to share ratably, subject to the rights of the
holders of any securities which are senior to, or which have preferences greater
than the Common Stock, in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or winding
up of the affairs of the Company; (iii) are not subject to preemptive,
subscription or conversion rights; (iv) have no redemption or sinking fund
provisions applicable thereto; and (v) are entitled to one non-cumulative vote
per share on all matters which stockholders may vote on at all meetings of
stockholders. All of the 24,261,091 shares of Common Stock now outstanding are
fully paid and non-assessable.
Inasmuch as the Common Stock of the Company does not have cumulative
voting rights, the holders of more than 50% of the outstanding shares can elect
all of the directors, if they choose to do so, in which event the holders of the
remaining shares cannot elect any directors. Accordingly, since the presently
existing officers, directors and a control person or persons own more than 50%
of the outstanding shares, they will continue to be able to elect all of the
directors.
The Company has paid no cash dividends and it is not anticipated that any
cash dividends will be paid in the foreseeable future. In all events, the
declaration of cash dividends will depend upon future earnings, if any, the
financial needs of the Company, and other pertinent factors.
The Company's Transfer Agent is Olde Monmouth Stock Transfer Company,
Inc., 77 Memorial Parkway, Atlantic Highlands, New Jersey 07716
21
<PAGE>
The Company intends to furnish its stockholders with annual reports of its
operations, containing audited financial statements and with additional
information concerning the business and affairs of the Company whenever deemed
appropriate by the Board of Directors.
Preferred Stock
Pursuant to the certificate of incorporation, the Company is authorized to
issue up to 4,000,000 shares of "blank check" preferred stock, which may be
issued from time to time in one or more series upon authorization by the
Company's Board of Directors. The Board of Directors, without further approval
of the stockholders, will be authorized to fix the dividend rights and terms,
conversion rights, voting rights, redemption rights and terms, liquidation
preferences, and any other rights, preferences, privileges and restrictions
applicable to each series of the preferred stock. The issuance of preferred
stock, while providing flexibility in connection with possible acquisitions and
other corporate purposes could, among other things, adversely affect the voting
power of the holders of Common Stock and, in certain circumstances, make it more
difficult for a third party to gain control of the Company, discourage bids for
the Company' Common Stock at a premium, or otherwise adversely affect the market
price of the Common Stock.
Currently, there are no shares of preferred stock outstanding.
22
<PAGE>
PART II
Item 1. Market Price and Dividends on the Registrant's
Common Equity and Related Stockholder Matters
The Company's Common Stock is admitted to quotation on the NASD's OTC
Bulletin Board under the symbol INTRE. However, in the event that this
Registration Statement is not declared effective by the Securities and Exchange
Commission on or before January 16, 2000, the Common Stock may be delisted from
the OTC Bulletin Board. The ranges of the high, low and closing prices of the
Company's Common Stock on a quarter by quarter basis since February 26, 1999
(the date of closing of the Reverse Acquisition), and the high, low and closing
prices of the Common Stock on December 15, 1999, are set forth in the following
table:
Quarter-End High Low Close
----------------- ----------- ----------- -----------
March 31, 1999 $ 3.875 $ 3.625 $ 3.875
June 30, 1999 12.562 11.625 12.188
Sept. 30, 1999 7.125 6.375 6.750
Dec. 15, 1999 5.750 5.125 5.125
As of December 20, 1999, there were 636 holders of record of the Common
Stock.
To date, the Company has neither declared nor paid any cash dividends on
its Common Stock. The Company currently intends to retain our earnings to
finance operations and future growth and, therefore, it does not anticipate
paying any cash dividends in the foreseeable future. The payment of cash
dividends in the future will be at the discretion of the Board of Directors and
will depend upon the Company's earning levels, capital requirements, restrictive
loan covenants, if any, and other factors which the Board of Directors may deem
relevant.
Item 2. Legal Proceedings
Neither the Company nor any of its subsidiaries is a party to any
litigation proceeding.
Item 3. Changes in and Disagreements with Accountants
Not applicable.
Item 4. Recent Sales of Unregistered Securities
Prior to the February 26, 1999 Reverse Acquisition, the Company was
controlled by persons other than its current management. The Company's current
management does not have any records regarding any sales of unregistered
securities made by the Company prior to that date. Between February 26, 1999 and
the date of filing of this Registration Statement, the Company sold the
unregistered securities listed below:
23
<PAGE>
On April 15, 1999, the Company issued 500,000 shares of Common Stock to
the investors identified below at a price of $2.00 per share in connection with
the closing of a private placement made pursuant to the exemption from
registration accorded under Rule 504 of Regulation D.
On April 21, 1999, the Company issued 1,178,572 shares of Common
Stock to Alan Brooks, the Chairman of the Board, and a controlling shareholder
of the Company prior to the February 26, 1999 Reverse Acquisition, in payment
for services previously rendered by him for which the Company owed $360,000 to
him, and in payment of loan indebtedness due and owing to him in the amount of
$300,000. The conversion of such obligations into equity was made at an average
per share price of $.64, the price of the Common Stock in effect when such
obligations were incurred by the Company. The issuance of such Common Stock was
made pursuant to the exemption from registration accorded under Section 4(2) of
the Securities Act.
On April 28, 1999, the Company issued 18,000,000 shares of Common
Stock to William R. Becker, the Chairman of the Board, Chief Executive Officer
and a controlling shareholder of the Company. Such shares were issued at the
closing of the Reverse Acquisition in consideration for Mr. Becker's
contribution of 80% of the issued and outstanding shares of the common stock of
Ubuy, United Interactive, IMS and Web Classified to the Company. The issuance of
such Common Stock was made pursuant to the exemption from registration accorded
under Section 4(2) of the Securities Act.
Between February 1999 and August 1999, the investors identified
below, exchanged 2,275,000 shares of the Company's 7% Cumulative Convertible
Preferred Stock which had been issued in or about 1994, and an additional
661,321 shares of such stock issued in lieu of accumulated dividends), for
3,130,005 shares of Common Stock in a transaction for which no commission or
other remuneration was paid or given directly or indirectly for soliciting such
exchange. The conversion price, which was tied to the market price of the Common
Stock on and immediately prior to the conversion date, ranged between $.56 and
$12.16 per share. The issuance of such Common Stock was made pursuant to the
exemption from registration accorded under Section 3(a)(9) of the Securities
Act.
<TABLE>
<CAPTION>
Number of Shares of
Preferred Stock Converted
-------------------------
Original Dividend Number of Shares of
Name of Investor Shares Shares Common Stock Issued
---------------- ------ ------ -------------------
<S> <C> <C> <C>
Aircraft Investment
Services, Inc 70,000 66,963 316,963
Asselone, Kimberly 5,000 220 1,042
Brogan, Glenn 20,000 880 4,168
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C> <C>
Brooks, Alan P. 160,000 113,177 535,716
Casatelli, Dr. Bruno 10,000 440 2,084
Collins, Barbara M. 20,000 880 4,168
Collins, Robert E. 10,000 440 2,084
Collins, Gordon & Johnson
PC Pension Trust 90,000 3,523 18,759
Compton, James E. and
Rebecca, JTWROS 5,000 220 1,042
Crink, James W. and
Brenda, JTWROS 5,000 220 1,042
Dellin, Edward J. 5,000 220 1,042
DeVico, Angelo 2,500 110 521
DiCarli, James J. 10,000 440 2,084
Dinkin, Les & Marcy J, JTWROS 10,000 440 2,084
Dubraski, Jr., John M. 20,000 880 4,168
Duffy, L. Robert 10,000 440 2,084
Duffy, L. Robert and Virginia,
JTWROS 10,000 440 2,084
Duffy, L. Robert IRA 10,000 440 2,084
Dzaluk, Joseph Francis Living
Trust Dtd 8/25/93 10,000 440 2,084
Epstein, Jeffrey 5,000 220 1,042
Falcha, James 3,333 146 694
Falcha, Laura 3,333 147 694
Falcha, Robert 3,334 147 694
Gallagher, William H. & Hyland,
Michael G, Ten in Com 10,000 440 2,084
Gallagher, William H. & Ann
H., JTWROS 15,000 660 3,101
Gallagher, William H. &
Caroline H., JTWROS 5,000 220 1,042
Healy, Esther 10,000 440 2,084
Healy, Thomas B. Family Trust 10,000 440 2,084
Healy, Thomas B. Marital Trust 10,000 440 2,084
Howard, Alexander & Allan,
JTWROS 2,500 110 521
Ignatowicz, Wieslaw B., Dr. Profit
Sharing Plan 10,000 440 2,084
Ignatowicz, Wieslaw B., Dr. 10,000 440 2,084
Lacasse, Jean-Paul 10,000 440 2,084
Larizza, Louis J. Trust 10,000 440 2,084
Larizza, Louis J. 10,000 440 2,084
Levinson, Leonard 5,000 220 1,042
Lyons, Ellen 70,000 3,080 13,175
Macri, Rocco F. & Barbara C.,
JTWROS 5,000 220 1,042
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C> <C>
Reuben, Mark 10,000 440 2,084
Mayer, Charles D. Trust
Dtd 3/21/95 10,000 440 2,084
McGeory, G. Holmes & William J.
Giacomo Ten in Com 5,000 220 1,042
Milbier, Donald J. Custodian
for Kyle Milbier UGMA 5,000 220 1,042
Milbier, Donald J. Custodian
for Matthew Milbier UGMA 5,000 220 1,042
Milbier, Donald J. Custodian
for Kathleen Milbier 5,000 220 1,042
Milbier, Donald J. Custodian
for Brenna Milbier 5,000 220 1,042
Milbier, Mary 5,000 220 1,042
Morin, Raymond N. & Bonnie C.,
JTWROS 10,000 440 2,084
Morrell, John D. 10,000 440 2,084
Mulligan, William O. 10,000 440 2,084
Fox, James L. IRA Rollover 10,000 440 2.084
Okon, Joseph J. Retirement Trust 50,000 2,200 10,422
Palumbo, Edward Arthur 20,000 880 4,168
Parry, Catherine King 10,000 440 2,084
Picone, Salvadore & Susan,
JTWROS 5,000 220 1,042
Romanello, Daniel 5,000 220 1,042
Rosenbaum, Henry & Judith,
JTWROS 5,000 220 1,042
Rosenbaum, Jesse & Lydia,
JTWROS 5,000 220 1,042
Scher, Craig 5,000 220 1,042
Schultz, Kimberly 20,000 880 4,168
Skinner, Mark 10,000 440 2,084
Trager, Michael 5,000 220 1,042
Tripodi, Louis 10,000 440 2,084
Ullman, Allan 5,000 220 1,042
Von Arx, Dolph W. Trust
Dtd. 8/18/88 30,000 1,320 6,253
Weissenborn, Stanton F. 10,000 440 2,084
Winjum, Scott 20,000 880 4,168
Winstead, David V. 20,000 880 4,168
Yale Asset Management, Inc. 1,250,000 446,418 2,063,083
Zeier, Doris M. Revocable Trust 10,000 440 2,084
--------- ------- ---------
2,275,000 661,321 3,130,005
========= ======= =========
</TABLE>
26
<PAGE>
Item 5. Indemnification of Directors and Officers
Under the Delaware Corporation Law, a director's liability cannot be
eliminated or limited: (i) for breaches of duty of loyalty, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for the payment of unlawful dividends or expenditure of
funds for unlawful stock purchases or redemptions, or (iv) for transactions from
which the director derived an improper personal benefit. Under the Company's
Certificate of Incorporation no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. The Company's Certificate of
Incorporation further provides that notwithstanding the foregoing a director
shall be liable to the extent provided by applicable law as described in clauses
(i) through (iv) above. This provision, in effect, eliminates the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages from a director for breach of his or
her fiduciary duty of care as a director, except in the situations set forth in
clauses (i) through (iv) above. In addition, the Certificate of Incorporation
does not alter the liability of directors under federal securities laws, and
does not limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief, such as an injunction or rescission, in the event of a
breach in a director's duty of care. The Certificate of Incorporation requires
the Company to indemnify all directors and officers of the Company to the
fullest extent permitted by law, provided, however, that, with certain limited
exceptions, the Company will only indemnify an officer or director in connection
with a proceeding that was authorized by the Board of Directors. The Bylaws also
authorize the Company to indemnify and advance indemnification expenses to the
Company's officers and directors.
Insofar as indemnification for liabilities under the Securities Act of
1933 or the Securities Exchange Act of 1934 may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company believes such indemnification is against public policy
as expressed in such Acts and is therefore unenforceable.
The Company has purchased a directors and officers liability insurance
policy issued by the National Union Fire Insurance Company of Pittsburgh, Pa
which insures each of the Company's directors and officers for claims alleging
violations of the federal securities laws up to a limit of $3,000,000 per claim.
27
<PAGE>
PART F/S
Index to Financial Statements
Page
----
Independent Auditor's Report........................................... F-1
Consolidated Balance Sheet at December 31, 1998
and March 31, 1999.................................................. F-2
Consolidated Statements of Operations for each
of the two years in the period ended December 31, 1998
and the Three Months Ended March 31, 1999............................. F-3
Consolidated Statements of Shareholders' Equity for each
of the two years in the period ended December 31, 1998
and the Three Months Ended March 31, 1999............................ F-4
Consolidated Statements of Cash Flows for each
of the two years in the period ended December 31, 1998
and the Three Months Ended March 31, 1999............................ F-5
Notes to Consolidated Financial Statements............................. F-6
Condensed Consolidated Balance Sheet at September 30, 1999............. F-9
Condensed Consolidated Statements of Operations - Nine
Months Ended September 30, 1999 and 1998............................. F-10
Condensed Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1999 and 1998............................. F-11
Notes to Condensed Consolidated Financial Statements................... F-12
28
<PAGE>
ROBERT JARKOW
CERTIFIED PUBLIC ACCOUNTANT
3111 North Andrews Avenue
Fort Lauderdale, Florida 33309
(954) 630-9070
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Interactive Technologies.Com, Ltd. and Subsidiaries
I have audited the accompanying consolidated balance sheets of Interactive
Technologies.Com, Ltd. and Subsidiaries as of March 31, 1999 and December 31,
1998 and the consolidated statements of operations, shareholders' equity and
cash flows for the three months ended March 31, 1999 and the years ended
December 31, 1998 and 1997. These consolidated financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these consolidated financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. I believe that my audits provide
a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Interactive Technologies.Com, Ltd. and Subsidiaries as of March 31, 1999 and
December 31, 1998, and the results of its consolidated operations and cash flows
for the three months ended March 31, 1999 and the years ended December 31, 1998
and 1997, in conformity with generally accepted accounting principles.
September 10, 1999 /s/ Robert Jarkow
F-1
<PAGE>
INTERACTIVE TECHNOLOGIES.COM, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 361,904 $ 14,300
Accounts receivable 9,856 8,611
Subscriptions receivable 565,200 --
----------- -----------
Total current assets 936,960 22,911
Property and equipment 222,556 209,743
Less: Accumulated depreciation (104,330) (94,261)
----------- -----------
Property and equipment-net 118,226 115,482
----------- -----------
$ 1,055,186 $ 138,393
=========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 104,948 $ 92,197
Deferred income -- 471,143
Income tax payable 59,000 --
Due to shareholder 94,155 71,155
----------- -----------
Total current liabilities 258,103 634,495
----------- -----------
Minority interest 27,664
-----------
Shareholders' Equity
Common stock-$.001 par value, 25,000,000 shares authorized,
24,261,091 issued and outstanding 24,261 1,000
Additional paid-in capital 1,045,739 66,902
Deficit (300,581) (564,004)
----------- -----------
Total shareholders' equity 769,419 (496,102)
----------- -----------
$ 1,055,186 $ 138,393
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
INTERACTIVE TECHNOLOGIES.COM, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
and for the Three Months ended March 31, 1999
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
--------------- ------------------------
1999 1998 1997
----------- ---------- -----------
<S> <C> <C> <C>
Revenues $ 1,136,761 $4,054,706 $ 3,298,637
----------- ---------- -----------
Expenses
Direct costs 116,320 182,322 158,795
Selling, general, and administrative 546,479 2,083,597 1,852,786
----------- ---------- -----------
Total expenses 662,799 2,265,919 2,011,581
----------- ---------- -----------
Income before income tax & minority interest 473,962
Provision for income tax 59,000
-----------
Income before minority interest 414,962
Minority interest 27,664
-----------
Net Income $ 387,298 $1,788,787 $ 1,287,056
=========== ========== ===========
Basic earning per common share $ 0.02 $ 0.07 $ 0.05
=========== ========== ===========
Weighted average common shares outstanding 24,261,091 24,261,091 24,261,091
=========== ========== ===========
Proforma Tax (Unaudited):
The Proforma Tax is computed as if Interactive Technologies.Com, Ltd.
and Subsidiaries were taxed for the entire periods as a conventional
Corporation under the Internal Revenue Code
Income from operations before income tax $ 473,962 $1,788,787 $ 1,287,056
Provision for Income Tax 178,081 672,850 484,049
----------- ---------- -----------
Net Income $ 295,881 $1,115,937 $ 803,007
=========== ========== ===========
Basic earnings per share $ 0.01 $ 0.05 $ 0.03
=========== ========== ===========
Weighted average common shares outstanding 24,261,091 24,261,091 24,261,091
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
INTERACTIVE TECHNOLOGIES.COM, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1997
and for the Three Months ended March 31, 1999
<TABLE>
<CAPTION>
Additional Retained
Common Paid-In Earnings
Stock Capital (Deficit)
----------- ----------- -----------
<S> <C> <C> <C>
Balance December 31, 1996 $ 23,761 $ 45,739 ($ 8,063)
Net income -- -- 1,287,056
Distribution to shareholders -- -- (2,148,543)
----------- ----------- -----------
Balance December 31, 1997 23,761 45,739 (869,550)
Net income -- -- 1,788,787
Distribution to shareholders -- -- (1,483,241)
----------- ----------- -----------
Balance December 31, 1998 23,761 45,739 (564,004)
Sale of common stock 500 999,500 --
Net income -- -- 387,298
Distribution to shareholders -- -- (123,875)
----------- ----------- -----------
Balance March 31, 1999 $ 24,261 $ 1,045,239 ($ 300,581)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
INTERACTIVE TECHNOLOGIES.COM, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
and for the Three Months ended March 31, 1999
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
--------------- --------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 387,298 $ 1,788,787 $ 1,287,056
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 10,089 29,623 18,890
Minority interest 27,664 -- --
Increase (decrease) in deferred income (469,064) (318,934) 680,284
(Increase) in accounts receivable (1,245) (8,611) --
Increase in income tax payable 59,000 -- --
Increase in accounts payable 12,750 81,479 733
----------- ----------- -----------
Total adjustments (360,806) (216,443) 699,907
----------- ----------- -----------
Net cash provided by operating activities 26,492 1,572,344 1,986,963
----------- ----------- -----------
Cash flows from investing activities
Purchase of property and equipment (12,813) (105,228) (2,106)
----------- ----------- -----------
Cash flows from financing activities
Increase (decrease) in shareholder loan payable 23,000 -- (5,442)
Sale of common stock 434,800 -- --
Distributions to shareholders (123,875) (1,483,241) (2,148,543)
----------- ----------- -----------
Net cash provided (used) by financing activities 333,925 (1,483,241) (2,153,985)
----------- ----------- -----------
Increase (decrease) in cash 347,604 (16,125) (169,128)
Cash-beginning 14,300 30,425 199,553
----------- ----------- -----------
Cash-end $ 361,904 $ 14,300 $ 30,425
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
Interactive Technologies.Com, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 1998 and 1997, and Three Months Ended March 31, 1999
Note 1. Public Entity
On February 26, 1999 a public shell corporation was acquired by three
privately held operating companies. Its name was changed to Interactive
Technologies.Com, Ltd. The owners of the private companies received 89.5% of
Interactive Technologies.Com, Ltd. in exchange for 80% of their stock in the
private companies. The transaction was accounted for as a reverse acquisition,
which is a capital transaction and not a business combination. Accordingly, the
recorded assets, liabilities, and operations of the private companies were
carried forward at their historical amounts. Equity has been restated to give
effect to the transaction for all periods.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The Balance Sheet at December 31, 1998 includes only the three privately
held companies, without effect of the reverse acquisition described in Note 1.
Principles of Consolidation
The consolidated financial statements include the Company and all
subsidiaries. All intercompany accounts and transactions have been eliminated in
the consolidation.
Minority interest reflects 20% of the net income from date of the reverse
acquisition.
Use of Estimates
Use of estimates and assumptions by management is required in the
preparation of financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates and
assumptions.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the five year estimated useful lives of the
assets.
Earnings Per Share
Earnings per share is calculated by dividing net income by the weighted
average number of shares outstanding during the period.
F-6
<PAGE>
Interactive Technologies.Com, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 1998 and 1997, and Three Months Ended March 31, 1999
Year 2000 Compliance
The Company believes it is year 2000 compliant.
Note 3. Business Segments
The Company operates three business units. The first unit supplies a
variety of money saving benefits and services to the membership of its clients .
The second unit allows businesses quick, inexpensive, instant access to hosting
web sites on the internet. The third unit is a Visa/MasterCard merchant service
provider, check and debit card processing, and a credit card gateway service for
internet e-commerce credit card transactions.
1999 1998 1997
---- ---- ----
Revenues
Unit 1 $ 974,924 $ 3,416,821 $ 2,882,085
Unit 2 76,760 89,259 28,390
Unit 3 85,077 548,626 388,162
----------- ----------- -----------
Total $ 1,136,761 $ 4,054,706 $ 3,298,637
=========== =========== ===========
Operating income (loss)
Unit 1 $ 614,156 $ 2,047,005 $ 1,395,780
Unit 2 (134,380) (265,661) (75,581)
Unit 3 (5,814) 7,443 (33,143)
----------- ----------- -----------
Total $ 473,962 $ 1,788,787 $ 1,287,056
=========== =========== ===========
The Company has one customer whose sales represent a significant portion
of revenue for unit 1. Sales to this customer was 62% in 1997, 42% in 1998, and
72% in 1999 of unit 1.
Note 4. Commitments and Other Matters
Operating Lease-On April 15, 1999 the Company entered into a 10 year lease
for office space. The following summarizes the future minimum lease payments
under this noncancelable operating lease: for 1999 is $71,400; 2000 is $224,200;
2001 is $229,200; 2002 is $234,500; 2003 is $239,900; 2004 is $245,500; 2005 is
$251,200; 2006 is $257,100; 2007 is $263,200; 2008 is $269,500, and 2009 is
$78,600.
Payroll tax payable-The public shell, at the date of the reverse
acquisition, had a payroll tax liability of $137,000 from discontinued
operations. This liability was assumed by the seller of the public shell and was
paid subsequent to March 31, 1999.
F-7
<PAGE>
Interactive Technologies.Com, Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 1998 and 1997, and Three Months Ended March 31, 1999
Note 4. Income Tax
Prior to the reverse acquisition, the privately held companies were S
Corporations under the Internal Revenue Code. Accordingly, they were not
responsible for payment of Income Taxes. Due to this, the effective tax rate for
1999 was only 12%.
If the privately held companies were conventional corporations under the
Internal Revenue Code, management is of the opinion that all distributions would
have been paid as salary, and accordingly, there would have been no taxable
income.
At March 31, 1999, there are no items that give rise to deferred income
taxes.
Note 5. Shareholders' Equity
There are 4,000,000 authorized shares of $.001 par value preferred stock.
No shares are outstanding at March 31, 1999.
On or about March 1, 1999, the Company sold 500,000 shares of its common
stock, at $2 per share, pursuant to Rule 504 of Regulation D under the United
States Securities Act of 1933. Subsequent to March 31, 1999, all subscriptions
were collected.
F-8
<PAGE>
Interactive Technologies.com, Inc.
Balance Sheet
September September
1999 1998
---- ----
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 167,175 $ 46,069
Accounts Receivable 1,519,198 --
Other current assets 188,142 25,051
----------- -----------
Total current assets 1,874,515 71,120
----------- -----------
FIXED ASSETS
Equipment - net 132,097 113,790
----------- -----------
Total fixed assets 132,097 113,790
----------- -----------
Total Assets $ 2,006,612 $ 184,910
=========== ===========
LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 112,365 48,605
Notes payable 326,079 74,895
----------- -----------
Total current liabilities 438,444 123,500
NON-CURRENT LIABILITIES
Other long-term liabilities 151,667 967,527
----------- -----------
Total liabilities 590,111 1,091,027
----------- -----------
STOCKHOLDERS' EQUITY
Capital stock issued 24,261 5,557
Additional paid in capital 975,017 262,152
Retained earnings 417,223 (1,173,826)
----------- -----------
1,416,501 (906,117)
----------- -----------
Total Liabilities and Equity $ 2,006,612 $ 184,910
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
Interactive Technologies.com, Inc.
Income Statement
Nine Months Ended September 30,
-------------------------------
1999 1998
---- ----
(Unaudited)
SALES
Sales $ 4,854,936 $ 3,675,102
----------- -----------
EXPENSES
Operating expenses 2,740,746 1,879,753
Direct Costs 363,548 258,099
Depreciation 23,180 20,585
Amortization 0
----------- -----------
3,127,474 2,158,437
----------- -----------
Operating income 1,727,462 1,516,665
----------- -----------
OTHER INCOME AND EXPENSES
Gain (loss) on sale of assets
Other (net) (238,712) 0
----------- -----------
(238,712) 0
----------- -----------
Net income 1,488,750 1,516,665
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
Interactive Technologies.com, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
---- ----
<S> <C> <C>
(Unaudited)
Cash provided from operations
Net earnings (loss) $ 1,488,750 1,516,665
Depreciation expense 23,180 20,585
----------- -----------
Net cash provided from (used by) operations 1,511,930 1,537,250
----------- -----------
Cash provided from (used by) operating activities
Accounts Receivable (1,510,587) 0
Other current assets (188,142) (25,051)
Accounts payable (450,975) 37,887
Long term liabilities 151,667 181,007
----------- -----------
Net cash provided from (used by) operations (486,107) 1,731,093
----------- -----------
Investment transaction Increases (Decreases)
Purchases of equipment (39,795) (94,498)
Net proceeds from issuance of common stock 423,853 (1,624,691)
----------- -----------
Net cash used by (from) investment transactions 384,058 (1,719,189)
----------- -----------
Financing transaction Increases (Decreases)
Notes payable 254,924 3,740
----------- -----------
Net cash from (used by) financing transactions 254,924 3,740
----------- -----------
Net increase (decrease) in cash 152,875 15,644
Cash at beginning of period 14,300 30,425
----------- -----------
Cash at end of period $ 167,175 $ 46,069
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
INTERACTIVE TECHNOLOGIES.COM, LTD. AND SUBSIDIARIES
SELECTED NOTES TO CONDENSED FINANCIAL STATEMENTS
The information as of September 30, 1999 and 1998 is unaudited
Note 1. Public Entity
On February 26, 1999 a public shell corporation was acquired by three
privately held operating companies. Its name was changed to Interactive
Technologies.Com, Ltd. The owners of the private companies received 89.5% of
Interactive Technologies.Com, Ltd. in exchange for 80% of their stock in the
private companies. The transaction was accounted for as a reverse acquisition,
which is a capital transaction and not a business combination. Accordingly, the
recorded assets, liabilities, and operations of the private companies were
carried forward at their historical amounts. Equity has been restated to give
effect to the transaction for all periods.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the Company and all
subsidiaries. All intercompany accounts and transactions have been eliminated in
the consolidation.
Minority interest reflects 20% of the net income from date of the reverse
merger.
Use of Estimates
Use of estimates and assumptions by management is required in the
preparation of financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates and
assumptions.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the five year estimated useful lives of the
assets.
Earnings Per Share
Earnings per share is calculated by dividing net income by the average
number of shares outstanding during the period.
Year 2000 Compliance
The Company believes it is year 2000 compliant, although the Company
operations are dependent on others.
F-12
<PAGE>
INTERACTIVE TECHNOLOGIES.COM, LTD. AND SUBSIDIARIES
SELECTED NOTES TO CONDENSED FINANCIAL STATEMENTS
The information as of September 30, 1999 and 1998 is unaudited
Note 3. Commitments and Other Matters
Long-Term Operating Lease-On April 15, 1999 the Company entered into a 10
year lease for office space. The following summarizes the estimated future
minimum lease payments under this noncancelable operating lease: for 1999 is
$71,400; 2000 is $224,200; 2001 is $229,200; 2002 is $234,500; 2003 is $239,900;
years thereafter is $1,365,100.
Payroll tax payable-The public shell, at the date of the reverse
acquisition, had a payroll tax liability from previously discontinued
operations. Subsequent to September 30, 1999, these taxes were paid by the
seller of the public shell.
Note 4. Income Tax
Prior to the reverse acquisition, the privately held companies were S
Corporations under the Internal Revenue Code. Accordingly, they were not
responsible for payment of Income Taxes. Due to this, the effective tax rate for
1999 was 30%.
If the privately held companies were conventional corporations under the
Internal Revenue Code, management is of the opinion that all distributions would
have been paid as salary, and accordingly, there would have been no taxable
income.
At September 30, 1999, there are no items that give rise to deferred
income taxes.
Note 5. Shareholders' Equity
There are 4,000,000 authorized shares of $.001 par value preferred stock.
No shares are outstanding at September 30, 1999.
On March 1, 1999, the Company sold 500,000 shares of its common stock at
$2 per share, pursuant to Rule 504 of Regulation D under the United States
Securities Act of 1933. Subsequent to September 30, 1999, all subscriptions were
collected.
F-13
<PAGE>
PART III
Item 1. Index to Exhibits
The exhibits listed in the accompanying index are filed as part of this
Registration Statement.
Exhibit
Number Description
- ------ -----------
2.1 Certificate of Incorporation, as Amended
2.2 By-laws
3.1 Specimen stock certificate of common stock
3.2 1999 Stock Option Plan (the "Plan")
3.3 Form of Option issuable under the Plan.
6.1 Employment agreement between the Company and William R. Becker
6.2 Employment agreement between the Company and Matthew Cohen
6.3 Delray Lease
6.4 Coral Springs Lease
6.5 Lease dated the 28th day of October 1991 between Mass Mutual Life
Insurance Co. and Express Financial Corporation
21 The Company's Subsidiaries
27.1 Financial Data Schedule
27.2 Financial Data Schedule
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: December 23, 1999 Interactive Technologies.Com, Ltd.
By: /s/ William R. Becker
--------------------------------
William R. Becker, President and
Chief Executive Officer
30
Exhibit 2.1
CERTIFICATE OF INCORPORATION
OF
ADV ACQUISITION CORP.
FIRST: The name of this corporation is ADV ACQUISITION CORP.
SECOND: Its registered office in the State of Delaware is to be located at
Three Christina Centre, 201 N. Walnut Street, Wilmington DE 19801, New Castle
County. The registered agent in charge thereof is The Company Corporation,
address "same as above".
THIRD: The nature of the business and, the objects and purposes proposed
to be transacted, promoted and carried on, are to do any or all the things
herein mentioned as fully and to the same extent as natural persons might or
could do, and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 20,000,000 shares of stock at $.001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Vanessa Foster
Three Christina Centre
201 N. Walnut St.
Wilmington, DE 19801
SIXTH: The powers of the incorporator are to terminate upon filing of the
certificate of incorporation, and the name(s) and mailing address(es) of person
who are to serve as director(s) until the first annual meeting of stockholders
and their successors are elected and qualified are as follows:
Morris Diamond
Three Christina Centre
201 N. Walnut St.
Wilmington DE 19801
1
<PAGE>
SEVENTH: The Directors shall have power to make and to alter or amend the
ByLaws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the Corporation 'outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
EIGHTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the
laws of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true; and I have accordingly hereunto set my
hand.
DATE: March 30, 1993 /s/
-------------------------------
2
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ADV ACQUISITION CORP.
ADV ACQUISITION CORP., a corporation organized and existing under
and by virtue of the general corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting
duly convened and held, adopted the following resolution:
RESOLVED, that the Board of Directors hereby declares it advisable
and in the best interest of the Company that Article FIRST of the Certificate of
Incorporation be amended to read as follows:
FIRST: The name of this corporation shall be:
EMPIRE CAPITAL CORPORATION
SECOND: That the said amendment has been consented to and authorized
by the holders of a majority of the issued and outstanding stock entitled to
vote by written consent given in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the general
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, SAID CORPORATION HAS caused this Certificate to
be signed by Morris Diamond its President, and attested by Stan Luxenberg its
Secretary, this 7th day of June A.D. 1993.
/s/
-----------------------------------------
, President
/s/
-----------------------------------------
Attested by: , Secretary
1
<PAGE>
CERTIFICATE OF DETERMINATION
OF
PREFERRED STOCK
OF
EMPIRE CAPITAL CORPORATION
Dated:
May 27, 1994
The corporation shall be authorized to issue up to 4,000,000 shares
of non-voting preferred stock at $.001 par value upon the completion of its
filing of a Certificate of Amendment to its Certificate of Incorporation.
The By-Laws of the Corporation, Article V, Section 2(A) as amended
May 27, 1994 provides that the Board of Directors may, from time to time,
establish the rights, privileges, preferences, restriction and terms which will
govern and be applicable to each class or series of preferred shares the
corporation shall issue. Those terms are to be drawn from a Certificate of
Determination which affords the broadest and most flexible variety of choices
possible. The following represents the choices and options which the Board
believes should be available to it at this time.
Dividends. A preference in respect of earnings shall be accorded to
holders of a class or series of preferred stock. The Board may identify any
class or series of preferred stock as junior or senior to any other class or
series, whether issued before or after the class or series named, in terms of
the class' or series' priority in receiving dividends. Dividends may be
expressed as a specified dollar amount or percentage of par, stated or
liquidation value and must be declared and paid or set aside before any
dividends are permitted to be paid on a junior security (such as common stock).
This preference will typically be denominated "cumulative," "cumulative if
earned" or "non-cumulative."
If the preference is cumulative, no dividends may be paid on the
common stock or any other junior equity shares, until all previously accrued but
unpaid dividends on preferred shares have been paid or provided for, regardless
of whether the preferred dividends could legally have been paid in prior
periods. Accordingly, if the preferred dividend is passed in one or more
periods, such dividend or dividends must be "made up" before any dividends may
be declared and paid on the common stock, i.e. the Board provides that the
preferred dividend is to be cumulative if earned, the preferred dividend will
accrue for a particular period only if the corporation's earnings for that
period equaled or exceeded the amount of the dividend.
1
<PAGE>
If the preferred dividend is non-cumulative, the declaration and
payment thereof is within the discretion of the board of directors. Accordingly,
when a non-cumulative dividend is passed, the holders of preferred stock have no
claim for its subsequent payment prior to the making of any distribution on the
common stock.
There shall be no penalty imposed on the corporation for the failure
to pay preferred dividends at the stated rate when due. The Board may make
provision for an increase in the stated dividend rate for all periods subsequent
to the failure to pay the prescribed dividend; the rate may or may not revert to
the previous stated rate upon curing of the arrearage.
The preferential claim in respect of the earnings of the corporation
is normally limited to the stated preference. The Board may allow for a class or
series to participate in respect of the earnings of the corporation in addition
to the stated preference. Such preferred series shall be referred to as
"participating preferred stock." If it is to be participating, the preferred
stock may be given the right to participate share for share in any dividends on
the common stock. Alternatively, it may be granted a further participation,
either on a per share basis (which may be limited as to amount) or as a class
(based upon a stated percentage of any further dividends declared during the
applicable period), only after a designated amount has first been paid on the
common stock. If the preferred stock is callable or redeemable at the option of
the corporation, the Board should, in order to protect the right of
participation of the preferred stock, consider making the shares convertible
into the common stock. In addition, the Board should consider a provision that,
in the event of a stock dividend on, or subdivision or combination of, the
common stock with which the preferred stock participates, an appropriate
adjustment be made in the rate of participation of the class or series of
preferred stock so that the holders of the preferred stock maintain the same
relative economic position as they enjoyed prior to the change in
capitalization.
Generally, dividends on preferred stock will be payable in cash.
However, the Board may consider and issue shares of "pay-in-kind" or "PIK"
preferred that require or permit the Corporation to pay dividends in the form of
additional shares of the Corporation's equity securities. Alternatively, the
Board may also consider and may issue "accreting" preferred stock pursuant to
which accrued dividends are added to the liquidation preference and paid upon
redemption or maturity. Any variations of these features may be adopted, for
example, the PIK or accretion feature may apply only for an initial designated
period after issuance of the preferred stock or the Board may elect to adopt
such a provision for payment after a designated period has elapsed.
Liquidation Preference. Unless the Board shall otherwise determine
with regard to a class or series of stock, preferred stock shall be entitled to
a preference (after satisfaction of creditor's claims) in respect of the
distribution of the assets of the corporation
2
<PAGE>
in the event of its voluntary or involuntary liquidation, dissolution or winding
up. This liquidation preference shall be a specified dollar amount per share,
which is generally equal to the issue price per share, and which need not bear
any relationship to the par or stated value per share. In the absence of such a
specification, however, the liquidation preference shall be equal to such par or
stated value. If, following satisfaction of the claims of creditors, the assets
of the corporation (or the proceeds thereof) are insufficient to satisfy the
liquidation preference in full, such assets will be distributed ratably among
the holders of the preferred stock in accordance with their respective
interests. In addition, if the preferred stock is cumulative, the holders will
receive, in addition to the specified liquidation preference, all accrued and
unpaid dividends before any distributions are made to holders of the common
stock or any other junior stock.
As in the case of dividends, participation beyond the stated
liquidation preference may be provided for by the Board. If the preferred stock
is to participate beyond the stated liquidation preference, protection of the
right to participate would involve the considerations expressed above with
respect to protection of the relative economic position of holders.
Redemption. At the election of the Board, a class or series of
preferred stock may be callable or redeemable, in whole or in part, at the
option of the Corporation, automatically upon the happening of a specified event
or at the option of the holder, at such times, at such prices and upon such
other terms and conditions as are provided by the Board of Directors. The Board
may choose, whether or not stated at, prior to or after the date of issue, to
arrange to make a payment in kind of the Corporation's common stock in payment
of the redemption value, or it may choose to allow the holders of shares to
elect to take payment in kind as opposed to any other method of payment provided
for, as payment of the redemption value.
Upon redemption, the rights of a holder of preferred stock as a
shareholder of the corporation cease to exist. Accordingly, the Board will
provide for adequate notice of redemption. This is particularly important if the
preferred stock is convertible, so that a shareholder will have an adequate
opportunity to determine whether to convert or surrender its shares for
redemption. Upon payment or irrevocable deposit by the corporation of a sum
sufficient to redeem on the redemption date the shares called for redemption,
the shares are no longer deemed to be outstanding. Such shares will revert to
the status of authorized and unissued stock or treasury stock, and in either
case become available for future issuances unless otherwise provided by the
Board.
(a) Sinking Fund or Mandatory Redemption. The Board may choose to
provide for an obligatory redemption of the preferred stock by a designated
future date, and may provide for the redemption of the entire class or series of
preferred stock on a particular date, or may provide that the redemption of all
or part of the issue is to be spread
3
<PAGE>
over a period of years pursuant to a "sinking fund" or mandatory redemption
provision. In either event, the redemption price may be the issue price or
liquidation preference per share, plus all accrued but unpaid dividends.
The Board will determine when the sinking fund comes into operation
after issuance of the preferred stock. The annual sinking fund obligation may be
reduced by shares previously purchased or acquired by the Corporation (e.g.,
pursuant to the exercise of an optional redemption right or a private repurchase
or, if the Corporation's shares are publicly traded, in the open market) and, if
the class or series of preferred stock is convertible, by shares of the same
class or series previously converted into common stock. The selection of shares
for redemption pursuant to the sinking fund shall be pro rata among all holders
thereof or by lot so as to ensure fair treatment of all shareholders.
(b) Optional Redemption by Corporation. The Board may choose a
provision for optional redemption which allows, but does not require, the
Corporation to redeem all or a portion of an outstanding class or series of
preferred stock during a designated period or periods. The Board may provide for
a redemption premium - an amount above the issue price of the preferred stock
being redeemed - at which the optional redemption is to be consummated. This
redemption premium may be fixed, or may be higher in the early years; in which
the redemption right may be exercised and decline to zero over several years, or
it may be decided upon by the Board of Directors at the time it decides to call
or redeem the shares..
If the class or series which has an option to redeem is convertible
preferred stock, then sufficient notice of the intention to redeem to allow the
investor to choose whether to convert prior to redemption, will be provided.
The Board may determine that payment under any of the foregoing
redemption schemes should be accomplished by delivery to the holders of the
class or series to be redeemed, of the Corporation's equity securities, similar
to the PIK payment of dividends described above.
Conversion. The Board may provide that a class or series of
preferred stock is convertible into another class of stock at the option of the
holder or automatically upon the happening of a specified event, such as the
effectiveness under the Securities Act of 1933 of a registration statement
covering the initial public offering of the corporation's common stock.
A right of conversion may entitle the holder to surrender the
preferred stock (generally valued at its issue price or liquidation preference,
without accrued dividends) in exchange for shares of common stock at a price,
denominated as the conversion price, determined by the Board. The Board will
establish mechanics to be followed to exercise
4
<PAGE>
the conversion right, to provide written notice to the Corporation of a holder's
election to convert and surrender certificates evidencing the shares to be
converted together with any required documentation prior to the expiration of
the conversion period, and shall specify when conversion is deemed to be
effective. The holder of convertible preferred stock will be deemed to be a
holder of the common stock as of the date of the surrender of the convertible
preferred stock, together with all other necessary documentation.
The Corporation will ensure that a sufficient number of authorized
but unissued shares of common stock are reserved for issuance upon conversion.
Protection of the Conversion Right-Anti-Dilution Provisions. Since
the terms of a convertible preferred stock class or series, if issued, will
provide the holder with the right to acquire a specified number of shares of
common stock at a designated price, unless the Board decides to provide to the
contrary, certain actions taken by the Corporation (such as a change in
capitalization) which affect the number of shares of common stock outstanding or
to be outstanding would affect the value of the conversion right-decreasing or
"diluting" it if the number of outstanding common shares is increased, and
rendering it more valuable if the number of outstanding common shares is
decreased. Therefore the Board should include "anti-dilution" provisions in
order to ensure that the value of the conversion right will not be affected by
such actions. Briefly stated, the anti-dilution should provide for adjustment in
the amount of securities to be issued upon conversion of the convertible
security. . . in order to compensate for certain changes affecting the security
. . . into which it is convertible. The determination of the changes affecting
the security which will trigger an adjustment is a matter to be resolved in each
case by the Board.
Typically, anti-dilution provisions call for adjustments in the
conversion price (and thus the number of shares of common stock issuable upon
conversion) in a number of circumstances. An anti-dilution clause which provides
for an adjustment in the conversion price in the event of certain "structural"
changes in the underlying common stock, such as stock splits, dividends or
combinations of the outstanding shares, should be considered by the Board for
inclusion.
5
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
EMPIRE CAPITAL CORPORATION
EMPIRE CAPITAL CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST, that the Board of Directors of said corporation, at a meeting duly
convened and held, adopted the following resolutions:
RESOLVE D, that the Board of Directors hereby declares it advisable and in
the best interest of the Corporation that Article First of the Certificate of
Incorporation be amended to read as follows:
FIRST: The name of the corporation shall be:
INTERFUND RESOURCES LTD.
and it was further
RESOLVED, that the Board of Directors hereby declares it advisable and in
the best interest of the Corporation that Article Fourth of the Certificate of
Incorporation be amended to read as follows:
FOURTH: The total number of shares of stock which this corporation is
authorized to issue is:
"Twenty-nine Million (29,000,000) shares of which Twenty-five
Million (25,000,000) shares with a par value of one mil
($.001) each, are common stock and Four Million (4,000,000)
shares with a par value of one mil ($.001) each, are
non-voting preferred stock."
and it was further
1
<PAGE>
"Each six shares of common stock, .001 par value, issued and outstanding as of
July 15, 1992 ("Old Common Stock") shall be changed and re-classified into one
fully paid and non- assumable share of common stock, with .006 par value ("New
Common Stock"). The Capital account of the Corporation shall not be increased or
decreased by such change and reclassification. To reflect the said change and
reclassification each certificate representing Old Common Stock ("Old Common
Stock Certificate") shall represent one-sixth the number of shares of New Common
Stock. The holder of record of the Old Common Stock Certificate shall be
entitled to receive a new certificate representing the New Common Stock equal to
one-sixth the number of shares of the Old Common Stock Certificate."
SECOND, that the said amendment has been consented to and authorized by the
holders of a majority of the issued and Outstanding stock entitled to vote by
written consent given in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
THIRD, that the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Alan P. Brooks, its President and attested to by Cindy Passero, its
secretary this 12th day of July, 1998
/s/ Alan P. Brooks
--------------------------
Alan P. Brooks, President
Attested to:
/s/ Cindy Passero
- --------------------------------
Cindy Passero, Secretary
2
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTERFUND RESOURCES LTD.
INTERFUND RESOURCES LTD., a corporation organized and existing under and
by virtue of the general corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
convened and held, adopted the following resolution:
RESOLVED, that the Board of Directors hereby declares it advisable and in
the best interest of the Company that Article FIRST of the Certificate of
Incorporation be amended to read as follows;
FIRST: The name of this corporation shall be:
INTERACTIVE TECHNOLOGIES.COM, LTD.
SECOND, That the said amendment has been consented to and authorized by
the holders of a majority of the issued and outstanding stock entitled to vote
by written consent given in accordance with the provisions of Section 228 of the
General corporation Law of the State of Delaware.
THIRD, That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the general Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, SAID CORPORATION HAS caused this Certificate to be
signed by Alan P. Brooks, its President and attested C.A. Passero, its
Secretary, this 1st day of March, A.D. 1999.
/s/ Alan P. Brooks Attested by: /s/ Cindy Passero
- -------------------------------- -------------------------
President Secretary
1
Exhibit 2.2
BY-LAWS
of
INTERACTIVE TECHNOLOGIES.COM, LTD.
a Delaware Corporation (the "Corporation")
ARTICLE I - OFFICES
Section 1.1. Location. The address of the registered office of the
Corporation in the State of Delaware and the name of the registered agent at
such address, if any, shall be as specified in the Certificate of Incorporation
or, if subsequently changed, as specified in the most recent certificate of
change filed pursuant to law. The Corporation may also have other offices at
such places within or without the State of Delaware as the Board of Directors
may from time to time designate or the business of the Corporation may require.
Section 1.2. Change of Location. In the manner permitted by law, the
Board of Directors may change the address of the Corporation's registered office
in the State of Delaware and the Board of Directors may make, revoke or change
the designation of the registered agent.
ARTICLE II - SHAREHOLDERS
Section 2.1 Place of Meetings. Meeting of shareholders shall be held
at the principal office of the Corporation or at such place within or without
the State of Delaware as the Board of Directors shall authorize.
Section 2.2 Annual Meeting. The annual meeting of shareholders shall
be held each year on a date and at a time to be selected by the President or the
Board of Directors at least 30 days before such meeting or, in the event the
President or the Board of Directors shall not make such selection at least 30
days prior to the following indicated date, at 10:00 A.M. on the last Friday in
September of each year (if not a legal holiday, and if a legal holiday, then on
the next business day), at such place within or without the State of Delaware as
shall be stated in the notice of meeting. At such meeting, or at any special
meeting in lieu of the annual meeting, the shareholders shall elect a Board of
Directors and transact such
<PAGE>
other business as may properly be brought before the meeting.
The notice of the meeting shall be in writing and signed by the
President or a Vice President or the Secretary or an Assistant Secretary. Such
notice shall state the purpose or purposes for which the meeting is called and
the time when and the place within or without the State where such meeting is to
be held, and a copy thereof shall be served, either personally or by mail upon
each shareholder of record entitled to vote at such meeting, and upon each
shareholder of record, who, by reason of any action proposed at such meeting,
would be entitled to have his stock appraised if such action were taken, not
less than ten or more than fifty days before the meeting. If mailed, it shall be
directed to a shareholder at his address as it appears on the stock book unless
he shall have filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which case it shall
be mailed to the address designated in such request.
Section 2.3 Special Meetings. Special meetings of the shareholders
may be called at any time by the Chairman of the Board, by the President and by
the President or the Secretary at the request in writing of either (a) a
majority of the Board of Directors, or (b) shareholders owning a majority in
amount of the shares issued and outstanding. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at a special
meeting shall be confined to the purposes stated in the notice.
Section 2.4. List of Shareholders Entitled to Vote. The officer who
has charge of the stock ledger of the Corporation shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
shareholders, a complete list, based upon the record date for such meeting
determined pursuant to Section 5.8, of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if such place shall not be so specified, at the place where said
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
The stock ledger shall be the only evidence as to who are the
shareholders entitled (i) to examine the stock ledger, the list of shareholders
entitled to vote at any meeting, or the books of the Corporation, or (ii) to
vote in person or by proxy at any meeting of shareholders.
2
<PAGE>
Section 2.5. Notice of Meetings. Written notice of each annual and
special meeting of shareholders, other than any meeting the giving of notice of
which is otherwise prescribed by law, stating the place, date and hour of the
meeting, and, in the case of a special meeting, indicating the purpose or
purposes thereof and that it is being issued by or at the direction of the
person or persons calling the meeting, shall be delivered or mailed in writing
at least ten but not more than sixty days before such meeting, to each
shareholder required or permitted to take any action or entitled to vote
thereat. If mailed, such notice shall be deposited in the United States mail,
postage prepaid, directed to such shareholder at his address as the same appears
on the records of the Corporation. An affidavit of the Secretary, an Assistant
Secretary or the transfer agent of the Corporation that notice has been given by
mail shall be evidence of the facts stated therein.
Section 2.6. Adjourned Meetings and Notice Thereof. Any meeting of
shareholders may be adjourned to another time or place, and the Corporation may
transact at any adjourned meeting any business which might have been transacted
at the original meeting. Notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken, unless (a) any adjournment or series of adjournments cause the
original meeting to be adjourned for more than thirty days after the date
originally fixed therefor, or (b) a new record date is fixed for the adjourned
meeting. If notice of any adjourned meeting is given, such notice shall be given
to each shareholder of record entitled to vote at the adjourned meeting in the
manner prescribed in Section 2.5 for giving of notice of meetings.
Section 2.7. Quorum. At any meeting of shareholders, except as
otherwise expressly required by law, or by the Certificate of Incorporation, the
holders of record of at least a majority of the outstanding Capital Shares
entitled to vote or act at such meetings shall be present or represented by
proxy in order to constitute a quorum for the transaction of any business, but
less than a quorum shall have power to adjourn any meeting unless a quorum shall
be present. When a quorum is once present to organize a meeting, the quorum
cannot be destroyed by the subsequent withdrawal or revocation of the proxy of
any shareholder. Capital shares owned by the Corporation or by another
corporation, if a majority of its shares entitled to vote in the election of
directors is held by the Corporation, shall not be counted for quorum purposes
or entitled to vote.
Section 2.8. Voting. At any meeting of shareholders each shareholder
holding, as of the record date, shares entitled to be voted on any matter at
such meeting shall have one vote on each such matter submitted to vote at such
meeting for each such share held by such shareholder as of the record date as
shown by the list of shareholders entitled to vote at the meeting, unless the
Certificate of Incorporation provides for more or less than one vote for any
share on any matter, in which case every reference to a required
3
<PAGE>
proportion of shares shall refer to the proportion of the votes of such shares.
Each shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, provided that no
proxy shall be voted or acted upon after eleven months from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only so long as, it is coupled
with an interest, whether in the shares themselves or in the Corporation,
sufficient in law to support an irrevocable power.
Section 2.9 Waivers of Notice of Meetings. Notice of meeting need
not be given to any shareholder who signs a waiver of notice, in person or by
proxy, whether before or after the meeting. The attendance of any shareholder at
a meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by him.
Section 2.10. Action by Consent of Shareholders. Unless otherwise
provided in the Certificate of Incorporation, whenever any action by the
shareholders at a meeting thereof is required or permitted by law, the
Certificate of Incorporation, or these By-Laws, such action may be taken without
a meeting, without prior notice and without a vote if a consent in writing,
setting forth the action so taken, shall be signed by the holders of all the
outstanding shares entitled to vote thereon.
ARTICLE III - BOARD OF DIRECTORS
Section 3.1. General Powers. The property, business and affairs of
the Corporation shall be managed by the Board of Directors. The Board of
Directors may exercise all such powers of the Corporation and have such
authority and do all such lawful acts and things as are permitted by law, the
Certificate of Incorporation or these By-Laws.
Section 3.2. Number of Directors. The Board of Directors of the
Corporation shall consist of at least three and not more than seven members,
provided, however, that when all of the issued and outstanding shares of the
Corporation's capital stock are owned by less than three shareholders, the
number of directors may be less than three but not less than the number of
shareholders. Subject to the foregoing limitations, the number of directors
constituting the entire Board of Directors, to serve until the next annual
meeting of shareholders, shall be such number as shall be designated by
resolution of the Board of
4
<PAGE>
Directors adopted prior to the annual meeting of shareholders. In the absence of
such resolution, the number of directors to be elected at such annual meeting
shall be the number last fixed by the directors.
Section 3.3. Qualification. Directors must be at least eighteen
years of age, but need not be shareholders of the Corporation.
Section 3.4. Election. Except as otherwise provided by law, the
Certificate of Incorporation, or these By-Laws, after the first meeting of the
Corporation at which directors are elected, directors of the Corporation shall
be elected in each year at the annual meeting of shareholders, or at a special
meeting in lieu of the annual meeting called for such purpose, by a plurality of
votes cast at such meeting. The voting on directors at any such meeting need not
be written ballot.
Section 3.5. Term. Each director shall hold office until the
expiration of the term for which he is elected and until his successor has been
elected and qualified, or until his prior resignation or removal.
Section 3.6. Resignation and Removal. Any director may resign at any
time upon written notice to the Board of Directors, the President or the
Secretary. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice, and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any or all of the directors may be removed
for cause by vote of the shareholders or by action of the Board of Directors.
Directors may be removed without cause only by vote of the shareholders.
Section 3.7. Vacancies. Vacancies in the Board of Directors (unless
the vacancy be caused by the removal of a director without cause) and newly
created directorships resulting from any increase in the authorized number of
directors shall be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director. A vacancy caused by the
removal of a director without cause shall be filled by a vote of the holders of
a majority of the shares entitled to vote for the election of directors.
If one or more directors shall resign from the Board of Directors
effective at a future date, a majority of the directors then in office,
including those who have so resigned at a future date, shall have power to fill
such vacancy or vacancies, the vote
5
<PAGE>
thereon to take effect and the vacancy to be filled when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section for the filling of other vacancies.
Each director chosen to fill a vacancy on the Board of Directors
shall hold office until the next annual election of directors and until his
successor shall be elected and qualified.
Section 3.8. Quorum and Voting. Unless the Certificate of
Incorporation provides otherwise, at all meetings of the Board of Directors a
majority of the total number of directors (but not less than one-third of the
total number of directors) shall be present to constitute a quorum for the
transaction of business. A director interested in a contract or transaction may
be counted in determining the presence of a quorum at a meeting of the Board of
Directors which authorizes the contract or transaction. In the absence of a
quorum, a majority of the directors present may adjourn the meeting until a
quorum shall be present.
Unless the Certificate of Incorporation provides otherwise, members
of the Board of Directors or any committee designated by the Board of Directors
may participate in a meeting of the Board of Directors or such committee by
means of conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at such meeting
for all purposes.
The vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors unless the
Certificate of Incorporation or these By-Laws shall require a vote of a greater
number.
Section 3.9. Regulations. The Board of Directors may adopt such
rules and regulations for the conduct of the business and management of the
Corporation, not inconsistent with law or the Certificate of Incorporation or
these By-Laws, as the Board of Directors may deem proper. The Board of Directors
may hold its meetings and cause the books and records of the Corporation to be
kept at such place or places within or without the State of Delaware as the
Board of Directors may from time to time determine. The Corporation shall keep
at its registered office in the State of Delaware a record containing the names
and addresses of all shareholders of the Corporation, the number and class of
shares held by each shareholder, and the dates when they respectively became the
owners of record. A member of the Board of Directors shall, in the performance
of his duties, be fully protected in relying in good faith upon the books of
account or reports made to the Corporation by any of its officers, by an
independent certified public accountant, or by an
6
<PAGE>
appraiser selected with reasonable care by the Board of Directors or any
committee of the Board of Directors or in relying in good faith upon other
records of the Corporation.
Section 3.10. Annual Meeting of Board of Directors. An annual
meeting of the Board of Directors shall be called and held for the purpose of
organization, election of officers and transaction of any other business. If
such meeting is held promptly after and at the place specified for the annual
meeting of shareholders, no notice of the annual meeting of the Board of
Directors need by given. Otherwise such annual meeting shall be held at such
time (not more than thirty days after the annual meeting of shareholders) and
place as may be specified in a notice of the meeting.
Section 3.11. Regular Meetings. Regular meetings of the Board of
Directors shall be held at the time and place, within or without the State of
Delaware, as shall from time to time be determined by the Board of Directors.
After there has been such determination and notice thereof has been given to
each member of the Board of Directors, no further notice shall be required for
any such regular meeting. Except as otherwise provided by law, any business may
be transacted at any regular meeting.
Section 3.12. Special Meetings. Special meetings of the Board of
Directors may, unless otherwise prescribed by law, be called from time to time
by the Chairman of the Board or the President, and shall be called by the
President or Secretary upon the written request of a majority of the whole Board
of Directors directed to the President or the Secretary. Except as provided
below, notice of any special meeting of the Board of Directors, stating the time
when and place where such special meeting shall be held, shall be given to each
director.
Section 3.13. Notice of Meetings. Notice of any meeting of the Board
of Directors shall be deemed to be duly given to a director (i) if mailed to
such director, addressed to him at his address as it appears upon the books of
the Corporation, or at the address last made known in writing to the Corporation
by such director as the address to which such notices are to be sent, at least
two days before the day on which such special meeting is to be held, or (ii) if
sent to him at such address by telegram, mailgram, cable, overnight courier,
e.g., Federal Express, radio or wireless not later than the day before the day
on which such meeting is to be held, or (iii) if delivered to him personally or
orally, by telephone or otherwise, not later than the day before the day on
which such special meeting is to be held. Each notice shall state the time and
place of the meeting.
Section 3.14. Committees of Directors. The Board of Directors may,
by
7
<PAGE>
resolution or resolutions passed by a majority of the whole Board of Directors,
designate one or more committees, each committee to consist of three or more of
the directors of the Corporation.
Except as herein provided, vacancies in membership of any committee
shall be filled by the vote of a majority of the whole Board of Directors. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of any member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Members of a
committee shall hold office for such period as may be fixed by a resolution
adopted by a majority of the whole Board of Directors, subject, however, to
removal at any time, with or without cause, by the vote of a majority of the
whole Board of Directors.
Section 3.15. Powers and Duties of Committees. Any committee, to the
extent provided in the resolution or resolutions creating such committee, shall
have and may exercise the powers of the Board of Directors in the management of
the business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it. No such committee
shall have any power or authority with regard to (a) any action that requires
shareholder approval, (b) filling of vacancies in the Board of Directors or in
any committee, (c) fixing of compensation of the directors for serving on the
Board or on any committee, (d) amending or repealing the By-Laws of the
Corporation, or adopting new By-Laws, and (e) amending or repealing any
resolution, which by its terms is not amendable or repealable. The Board of
Directors, by specific resolution, may grant to such committee the power and
authority to declare a dividend or authorize the issuance of stock.
Each committee may adopt its own rules of procedure and may meet at
stated times or on such notice as such committee may determine. Except as
otherwise permitted by these By-Laws, each committee shall keep regular minutes
of its proceedings and report the same to the Board of Directors when required.
Section 3.16. Compensation of Directors. The Board of Directors may
from time to time, in its discretion, fix the amounts which shall be payable to
directors and to members of any committee of the Board of Directors for
attendance at the meetings of the Board of Directors or of such committee and
for services rendered to the Corporation.
Section 3.17. Action Without Meeting. Unless otherwise restricted by
the
8
<PAGE>
Certificate of Incorporation, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if a written consent thereto is signed by all members of
the Board of Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
ARTICLE IV - OFFICERS
Section 4.1 Principal Officers. The principal officers of the
Corporation shall be elected by the Board of Directors and shall include a
President, a Secretary and a Treasurer and may, at the discretion of the Board
of Directors, also include one or more Vice Presidents, and a Controller. Except
as otherwise provided in the Certificate of Incorporation or these By-Laws, one
person may hold the offices and perform the duties of any two or more of said
principal offices except the offices and duties of President and Vice President
or of the President and Secretary.
Section 4.1 Election of Principal Officers; Term of Office. The
principal officers of the Corporation shall be elected annually by the Board of
Directors at each annual meeting of the Board of Directors. Failure to elect any
principal officer annually shall not result in or constitute grounds for the
dissolution of the Corporation.
If the Board of Directors shall fail to fill any principal office at
an annual meeting, or if any vacancy in any principal office shall occur, or if
any principal office shall be newly created, such principal office may be filled
at any regular or special meeting of the Board of Directors.
Each principal officer shall hold office for the term for which he
is elected and until his successor is duly elected or appointed, and qualified,
or until his earlier death, resignation or removal.
Section 4.3. Subordinate Officers, Agents and Employees. In addition
to the principal officers, the Corporation may have one or more Assistant
Treasurers, Assistant Secretaries and such other subordinate officers, agents
and employees as the Board of Directors may deem advisable, each of whom shall
hold office for such period and have such authority and perform such duties as
the Board of Directors, the Chairman of the Board, the President, or any officer
designated by the Board of Directors, may from time to time determine. The Board
of Directors at any time may appoint and remove, or may delegate to any
principal officer the power to appoint and remove, any subordinate officer,
9
<PAGE>
agent or employee of the Corporation.
Section 4.4. Delegation of Duties of Officers. The Board of
Directors may delegate the duties and powers of any officer of the Corporation
to any other officer or to any director for a specified period of time for any
reason that the Board of Directors may deem sufficient.
Section 4.5. Removal of Officers. Any officer of the Corporation may
be removed with or without cause by resolution adopted by a majority of the
directors then in office at any regular or special meeting of the Board of
Directors or by a written consent signed by all of the directors then in office.
Section 4.6. Resignations. Any officer may resign at any time by
giving written notice of resignation to the Board of Directors, to the President
or to the Secretary. Any such resignation shall take effect upon receipt of such
notice or at any later time specified in such notice. Unless otherwise specified
in the notice, the acceptance of a resignation shall not be necessary to make
the resignation effective.
Section 4.7. President. The President shall be the chief executive
of the Corporation and shall be responsible for implementing and executing the
plans and policies of the Corporation, as established from time to time by the
Board of Directors. In the absence of the Board's appointment of a different
person to serve as chief operating officer, the President shall also serve the
Corporation in such capacity, and shall be responsible for executing the plans
and policies of the Corporation, as established from time to time by the Board
of Directors. The President shall have all powers and duties usually incident to
the office of the President except as specifically limited by a resolution of
the Board of Directors. The President shall have such other powers and perform
such other duties as may be assigned to him from time to time by the Board of
Directors.
Section 4.8. Vice President. In the absence or disability of the
President or if the office of the President be vacant, the Vice Presidents in
the order determined by the Board of Directors, or if no such determination has
been made in the order of their seniority, shall perform the duties and exercise
the powers of the President, subject to the right of the Board of Directors at
any time to extend or confine such powers and duties or to assign them to
others. Any Vice President may have such additional designation in his title as
the Board of Directors may determine. The Vice Presidents shall generally assist
the President in such manner as the President shall direct. Each Vice President
shall have such other powers and perform such other duties as may be assigned to
him from time to time
10
<PAGE>
by the Board of Directors or the President.
Section 4.9. Secretary. The Secretary shall act as Secretary of all
meetings of shareholders and of the Board of Directors at which he is present,
shall record all the proceedings of all such meetings in a book to be kept for
that purpose, shall have supervision over the giving and service of notices of
the Corporation, and shall have supervision over the care and custody of the
corporate records and the corporate seal of the Corporation. The Secretary shall
be empowered to affix the corporate seal to documents, the execution of which on
behalf of the Corporation under its seal, is duly authorized, and when so
affixed may attest the same. The Secretary shall have all powers and duties
usually incident to the office of Secretary, except as specifically limited by a
resolution of the Board of Directors or the President.
Section 4.10. Treasurer. The Treasurer shall have general
supervision over the care and custody of the funds and over the receipts and
disbursements of the Corporation and shall cause the funds of the Corporation to
be deposited in the name of the Corporation in such banks or other depositories
as the Board of Directors may designate. The Treasurer shall have supervision
over the care and safekeeping of the securities of the Corporation. The
Treasurer shall have all powers and duties usually incident to the office of the
Treasurer except as specifically limited by a resolution of the Board of
Directors. The Treasurer shall have other powers and perform such other duties
as may be assigned to him from time to time by the Board of Directors or the
President.
Section 4.11. Controller. The Controller shall be the chief
accounting officer of the Corporation and shall have supervision over the
maintenance and custody of the accounting operations of the Corporation,
including the keeping of accurate accounts of all receipts and disbursements and
all other financial transactions. The Controller shall have all powers and
duties usually incident to the office of the Controller except as specifically
limited by a resolution of the Board of Directors. The Controller shall have
other powers and perform such other duties as may be assigned to him from time
to time by the Board of Directors or the President.
Section 4.12. Bond. The Board of Directors shall have power, to the
extent permitted by law, to require any officer, agent or employee of the
Corporation to give bond for the faithful discharge of his duties in such form
and with such surety or sureties as the Board of Directors may determine.
ARTICLE V - CAPITAL SHARES
11
<PAGE>
Section 5.1. Issuance of Certificates for Shares. Each shareholder
of the Corporation shall be entitled to a certificate or certificates in such
form as is prescribed by law and as shall be approved by the Board of Directors,
certifying the number of capital shares of the Corporation owned by such
shareholder.
Section 5.2. Signatures on Share Certificates. Certificates for
capital shares of the Corporation shall be signed by, or in the name of the
Corporation by, the Chairman of the Board, the President or a Vice President and
by the Secretary, the Treasurer, an Assistant Secretary or an Assistant
Treasurer and shall bear the corporate seal of the Corporation or a printed or
engraved facsimile thereof.
If any such certificates are countersigned by a transfer agent other
than the Corporation or its employee, or by a registrar other than the
Corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, such certificate may be issued by the Corporation with the same effect
as if such signer were such officer, transfer agent or registrar at the date of
issue.
Section 5.3. Stock Ledger. A record of all certificates for capital
shares issued by the Corporation shall be kept by the Secretary or any other
officer, employee or agent designated by the Board of Directors. Such record
shall show the name and address of the person, firm or corporation in which
certificates for capital shares are registered, the number of shares represented
by each such certificate, the date of each such certificate, and in case of
certificates which have been cancelled, the date of cancellation thereof.
The Corporation shall be entitled to treat the holder of record of
capital shares as shown on the stock ledger as the owner thereof and as the
person entitled to receive dividends thereon, to vote such shares and to receive
notice of meetings, and for all other purposes. The Corporation shall not be
bound to recognize any equitable or other claim to or interest in any capital
share on the part of any other person whether or not the Corporation shall have
express or other notice thereof.
Section 5.4. Regulations Relating to Transfer. The Board of
Directors may make such rules and regulations as it may deem expedient, not
inconsistent with law, the Certificate of Incorporation or these By-Laws,
concerning issuance, transfer and registration of certificates for capital
shares of the Corporation. The Board of Directors may appoint, or authorize any
principal officer to appoint, one or more transfer clerks or one or more
12
<PAGE>
transfer agents and one or more registrars and may require all certificates for
capital shares to bear the signature or signatures of any of them.
Section 5.5. Transfers. Transfer of capital shares shall be made on
the books of the Corporation only upon delivery to the Corporation or its
transfer agent of (i) a written direction of the registered holder named in the
certificate or such holder's attorney lawfully constituted in writing, (ii) the
certificate for the capital shares being transferred, and (iii) a written
assignment of the capital shares evidenced thereby.
Section 5.6. Cancellation. Each certificate for capital shares
surrendered to the Corporation for exchange or transfer shall be cancelled and
no new certificate or certificates shall be issued in exchange for any existing
certificate (other than pursuant to Section 5.7) until such existing certificate
shall have been cancelled.
Section 5.7. Lost, Destroyed, Stolen, and Mutilated Certificates. In
the event that any certificate for capital shares of the Corporation shall be
mutilated the Corporation shall issue a new certificate in place of such
mutilated certificate. In case any such certificate shall be lost, stolen, or
destroyed the Corporation may, in the discretion of the Board of Directors or a
committee designated thereby with power so to act, issue a new certificate for
capital shares in the place of any such lost, stolen or destroyed certificate.
The applicant for any substituted certificate or certificates shall surrender
any mutilated certificate or, in the case of any lost, stolen or destroyed
certificate, furnish satisfactory proof of such loss, theft or destruction of
such certificate and of the ownership thereof. The Board of Directors or such
committee may, in its discretion, require the owner of a lost, stolen or
destroyed certificate, or his representatives, to furnish to the Corporation a
bond with an acceptable surety or sureties and in such sum as will be sufficient
to indemnify the Corporation against any claim that may be made against it on
account of the lost, stolen or destroyed certificate or the issuance of such new
certificate. A new certificate may be issued without requiring a bond when, in
the judgment of the Board of Directors, it is proper to do so.
Section 5.8. Fixing of Record Dates. (a) The Board of Directors may
fix, in advance, a record date, which shall not be more than sixty nor less than
ten days before the date of any meeting of shareholders, nor more than sixty
days prior to any other action, for the purpose of determining shareholders
entitled to notice of or to vote at such meeting of shareholders or any
adjournment thereof, or to express consent or dissent to corporate action in
writing without a meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any rights in respect of
any change,
13
<PAGE>
conversion or exchange of shares or for the purpose of any other lawful action.
(b) If no record date is fixed by the Board of Directors:
(i) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the date next preceding the day on which notice is given, or if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held;
(ii) The record date for determining shareholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution or consents to the action relating thereto.
(c) A determination of shareholders of record entitled to notice of
or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE VI - DIVIDENDS
Subject to the provisions of the certificate of incorporation and to
applicable law, dividends on the outstanding shares of the Corporation may be
declared in such amounts and at such time or times as the Board of Directors may
determine.Before payment of any dividend, there may be set aside out of the net
profits of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time in its absolute discretion deems proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Board of Directors shall think conducive to the interests of the
Corporation, and the Board of Directors may modify or abolish any such reserve.
ARTICLE VII - INDEMNIFICATION
Section 7.1. Indemnification of Directors, Officers and Employees.
The Corporation shall indemnify to the full extent authorized by law any person
made or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
such person or such person's testator or intestate is or was a director, officer
or employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director, officer or employee. For
purposes of this By-law, the term "other enterprise" shall include any
corporation, partnership, joint venture, trust or employee benefit plan; service
"at the
14
<PAGE>
request of the Corporation" shall include service as a director, officer
or employee of the Corporation which imposes duties on, or involves services by,
such director, officer or employee with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifyable
expenses; and action by a person with respect to an employee benefit plan which
such person reasonably believes to be in the interest of the participants and
beneficiaries of such plan shall be deemed to be action not opposed to the best
interests of the Corporation.
Section 7.2 Advance Payments. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article VII. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 7.3 Non-Exclusivity. The indemnification provided by this
Article VII shall not be deemed exclusive of any rights to which those seeking
indemnification may be entitled under any By-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall continue as 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 person.
Section 7.4 Reliance on Provisions. Each person who shall act as a
director, officer, employee or agent of the Corporation shall be deemed to be
doing so in reliance upon the rights of indemnification provided by this Article
VII.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
Section 8.1. Corporate Seal. The Corporation's seal shall be
inscribed with the name of the Corporation, the year of its incorporation, and
the words "Delaware." The seal may be used by causing it or a facsimile to be
impressed or reproduced on a document or instrument, or affixed to a document or
instrument.
Section 8.2. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January of each year.
15
<PAGE>
Section 8.3. Waiver of Notice. Whenever any notice is required to be
given under any provision of law, the Certificate of Incorporation, or these
By-Laws, a written waiver thereof, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the shareholders, directors, or members of
a committee of directors need be specified in any written waiver of notice
unless so required by the Certificate of Incorporation.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Section 8.4. Execution of Instruments, Contracts, etc. All checks,
drafts, bills of exchange, notes or other obligations or orders for the payment
of money shall be signed in the name of the Corporation by such officer or
officers or person or persons, as the Board of Directors may from time to time
designate.
Except as otherwise provided by law, the Board of Directors, any
committee given specific authority in the premises by the Board of Directors, or
any committee given authority to exercise generally the powers of the Board of
Directors during the intervals between meetings of the Board of Directors, may
authorize any officer, employee or agent, in the name of and on behalf of the
Corporation, to enter into or execute and deliver deeds, bonds, mortgages,
contracts and other obligations or instruments, and such authority may be
general or confined to specific instances.
All applications, written instruments and papers required by any
department of the United States Government or by any state, county, municipal or
other governmental authority, may be executed in the name of the Corporation by
any principal officer or subordinate officer of the Corporation, or, to the
extent designated for such purpose from time to time by the Board of Directors,
by an employee or agent of the Corporation. Such designation may contain the
power to substitute, in the discretion of the person named, one or more other
persons.
ARTICLE IX - AMENDMENTS
Section 9.1. By Shareholders. These By-Laws may be altered, amended,
repealed or added to, or new By-Laws may be adopted by the affirmative vote of
the
16
<PAGE>
holders of not less than a majority of the outstanding shares entitled to
vote for the election of any director at an annual meeting or at a special
meeting called for that purpose, provided, however, that a written notice shall
have been sent to each shareholder of record entitled to vote at such meeting,
in conformity with the requisites of Section 2.5 hereof, which notice shall
state the alterations, amendments, additions or changes which are proposed to be
made in such By-Laws.
Section 9.2. By Directors. To the extent permitted by the
Certificate of Incorporation, these By-Laws may be amended, added to, altered or
repealed, or new By-laws may be adopted at any regular or special meeting of the
Board of Directors by a resolution adopted by affirmative vote of a majority of
the whole Board of Directors; provided, however, that:
(a) any By-law adopted by the Board of Directors may be
altered, amended or repealed by majority vote of the shareholders entitled to
vote for the election of directors; and
(b) if any By-law regulating an impending election of
directors is adopted, amended or repealed by the Board of Directors, there shall
be set forth in the notice of the next meeting of shareholders for the election
of directors the by-law so adopted, amended or repealed, together with a concise
statement of the changes made.
17
Exhibit 3.1
NUMBER SHARES
INTERACTIVE TECHNOLOGIES.COM, LTD.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS
C O M M O N S T O C K CUSIP 45837D 10 5
THIS CERTIFIES THAT:
is owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF $.001 PAR VALUE EACH OF
INTERACTIVE TECHNOLOGIES.COM LTD.
transferable on the books of the Corporation in person or by attorney upon
surrender of this certificate duly endorsed or assigned. This certificate and
the shares represented hereby are subject to the laws of the State of Delaware,
and to the Certificate of Incorporation and By-laws of the Corporation, as now
or hereafter amended.
This certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED: COUNTERSIGNED:
OLDE MONMOUTH STOCK TRANSFER CO., INC.
77 MEMORIAL PARKWAY, ATLANTIC HIGHLANDS, NJ 07716
TRANSFER AGENT
BY:
AUTHORIZED SIGNATURE
(Seal)
SECRETARY CHAIRMAN
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-______Custodian_______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants
in common Act__________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received,______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
______________________________________________________________________________
______________________________________________________________________________
_______________________________________________________________________ Shares
of the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated____________________
_________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE PAGE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER
THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER, UPON REQUEST AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND
LIMITATIONS OF THE SHARES OF EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, SO
FAR AS THE SAME HAVE BEEN DETERMINED, AND OF THE AUTHORITY, IF ANY, OF THE BOARD
TO DIVIDE THE SHARES INTO CLASSES OR SERIES AND TO DETERMINE AND CHANGE THE
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ANY CLASS OR SERIES. SUCH
REQUEST MAY BE MADE TO THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT
NAMED ON THIS CERTIFICATE.
THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE
FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST
COMPANY OR A MEMBER FIRM OF A NATIONAL OR REGIONAL OR OTHER RECOGNIZED STOCK
EXCHANGE IN CONFORMANCE WITH A SIGNATURE GUARANTEE MEDALLION PROGRAM.
Exhibit 3.2
INTERACTIVE TECHNOLOGIES.COM, LTD.
LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to further
the interests of Interactive Technologies.com, Ltd., a Delaware corporation (the
"Company"), its subsidiaries and its shareholders by providing incentives in the
form of grants of stock options, stock appreciation rights and restricted stock
to key employees and other persons who contribute materially to the success and
profitability of the Company. The grants will recognize and reward outstanding
individual performances and contributions and will give such persons a
proprietary interest in the Company, thus enhancing their personal interest in
the Company's continued success and progress. This program will also assist the
Company and its subsidiaries in attracting and retaining key persons.
2. Definitions. The following definitions shall apply to this Plan:
(a) "Award" means, individually or collectively, a grant under the Plan of
a Nonqualified Stock Option, an Incentive Stock Option, a Stock Appreciation
Right, or Restricted Stock.
(b) "Board" means the board of directors of the Company.
(c) "Change of Control" occurs when (i) any person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
who is not currently a ten percent shareholder of the Company, becomes the
beneficial owner of forty percent or more of the total number of shares entitled
to vote in the election of directors of the Board, (ii) the Company is merged
into any other company or substantially all of its assets are acquired by any
other company, or (iii) three or more directors nominated by the Board to serve
as a director, each having agreed to serve in such capacity, fail to be elected
in a contested election of directors.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Stock Incentive Committee appointed by the
Board.
(f) "Common Stock" means the Common Stock, par value $.001 per share of
the Company, or such other class of shares or securities as to which the Plan
may be applicable pursuant to Section 10 herein.
(g) "Company" means Interactive Technologies.com, Ltd.
(h) "Date of Grant" means the date on which the Option, Restricted Stock
or SAR, whichever is applicable, is granted.
<PAGE>
(i) "Eligible Person" means any person who performs or has in the past
performed services for the Company or any direct or indirect partially or wholly
owned subsidiary thereof, whether as a director, officer, employee, consultant
or other independent contractor, and any person who performs services relating
to the Company in his or her capacity as an employee or independent contractor
of a corporation or other entity that provides services for the Company.
(j) "Employee" means any person employed on an hourly or salaried basis by
the Company or any parent or Subsidiary of the Company that now exists or
hereafter is organized or acquired by or acquires the Company.
(k) "Fair Market Value" means the fair market value of the Common Stock.
If the Common Stock is not publicly traded on the date as of which fair market
value is being determined, the Board shall determine the fair market value of
the Shares, using such factors as the Board considers relevant, such as the
price at which recent sales have been made, the book value of the Common Stock,
and the Company's current and projected earnings. If the Common Stock is
publicly traded on the date as of which fair market value is being determined,
the fair market value is the mean between the high and low sales prices of the
Common Stock as reported by The NASDAQ Stock Market on that date or, if the
Common Stock is listed on a stock exchange, the mean between the high and low
sales prices of the stock on that date, as reported in The Wall Street Journal.
If trading in the stock or a price quotation does not occur on the date as of
which fair market value is being determined, the next preceding date on which
the stock was traded or a price was quoted will determine the fair market value.
(l) "Incentive Stock Option" means a stock option granted pursuant to
either this Plan or any other plan of the Company that satisfies the
requirements of Section 422 of the Code and that entitles the Recipient to
purchase stock of the Company or in a corporation that at the time of grant of
the option was a parent or subsidiary of the Company or a predecessor
corporation of any such corporation.
(m) "Nonqualified Stock Option" means a stock option granted pursuant to
the Plan that is not an Incentive Stock Option and that entitles the Recipient
to purchase stock of the Company or in a corporation that at the time of grant
of the option was a parent or subsidiary of the Company or a predecessor
corporation of any such corporation.
(n) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted pursuant to the Plan.
(o) "Option Agreement" means a written agreement entered into between the
Company and a Recipient which sets out the terms and restrictions of an Option
Award granted to the Recipient.
(p) "Option Shareholder" shall mean an Employee who has exercised his or
her Option.
(q) "Option Shares" means Shares issued upon exercise of an Option.
2
<PAGE>
(r) "Period of Restriction" means the period beginning on the Date of
Grant of a Restricted Stock Award and ending on the date on which the Restricted
Stock Shares subject to such Award are released from all restrictions imposed
upon such Shares.
(s) "Plan" means this Long-Term Incentive Plan.
(t) "Recipient" means an individual who receives an Award.
(u) "Restricted Stock" means an Award granted to a Recipient pursuant to
Section 8 hereof.
(v) "Restricted Stock Agreement" means a written agreement entered into
between the Company and a Recipient which sets out the terms and restrictions of
a Restricted Stock Award granted to the Recipient.
(w) "SAR Agreement" means a written agreement entered into between the
Company and a Recipient which sets out the terms and restrictions of a SAR Award
granted to the Recipient.
(x) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.
(y) "Stock Appreciation Right" or "SAR" means an Award, designated as a
SAR, granted to a Recipient pursuant to Section 7 hereof.
(z) "Subsidiary" means any corporation 50 percent or more of the voting
securities of which are owned directly or indirectly by the Company at any time
during the existence of this Plan.
3. Administration. This Plan will be administered by the Committee. The
Committee has the exclusive power to select the Recipients of Awards pursuant to
this Plan, to establish the terms of the Awards granted to each Recipient, and
to make all other determinations necessary or advisable under the Plan. The
Committee has the sole and absolute discretion to determine whether the
performance of an Eligible Person warrants an Award under this Plan, and to
determine the size and type of the Award. The Committee has full and exclusive
power to construe and interpret this Plan, to prescribe, amend, and rescind
rules and regulations relating to this Plan, and to take all actions necessary
or advisable for the Plan's administration. The Committee, in the exercise of
its powers, may correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any Agreement, in the manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective. In
exercising this power, the Committee may retain counsel at the expense of the
Company. The Committee shall also have the power to determine the duration and
purposes of leaves of absence which may be granted to a Recipient without
constituting a termination of the Recipient's employment for purposes of the
Plan. Any determinations made by the Committee will be final and binding on all
persons. A member of the Committee will not be liable for performing any act or
making any determination in good faith.
3
<PAGE>
4. Shares Subject to Plan. Subject to the provisions of Section 10 of the Plan,
the maximum aggregate number of Shares that may be subject to Awards under the
Plan shall be 5,000,000. If an Award should expire or become unexercisable for
any reason without having been exercised, the unpurchased Shares that were
subject to such Award shall, unless the Plan has then terminated, be available
for other Awards under the Plan.
5. Eligibility. Any Eligible Person that the Committee in its sole discretion
designates is eligible to receive an Award under this Plan. The Committee's
grant of an Award to a Recipient in any year does not require the Committee to
grant an Award to such Recipient in any other year. Furthermore, the Committee
may grant different Awards to different Recipients and has full discretion to
choose whether to grant Awards to any Eligible Person. The Committee may
consider such factors as it deems pertinent in selecting Recipients and in
determining the types and sizes of their Awards, including, without limitation,
(i) the financial condition of the Company or its Subsidiaries; (ii) expected
profits for the current or future years; (iii) the contributions of a
prospective Recipient to the profitability and success of the Company or its
Subsidiaries; and (iv) the adequacy of the prospective Recipient's other
compensation. Recipients may include persons to whom stock, stock options, stock
appreciation rights, or other benefits previously were granted under this or
another plan of the Company or any Subsidiary, whether or not the previously
granted benefits have been fully exercised or vested. A Recipient's right, if
any, to continue to serve the Company and its Subsidiaries as an officer,
Employee, or otherwise will not be enlarged or otherwise affected by his
designation as a Recipient under this Plan, and such designation will not in any
way restrict the right of the Company or any Subsidiary, as the case may be, to
terminate at any time the employment or affiliation of any participant.
6. Options. Each Option granted to a Recipient under the Plan shall contain such
provisions as the Committee at the Date of Grant shall deem appropriate. Each
Option granted to a Recipient will satisfy the following requirements:
(a) Written Agreement. Each Option granted to a Recipient will be
evidenced by an Option Agreement. The terms of the Option Agreement need not be
identical for different Recipients. The Option Agreement shall include a
description of the substance of each of the requirements in this Section 6 with
respect to that particular Option.
(b) Number of Shares. Each Option Agreement shall specify the number of
Shares that may be purchased by exercise of the Option.
(c) Exercise Price. Except as provided in Section 6(l), the exercise price
of each Share subject to an Incentive Stock Option shall equal the exercise
price designated by the Committee on the Date of Grant, but shall not be less
than the Fair Market Value of the Share on the Incentive Stock Option's Date of
Grant. The exercise price of each Share subject to a Nonqualified Stock Option
shall equal the exercise price designated by the Committee on the Date of Grant.
(d) Duration of Option. Except as provided in Section 6(l), an Incentive
Stock Option granted to an Employee shall expire on the tenth anniversary of its
Date of Grant or, at such earlier date as is set by the Committee in
establishing the terms of the Incentive Stock
4
<PAGE>
Option at grant. Except as provided in Section 6(l), a Nonqualified Stock Option
granted to an Employee shall expire on the tenth anniversary of its Date of
Grant or, at such earlier or later date as is set by the Committee in
establishing the terms of the Nonqualified Stock Option at grant. If the
Recipient's employment with the Company terminates before the expiration date of
an Option granted to the Recipient, the Option shall expire on the earlier of
the date stated in this subsection or the date stated in following subsections
of this Section. Furthermore, expiration of an Option may be accelerated under
subsection (j) below.
(e) Vesting of Option. Each Option Agreement shall specify the vesting
schedule applicable to the Option. The Committee, in its sole and absolute
discretion, may accelerate the vesting of any Option at any time.
(f) Death. In the case of the death of a Recipient, an Incentive Stock
Option granted to the Recipient shall expire on the one-year anniversary of the
Recipient's death, or if earlier, the date specified in subsection (d) above.
During the one-year period following the Recipient's death, the Incentive Stock
Option may be exercised to the extent it could have been exercised at the time
the Recipient died, subject to any adjustment under Section 10 herein. In the
case of the death of a Recipient, a Nonqualified Stock Option granted to the
Recipient shall expire on the one-year anniversary of the Recipient's death, or
if earlier, the date specified in subsection (d) above, unless the Committee
sets an earlier or later expiration date in establishing the terms of the
Nonqualified Stock Option at grant or a later expiration date subsequent to the
Date of Grant but prior to the one-year anniversary of the Recipient's death.
During the period beginning on the date of the Recipient's death and ending on
the date the Nonqualified Stock Option expires, the Nonqualified Stock Option
may be exercised to the extent it could have been exercised at the time the
Recipient died, subject to any adjustment under Section 10 herein.
(g) Disability. In the case of the total and permanent disability of a
Recipient and a resulting termination of employment or affiliation with the
Company, an Incentive Stock Option granted to the Recipient shall expire on the
one-year anniversary of the Recipient's last day of employment, or, if earlier,
the date specified in subsection (d) above. During the one-year period following
the Recipient's termination of employment or affiliation by reason of
disability, the Incentive Stock Option may be exercised as to the number of
Shares for which it could have been exercised at the time the Recipient became
disabled, subject to any adjustments under Section 10 herein. In the case of the
total and permanent disability of a Recipient and a resulting termination of
employment or affiliation with the Company, a Nonqualified Stock Option granted
to the Recipient shall expire on the one-year anniversary of the Recipient's
last day of employment, or, if earlier, the date specified in subsection (d)
above, unless the Committee sets an earlier or later expiration date in
establishing the terms of the Nonqualified Stock Option at grant or a later
expiration date subsequent to the Date of Grant but prior to the one-year
anniversary of the Recipient's last day of employment or affiliation with the
Company. During the period beginning on the date of the Recipient's termination
of employment or affiliation by reason of disability and ending on the date the
Nonqualified Stock Option expires, the Nonqualified Stock Option may be
exercised as to the number of Shares for which it could have been exercised at
the time the Recipient became disabled, subject to any adjustments under Section
10 herein.
5
<PAGE>
(h) Retirement. If the Recipient's employment with the Company terminates
by reason of normal retirement under the Company's normal retirement policies,
an Incentive Stock Option granted to the Recipient will expire 90 days after the
last day of employment, or, if earlier, on the date specified in subsection (d)
above. During the 90-day period following the Recipient's normal retirement, the
Incentive Stock Option may be exercised as to the number of Shares for which it
could have been exercised on the retirement date, subject to any adjustment
under Section 10 herein. If the Recipient's employment with the Company
terminates by reason of normal retirement under the Company's normal retirement
policies, a Nonqualified Stock Option granted to the Recipient will expire 90
days after the last day of employment, or, if earlier, on the date specified in
subsection (d) above, unless the Committee sets an earlier or later expiration
date in establishing the terms of the Nonqualified Stock Option at grant or a
later expiration date subsequent to the Date of Grant but prior to the end of
the 90-day period following the Recipient's normal retirement. During the period
beginning on the date of the Recipient's normal retirement and ending on the
date the Nonqualified Stock Option expires, the Nonqualified Stock Option may be
exercised as to the number of Shares for which it could have been exercised on
the retirement date, subject to any adjustment under Section 10 herein.
(i) Termination of Service. If the Recipient ceases employment or
affiliation with the Company for any reason other than death, disability, or
retirement (as described above), an Option granted to the Recipient shall lapse
immediately following the last day that the Recipient is employed by or
affiliated with the Company. However, the Committee may, in its sole discretion,
either at grant of the Option or at the time the Recipient terminates
employment, delay the expiration date of the Option to a date after termination
of employment; provided, however, that the expiration date of an Incentive Stock
Option may not be delayed more than 90 days following the termination of the
Recipient's employment or affiliation with the Company. During any such delay of
the expiration date, the Option may be exercised only for the number of Shares
for which it could have been exercised on such termination date, subject to any
adjustment under Section 10 herein. Notwithstanding any provisions set forth
herein or in the Plan, if the Recipient shall (i) commit any act of malfeasance
or wrongdoing affecting the Company or any parent or subsidiary, (ii) breach any
covenant not to compete or employment agreement with the Company or any parent
or Subsidiary, or (iii) engage in conduct that would warrant the Recipient's
discharge for cause, any unexercised part of the Option shall lapse immediately
upon the earlier of the occurrence of such event or the last day the Recipient
is employed by the Company.
(j) Change of Control. If a Change of Control occurs, the Board may vote
to immediately terminate all Options outstanding under the Plan as of the date
of the Change of Control or may vote to accelerate the expiration of the Options
to the tenth day after the effective date of the Change of Control. If the Board
votes to immediately terminate the Options, it shall make a cash payment to the
Recipient equal to the difference between the Exercise Price and the Fair Market
Value of the Shares that would have been subject to the terminated Option on the
date of the Change of Control.
(k) Conditions Required for Exercise. Options granted to Recipients under
the Plan shall be exercisable only to the extent they are vested according to
the terms of the Option Agreement. Furthermore, Options granted to Employees
under the Plan shall be exercisable only
6
<PAGE>
if the issuance of Shares pursuant to the exercise would be in compliance with
applicable securities laws, as contemplated by Section 9 of the Plan. Each
Agreement shall specify any additional conditions required for the exercise of
the Option.
(l) Ten Percent Shareholders. An Incentive Stock Option granted to an
individual who, on the Date of Grant, owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of either the Company
or any parent or Subsidiary, shall be granted at an exercise price of 110
percent of Fair Market Value on the Date of Grant and shall be exercisable only
during the five-year period immediately following the Date of Grant. In
calculating stock ownership of any person, the attribution rules of Code Section
424(d) will apply. Furthermore, in calculating stock ownership, any stock that
the individual may purchase under outstanding options will not be considered.
(m) Maximum Option Grants. The aggregate Fair Market Value, determined on
the Date of Grant, of stock in the Company with respect to which any Incentive
Stock Options under the Plan and all other plans of the Company or its
Subsidiaries (within the meaning of Section 422(b) of the Code) may become
exercisable by any individual for the first time in any calendar year shall not
exceed $100,000.
(n) Method of Exercise. An Option granted under this Plan shall be deemed
exercised when the person entitled to exercise the Option (i) delivers written
notice to the President of the Company (or his delegate, in his absence) of the
decision to exercise, (ii) concurrently tenders to the Company full payment for
the Shares to be purchased pursuant to the exercise, and (iii) complies with
such other reasonable requirements as the Committee establishes pursuant to
Section 9 of the Plan. Payment for Shares with respect to which an Option is
exercised may be made in cash, or by certified check or wholly or partially in
the form of Common Stock having a Fair Market Value equal to the exercise price.
No person will have the rights of a shareholder with respect to Shares subject
to an Option granted under this Plan until a certificate or certificates for the
Shares have been delivered to him. A partial exercise of an Option will not
affect the holder's right to exercise the Option from time to time in accordance
with this Plan as to the remaining Shares subject to the Option.
(o) Loan from Company to Exercise Option. The Committee may, in its
discretion and subject to the requirements of applicable law, recommend to the
Company that it lend the Recipient the funds needed by the Recipient to exercise
an Option. The Recipient shall make application to the Company for the loan,
completing the forms and providing the information required by the Company. The
loan shall be secured by such collateral as the Company may require, subject to
its underwriting requirements and the requirements of applicable law. The
Recipient shall execute a Promissory Note and any other documents deemed
necessary by the Committee.
(p) Designation of Beneficiary. Each Recipient shall designate, in the
Option Agreement he executes, a beneficiary to receive Options awarded hereunder
in the event of his death prior to full exercise of such Options; provided, that
if no such beneficiary is designated or if the beneficiary so designated does
not survive the Recipient, the estate of such Recipient shall be deemed to be
his beneficiary. Recipients may, by written notice to the Committee, change the
beneficiary designated in any outstanding Option Agreements.
7
<PAGE>
(q) Nontransferability of Option. An Option granted under this Plan is not
transferable except by will or the laws of descent and distribution. During the
lifetime of the Recipient, all rights of the Option are exercisable only by the
Recipient.
7. Stock Appreciation Rights. Subject to the provisions of the Plan, the
Committee may award SARs in tandem with an Option (at or after the grant of the
Option), or alone and unrelated to an Option. Each SAR granted to an Employee
under the Plan shall contain such provisions as the Committee at the Date of
Grant shall deem appropriate. Each SAR granted to an Employee will satisfy the
following requirements:
(a) Written Agreement. Each SAR granted to an Employee will be evidenced
by a SAR Agreement. The terms of the SAR Agreement need not be identical for
different Recipients. The SAR Agreement shall include a description of the
substance of each of the requirements in this Section with respect to that
particular SAR.
(b) Number of SARs. Each SAR Agreement shall specify the number of SARs
granted to the Recipient.
(c) Exercise Price. The exercise price of the SAR shall equal the exercise
price designated by the Committee on the Date of Grant. A SAR granted alone and
unrelated to an Option may be granted at such exercise price as the Committee
may determine in its sole and absolute discretion. A SAR granted in tandem with
an Option shall have an exercise price not less than the exercise price of the
Option.
(d) Duration of Option. Each SAR granted to a Recipient shall expire on
the tenth anniversary of its Date of Grant or, at such earlier or later date as
is set by the Committee in establishing the terms of the SAR at grant. If the
Recipient's employment with the Company terminates before the expiration date of
a SAR, the SARs owned by the Recipient shall expire on the earlier of the date
stated in this subsection (d) or the date stated in following subsections of
this Section 7. Furthermore, expiration of a SAR may be accelerated under
subsection (j) below.
(e) Vesting of SAR. Each SAR Agreement shall specify the vesting schedule
applicable to the SAR. The Committee, in its sole and absolute discretion, may
accelerate the vesting of any SAR at any time.
(f) Death. In the case of the death of a Recipient, the SAR shall expire
on the one-year anniversary of the Recipient's death, or if earlier, the date
specified in subsection (d) above, unless the Committee sets an earlier or later
expiration date in establishing the terms of the SAR at grant or a later
expiration date subsequent to the Date of Grant but prior to the one-year
anniversary of the Recipient's death. During the period beginning on the date of
the Recipient's death and ending on the date the SAR expires, the SAR may be
exercised to the extent it could have been exercised at the time the Recipient
died, subject to any adjustment under Section 10 herein.
(g) Disability. In the case of the total and permanent disability of a
Recipient and a resulting termination of employment with the Company, the SAR
shall expire on the one-year anniversary date of the Recipient's last day of
employment, or, if earlier, the date specified in
8
<PAGE>
subsection (d) above, unless the Committee sets an earlier or later expiration
date in establishing the terms of the SAR at grant or a later expiration date
subsequent to the Date of Grant but prior to the one-year anniversary of the
Recipient's last day of employment or affiliation with the Company. During the
period beginning on the date of the Recipient's termination of employment or
affiliation by reason of disability and ending on the date the SAR expires, the
SAR may be exercised as to the number of Shares for which it could have been
exercised at the time the Recipient became disabled, subject to any adjustments
under Section 10 herein.
(h) Retirement. If the Recipient's employment terminates by reason of
normal retirement under the Company's normal retirement policies, the SAR will
expire 90 days after the last day of employment, or, if earlier, on the date
specified in subsection (d) above, unless the Committee sets an earlier or later
expiration date in establishing the terms of the SAR at grant or a later
expiration date subsequent to the Date of Grant but prior to the end of the
90-day period following the Recipient's normal retirement. During the period
beginning on the date of the Recipient's normal retirement and ending on the
date the SAR expires, the SAR may be exercised as to the number of Shares for
which it could have been exercised on the retirement date, subject to any
adjustment under Section 10 herein.
(i) Termination of Service. If the Recipient ceases employment for any
reason other than death, disability, or retirement (as described above), all
SARs held by the Recipient shall lapse immediately following the last day that
the Recipient is employed by the Company. However, the Committee may, in its
sole discretion, either at grant of the SAR or at the time the Recipient
terminates employment, delay the expiration date of the SAR to a date after
termination of employment. During any such delay of the expiration date, the SAR
may be exercised only for the number of Shares for which it could have been
exercised on such termination date, subject to any adjustment under Section 10
herein. Notwithstanding any provisions set forth herein or in the Plan, if the
Recipient shall (i) commit any act of malfeasance or wrongdoing affecting the
Company or any parent or subsidiary, (ii) breach any covenant not to compete or
employment agreement with the Company or any parent or Subsidiary, or (iii)
engage in conduct that would warrant the Recipient's discharge for cause, any
unexercised part of the SAR shall lapse immediately upon the earlier of the
occurrence of such event or the last day the Recipient is employed by the
Company.
(j) Change of Control. If a Change of Control occurs, the Board may vote
to accelerate the expiration of the SARs to the 10th day after the effective
date of the Change of Control.
(k) Conditions Required for Exercise. SARs granted to Recipients under the
Plan shall be exercisable only to the extent they are vested according to the
terms of the SAR Agreement. Each SAR Agreement shall specify any additional
conditions required for the exercise of the SAR.
(l) Method of Exercise. A SAR granted under this Plan shall be deemed
exercised when the person entitled to exercise the SAR delivers written notice
to the President of the Company (or his delegate, in his absence) of the
decision to exercise, and complies with such other reasonable requirements as
the Committee establishes pursuant to Section 9 of the Plan. A
9
<PAGE>
partial exercise of a SAR will not affect the holder's right to exercise the
Option from time to time in accordance with this Plan as to the remaining Shares
subject to the Option.
(m) Designation of Beneficiary. Each Recipient shall designate in the SAR
Agreement he executes, a beneficiary to receive SARs awarded hereunder in the
event of his death prior to full exercise of such SARs; provided, that if no
such beneficiary is designated or if the beneficiary so designated does not
survive the Recipient, the estate of such Recipient shall be deemed to be his
beneficiary. Recipients may, by written notice to the Committee, change the
beneficiary designated in any outstanding SAR Agreements.
(n) Nontransferability of SARs. No SAR granted under this Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Recipient under this Plan shall be exercisable during his or
her lifetime only by such Recipient.
8. Restricted Stock. Subject to the provisions of the Plan, the Committee, at
any time and from time to time, may grant Shares of Restricted Stock to
Recipients in such amounts as the Committee shall determined in its sole and
absolute discretion. Each Restricted Stock Award granted to an Employee under
the Plan shall contain such provisions as the Committee at the Date of Grant
shall deem appropriate. Each Restricted Stock Award granted to a Recipient will
satisfy the following requirements:
(a) Written Agreement. Each Restricted Stock Award granted to a Recipient
will be evidenced by a Restricted Stock Agreement. The terms of the Restricted
Stock Agreement need not be identical for different Recipients. The Restricted
Stock Agreement shall specify the Period of Restriction, or Periods. In
addition, the Restricted Stock Agreement shall include a description of the
substance of each of the requirements in this Section with respect to that
particular Restricted Stock Award.
(b) Number of Shares. Each Agreement shall specify the number of
Restricted Stock Shares awarded to the Recipient.
(c) Transferability. Except as provided in this subsection (c), the
Restricted Stock Shares granted under this Plan may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee at grant and
specified in the Restricted Stock Agreement, or upon earlier satisfaction of any
other conditions, as specified by the Committee at grant and specified in the
Restricted Stock Agreement.
(d) Other Restrictions. The Committee shall impose such other restrictions
on any Restricted Stock Shares granted pursuant to this Plan as it may deem
advisable including, without limitation, vesting restrictions, restrictions
based upon the achievement of specific Company-wide, Subsidiary, and/or
individual performance goals, and/or restrictions under applicable federal or
state securities laws, and may legend the certificate representing Restricted
Stock to give appropriate notice of such restrictions. The Committee may also
require that Recipients make cash payments at the time of grant or upon lapsing
of restrictions. Such cash
10
<PAGE>
payments, if imposed, will be in an amount not less than the par value of the
Restricted Stock Shares.
(e) Certificate Legend. In addition to any legends placed on certificates
pursuant to subsection (c) above, each certificate representing Restricted Stock
Shares granted pursuant to this Plan shall bear the following legend:
"The sale or other transfer of the Shares of stock represented by
this certificate, whether voluntary, involuntary, or by operation of
law, is subject to certain restrictions on transfer as set forth in
the Interactive Technologies.com, Ltd. Long-Term Incentive Plan and
in a Restricted Stock Agreement dated_________. A copy of the Plan
and the Restricted Stock Agreement may be obtained from the Chief
Financial Officer of Interactive Technologies.com, Ltd."
(f) Removal of Restrictions. Except as otherwise provided in this Section
8, Restricted Stock Shares shall become freely transferable by the Recipient
after the last day of the Period of Restriction. Once the Restricted Stock
Shares are released from the restrictions, the Recipient shall be entitled to
have the legend required by subsection (e) above removed from his Share
certificate.
(g) Voting Rights. During the Period of Restriction, Recipients holding
Restricted Stock Shares may exercise full voting rights with respect to such
Shares.
(h) Dividends and Other Distributions. During the Period of Restriction,
Recipients holding Restricted Stock Shares shall be entitled to receive all
dividends and other distributions paid with respect to such Shares while they
are so held. If any such dividends or distributions are paid in Shares, such
Shares shall be subject to the same restrictions on transferability and
forfeitability as the Restricted Stock Shares with respect to which they were
paid.
(i) Death. In the case of the death of a Recipient, the restrictions on
the Recipient's Restricted Stock Shares shall expire on the date of the
Recipient's death.
(j) Disability. In the case of the total and permanent disability of a
Recipient and a resulting termination of employment with the Company, the
restrictions on the Recipient's Restricted Stock Shares shall expire on the
Recipient's last day of employment.
(k) Retirement. If the Recipient's employment terminates by reason of
normal retirement under the Company's normal retirement policies, the
restrictions on the Recipient's Restricted Stock Shares shall expire on the
Recipient's last day of employment.
(l) Termination of Service. If the Recipient ceases employment for any
reason other than death, disability, or retirement (as described above), all
nonvested Restricted Stock Shares held by the Recipient shall be forfeited
immediately and returned to the Company; provided, however, that the Committee,
in its sole and absolute discretion, shall have the right to
11
<PAGE>
provide for expiration of the restrictions on Restricted Stock Shares following
termination of employment, upon such terms and provisions as it deems proper.
(m) Change of Control. If a Change of Control occurs, the Board may vote
to remove immediately all restrictions on Restricted Stock Shares as of the date
of the Change of Control.
(n) Designation of Beneficiary. Each Recipient shall designate, in the
Restricted Stock Agreement he executes, a beneficiary to receive Restricted
Stock Shares awarded hereunder in the event of his death prior to removal of all
restrictions on such Shares; provided, that if no such beneficiary is designated
or if the beneficiary so designated does not survive the Recipient, the estate
of such Recipient shall be deemed to be his beneficiary. Recipients may, by
written notice to the Committee, change the beneficiary designated in any
outstanding Restricted Stock Agreements.
9. Taxes; Compliance with Law; Approval of Regulatory Bodies; Legends. The
Company shall have the right to withhold from payments otherwise due and owing
to the Recipient (or his beneficiary) or to require the Recipient (or his
beneficiary) to remit to the Company in cash upon demand an amount sufficient to
satisfy any federal (including FICA and FUTA amounts), state, and/or local
withholding tax requirements at the time the Recipient (or his beneficiary)
recognizes income for federal, state, and/or local tax purposes with respect to
any Award under this Plan.
Awards can be granted, and Shares can be delivered under this Plan, only
in compliance with all applicable federal and state laws and regulations and the
rules of all stock exchanges on which the Company's stock is listed at any time.
An Option is exercisable only if either (a) a registration statement pertaining
to the Shares to be issued upon exercise of the Option has been filed with and
declared effective by the Securities and Exchange Commission and remains
effective on the date of exercise, or (b) an exemption from the registration
requirements of applicable securities laws is available. This Plan does not
require the Company, however, to file such a registration statement or to assure
the availability of such exemptions. Any certificate issued to evidence Shares
issued under the Plan may bear such legends and statements, and shall be subject
to such transfer restrictions, as the Committee deems advisable to assure
compliance with federal and state laws and regulations and with the requirements
of this Section. No Option may be exercised, and Shares may not be issued under
this Plan, until the Company has obtained the consent or approval of every
regulatory body, federal or state, having jurisdiction over such matters as the
Committee deems advisable.
Each person who acquires the right to exercise an Option or a SAR or to
ownership of Shares by bequest or inheritance may be required by the Committee
to furnish reasonable evidence of ownership of the Option or SAR as a condition
to his exercise of the Option or SAR. In addition, the Committee may require
such consents and releases of taxing authorities as the Committee deems
advisable.
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 ("1934 Act"), transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 under the 1934 Act, as such Rule
may be amended from time to time, or its
12
<PAGE>
successor under the 1934 Act. To the extent any provision of the Plan or action
by the Plan administrators fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Plan administrators.
10. Adjustment Upon Change of Shares. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock of the Company occurs, the number and class of
Shares for which Awards are authorized to be granted under this Plan, the number
and class of Shares then subject to Awards previously granted to Employees under
this Plan, and the price per Share payable upon exercise of each Award
outstanding under this Plan shall be equitably adjusted by the Committee to
reflect such changes. To the extent deemed equitable and appropriate by the
Board, subject to any required action by shareholders, in any merger,
consolidation, reorganization, liquidation or dissolution, any Award granted
under the Plan shall pertain to the securities and other property to which a
holder of the number of Shares of stock covered by the Award would have been
entitled to receive in connection with such event.
11. Liability of the Company. The Company, its parent and any Subsidiary that is
in existence or hereafter comes into existence shall not be liable to any person
for any tax consequences incurred by a Recipient or other person with respect to
an Award.
12. Amendment and Termination of Plan. The Board may alter, amend, or terminate
this Plan from time to time without approval of the shareholders of the Company.
The Board may, however, condition any amendment on the approval of the
shareholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws to which the Company, the
Plan, Recipients or Eligible Persons are subject. Any amendment, whether with or
without the approval of shareholders of the Company, that alters the terms or
provisions of an Award granted before the amendment (unless the alteration is
expressly permitted under this Plan) will be effective only with the consent of
the Recipient to whom the Award was granted or the holder currently entitled to
exercise it.
13. Expenses of Plan. The Company shall bear the expenses of administering the
Plan.
14. Duration of Plan. Awards may be granted under this Plan only during the 10
years immediately following the original effective date of this Plan.
15. Applicable Law. The validity, interpretation, and enforcement of this Plan
are governed in all respects by the laws of Florida and the United States of
America.
16. Effective Date. The effective date of this Plan, shall be the earlier of (i)
the date on which the Board adopts the Plan or (ii) the date on which the
Shareholders approve the Plan.
13
Exhibit 3.3
NONQUALIFIED STOCK OPTION AGREEMENT
Interactive Technologies.com, Ltd.
This Nonqualified Stock Option Agreement (the "Agreement"), effective as of
[ ] [ ], [ ] (the "Date of Grant"), is made by and between Interactive
Technologies.com, Ltd., a Delaware corporation (the "Company"), and [ ] (the
"Participant").
Background
The Company has established the Interactive Technologies.com, Ltd. Long-Term
Incentive Plan (the "Plan"). The Company wishes to grant to the Participant a
Nonqualified Stock Option pursuant to the terms of the Plan.
Therefore, in consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, the Company and the Participant agree
as follows:
1. Grant of Option. In consideration of service to the Company and for other
good and valuable consideration, the Company grants to the Participant a
Nonqualified Stock Option (the "Option") to purchase [ ] shares of the
Company's common stock (the "Common Stock"). The Company grants the Option
in accordance with the terms and conditions of the Plan and this
Agreement.
2. Option Price. The purchase price of each share of stock covered by the
Option shall be $[ ].
3. Adjustments in Option. If the outstanding shares of stock subject to the
Option are changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend or combination of shares, the shares subject to the Option
and the price per share shall be equitably adjusted to reflect such
changes. Such adjustment in the Option shall be made without change in the
total price applicable to the unexercised portion of the Option (except
for any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in
the Option price per share. Any such adjustment made by the Committee
shall be final and binding upon the Participant, the Company and all other
interested persons.
4. Person Eligible to Exercise Option. During the lifetime of the
Participant, only the Participant may exercise the Option or any portion
of the Option. After the death of the Participant, any exercisable portion
of the Option may, prior to the time when the Option becomes unexercisable
under the terms of the Plan, be exercised by the Participant's personal
representative or by any other person empowered to do so under the
Participant's will, trust or under then applicable laws of descent and
distribution.
1
<PAGE>
5. Manner of Exercise. The Option, or any portion of the Option, shall be
exercised only in accordance with the provisions of the Plan and this
Agreement. The person exercising the Option shall give to the Company a
written notice that shall: (i) state the number of Shares with respect to
which the Option is being exercised; and (ii) specify a date (other than a
Saturday, Sunday or legal holiday) not less than five nor more than ten
days after the date of such written notice, as the date on which the
Shares will be purchased. Such tender and conveyance shall take place at
the principal office of the Company during ordinary business hours, or at
such other hour and place agreed upon by the Company and the person or
persons exercising the Option. On the date specified in such written
notice, the Company shall accept payment for the Option Shares in cash, by
bank or certified check, by wire transfer, or by such other means as may
be approved by the Committee and shall deliver to the person or persons
exercising the Option in exchange therefor an appropriate certificate or
certificates for fully paid nonassessable Shares or undertake to deliver
certificates within a reasonable period of time. In the event of any
failure to take up and pay for the number of Shares specified in such
written notice on the date set forth therein (or on the extended date as
above provided), the right to exercise the Option shall terminate with
respect to such number of Shares, but shall continue with respect to the
remaining Shares covered by the Option and not yet acquired pursuant
thereto.
The person who exercises the Option shall warrant to the Company that, at
the time of such exercise, such person is acquiring his or her Option
Shares for investment and not with a view to, or for or in connection
with, the distribution of any such Shares, and shall make such other
representations, warranties, acknowledgments, and affirmations, if any, as
the Committee may require. In such event, the person acquiring such Shares
shall be bound by the provisions of an appropriate legend which shall be
endorsed upon the certificate(s) evidencing his or her Option Shares
issued pursuant to such exercise. The Company may delay issuance of the
Shares until completion of any action or obtaining any consent that the
Company deem necessary under any applicable law (including without
limitation state securities or "blue sky" laws).
6. Conditions to Issuance of Stock Certificates. The shares of stock
deliverable upon the exercise of the Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares which
have been reacquired by the Company. Such shares shall be fully paid and
nonassessable.
7. Rights of Shareholders. The Participant shall not be, nor have any of the
rights or privileges of, a shareholder of the Company in respect of any
shares purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares shall have been issued by the
Company to the Participant.
8. Vesting and Exercisability. A Participant's interest in the Option shall
vest according to the provisions of this Section 8 and shall be
exercisable as to not more than the vested percentage of the shares
subject to the Option at any point in time. To the extent the Option is
either unexercisable or unexercised, the unexercised portion shall
accumulate
2
<PAGE>
until the Option both becomes exercisable and is exercised, subject to the
provisions of Section 9 of the Agreement. The Option shall become vested
as follows:
Date Vested Percentage of Option
---- ---------------------------
The Committee, in its sole and absolute discretion, may accelerate the
vesting of the Option at any time.
9. Duration of Option. Except as specified below, the Option shall expire on
[ ], [ ]. Notwithstanding the foregoing, the Option may expire prior to [
], [ ], in the following circumstances:
a. In the case of the Participant's death, the Option shall expire on
the one-year anniversary of the Participant's death.
b. If the Participant's employment or affiliation with the Company
terminates as a result of his total and permanent disability, the
Option will expire on the one-year anniversary of the Participant's
last day of employment.
c. If the Participant ceases employment or affiliation with the Company
for any reason other than death or disability, the Option shall
expire 90 days following the last day that the Participant is
employed by the Company.
d. Notwithstanding any provisions set forth above in this Section 9, if
the Participant shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or its affiliates, (ii) breach any
covenant not to compete or employment agreement with the Company or
any affiliate, or (iii) engage in conduct that would warrant the
Participant's discharge for cause, any unexercised part of the
Option shall expire immediately upon the earlier of the occurrence
of such event or the last day the Participant is employed by the
Company.
10. Administration. The Committee shall have the power to interpret this
Agreement and to adopt such rules for the administration, interpretation
and application of the Agreement as are consistent herewith and to
interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon the Participant, the Company and all other
interested persons. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with
respect to this Agreement or any similar agreement to which the Company is
a party.
11. Transfer of Option. Unless otherwise permitted by applicable laws and
approved in advance by the Committee, the Option shall not be transferable
by the Participant and shall be exercisable, during the Participant's
lifetime, only by such Participant or, in the event of the Participant's
incapacity, his guardian or legal representative. Except as
3
<PAGE>
otherwise permitted herein, the Option shall not be assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment, or similar process and any
attempted transfer, assignment, pledge, hypothecation or other disposition
of the Option or of any rights granted thereunder contrary to the
provisions of this Section 11, or the levy of any attachment or similar
process upon an option or such rights, shall be null and void. This
Section 11 shall not prevent transfers by will or by the applicable laws
of descent and distribution.
12. Shares to be Reserved. The Company shall at all times during the term of
the Option reserve and keep available such number of shares of stock as
will be sufficient to satisfy the requirements of this Agreement.
13. Notices. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary and any
notice to be given to the Participant shall be addressed to him at the
address given beneath his signature below. By a notice given pursuant to
this Section 13, either party may hereafter designate a different address
for notices to be given to him. Any notice which is required to be given
to the Participant shall, if the Participant is then deceased, be given to
the Participant's personal representative if such representative has
previously informed the Company of his status and address by written
notice under this Section 13. Any notice shall have been deemed duly given
when enclosed in a properly sealed envelope addressed as aforesaid,
deposited (with postage prepaid) in a United States postal receptacle.
14. Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
15. Incorporation of Plan by Reference. The Option is granted in accordance
with the terms and conditions of the Plan, the terms of which are
incorporated herein by reference, and the Agreement shall in all respects
be interpreted in accordance with the Plan. Any term used in the Agreement
that is not otherwise defined in the Agreement shall have the meaning
assigned to it by the Plan.
The Company and the Participant have executed this Agreement effective as of the
date first written above.
INTERACTIVE TECHNOLOGIES.COM, LTD.
By:______________________________
Its:
_________________________________
4
Exhibit 6.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of February 26,1999, is entered
into between Interactive Technologies.Com, Ltd., a Delaware corporation (the
"Company"), and William R. Becker (the "Executive").
Recitals
Executive is currently employed by the Company as a senior executive
officer and is an integral part of its management. The Board of Directors of the
Company recognizes the Executive as a key founding officer of the Company's
operating business, and consequently has approved the terms and conditions of
the continued employment of Executive as set forth herein and has authorized the
execution and delivery of this Agreement.
Agreement
For and in consideration of the foregoing and of the mutual covenants of
the parties herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall terminate at the close of business on
January 01, 2005, subject to earlier termination in accordance with Section 9
hereof and the other terms, provisions, and conditions set forth herein.
3. DUTIES. Executive shall serve as and have the title of President and Chief
Executive Officer of the Company and shall be the chairman of the Company's
Board of Directors. Executive agrees to devote substantially all of his business
time, energy, and skills to such employment while so employed.
4. COMPENSATION.
(a) Base Compensation. The Company shall pay Executive, and
Executive agrees to accept, base compensation at the rate of not less than
$250,000 per year in equal, weekly installments commencing as of January 01,
2000, through the term of this Agreement ("Base Compensation"). The Base
Compensation specified in this Section 4(a) may be increased at any time during
the term of this Agreement in the discretion of the Board of Directors and will
be reviewed no less frequently than during the first quarter of each calendar
year beginning in 2000. No increase in the Base Compensation pursuant to this
Section 4(a) shall at any time operate as a cancellation of this Agreement; any
such increase shall operate merely as an amendment hereof, without any further
action by Executive or the Company. If any such increase or increases shall be
so authorized, all of the terms, provisions and conditions of this Agreement
shall remain in effect as herein provided, except that the Base Compensation set
forth in this Section 4(a) shall be deemed amended to set forth the higher
amount of such Base Compensation to Executive.
<PAGE>
(b) Bonus Compensation. The Company shall pay Executive an annual
bonus ("Bonus Compensation") within 90 days following the end of each fiscal
year of the Company during the term of Executive's employment under this
Agreement. The amount of Executive's Bonus Compensation shall be determined by
the Board of Directors of the Company, after consideration of any
recommendations made by the Compensation Committee of the Board of Directors,
based upon Executive's performance and the performance of the Company during
such year. See attached bonus plan.
(c) Annual Stock Options. Employee shall be eligible to receive an
annual stock option award (the "Annual Stock Options") following each fiscal
year of the Company in amounts, at such exercise prices, and on such terms as
the Board of Directors determines, based upon the performance of the Employee
and the Company during such fiscal year. See attached option schedule.
5. FRINGE BENEFITS.
(a) Generally. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, automobile allowance and compensation, which
matters shall be governed exclusively by the terms hereof.
(b) Vacation. During the term of this Agreement, Executive shall be
entitled to five (5) weeks paid vacation per calendar year and any vacation time
not taken during any calendar year shall be carried over into subsequent
calendar years.
(c) Automobile. The Company shall provide Executive with full use of
an automobile, appropriate for Executive's position and title, for Executive's
business and personal use, which automobile shall be replaced at least every
three years. The Company agrees to provide adequate insurance for the automobile
and occupants and to pay all maintenance and operating costs appropriate or
necessary to maintain such automobile in prime operating condition.
6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred, but Executive shall be entitled to not less than
first-class for air travel. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
2
<PAGE>
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date, which date shall not be more than sixty (60)
calendar days after the giving of such notice. The death or disability of
Executive shall in no event be deemed a termination of employment by Executive.
(a) Mutual. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) Death. In the event of the death of Executive, the Company may
terminate Executive's employment under this Agreement.
(c) Disability. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred eighty
(180) days, then the Company may, upon sixty (60) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) Cause. Executive's employment under this Agreement may be
terminated by the Company, with Cause as herein defined upon giving Executive
sixty (60) days written notice. For purposes of this Agreement, the term "Cause"
shall mean the termination of the Executive by the Board of Directors of the
Company as a result of the existence or occurrence of one or more of the
following conditions or events:
(i) An act or acts of fraud, misappropriation, or embezzlement
on the Executive's part that result in or are intended to result in his personal
enrichment at the expense of the Company or its subsidiaries or affiliates.
(ii) Conviction of a felony that (a) arises in connection with
the Company's business and (b) has a material adverse effect on the Company's
business.
(iii) The Executive's willful or intentional failure to
perform his duties as required under this Agreement; provided, that the Company
shall provide Executive with written notice of such failure and Executive shall
have thirty (30) days from the date Executive receives such notice to remedy
such failure to perform.
(e) Change of Control. In the event of a "Change in Control" (as
defined in this Section 7(e)), Executive may elect, at any time during the
180-day period immediately
3
<PAGE>
following such Change in Control, to deliver 60 days' written notice to the
Company of his termination of employment hereunder. Termination of Executive's
employment under this Agreement pursuant to the provisions of the preceding
sentence shall be deemed a termination without Cause for purposes of Section 9
hereof and shall not be deemed to be a voluntary resignation or termination by
Executive. For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred when:
(i) any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, who owns less than
20% of the Company's capital stock on the date hereof, becomes the beneficial
owner of twenty-five percent or more of the capital stock of the Company;
(ii) the Company is merged with or into any other company
where members of the board of directors of the Company immediately prior to such
transaction do not constitute a majority of the board of directors of the
Company of the surviving entity immediately following such transaction, or
substantially all of the Company's assets are acquired by any other company; or
(iv) three or more directors nominated by the Board of
Directors to serve as a director, each having agreed to serve in such capacity,
fail to be elected in a contested election of directors.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives): (i) Executive's Base Compensation, unused vacation
entitlement, and other benefits until termination date of contract, and (ii)
Executive's Bonus Compensation payable under Section 4 and Executive's Annual
Stock Options for the fiscal year in which Executive's termination occurred, as
if Executive had been employed by the Company for the full fiscal year.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) With Cause or Voluntary Resignation. If Executive is terminated
for Cause (as defined in Section 7(d) of this Agreement), or if Executive
voluntarily terminates his employment by the Company, the Company shall pay
Executive, within five (5) business days after the date of termination,
Executive's Base Compensation, unused vacation entitlement and all expenses in
connection with Executive's use of the automobile under Section 5(c) hereof
through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
4
<PAGE>
(b) Without Cause or Due to Change of Control. If terminated by the
Company without Cause or by the Executive as a result of a Change of Control,
Executive shall receive the Base Compensation, Bonus Compensation, Annual Stock
Options, and the other benefits under this Agreement until the later to occur of
(x) the date thirty-six (36) months from the date of such termination and (y)
January 01, 2005.
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period of five (5)
years immediately following the date of termination of this Agreement, Executive
agrees not to disclose or use any confidential information, including without
limitation, information regarding research, developments, "know-how," prices,
suppliers, customers, costs or any knowledge or information with respect to
confidential or trade secrets of the Company, it being understood that such
confidential information does not include information that is publicly available
unless such information became publicly available as a result of a breach of
this Agreement. Executive acknowledges and agrees that all notes, records,
reports, sketches, plans, unpublished memoranda or other documents belonging to
the Company, but held by Executive, concerning any information relating to the
Company's business, whether confidential or not, are the property of the Company
and will be promptly delivered to it upon Executive's leaving the employ of the
Company. Executive also agrees to execute such confidentiality agreements that
the Board may adopt, and may modify from time to time, as a standard form to be
executed by all employees of the Company, to the extent such standard forms are
not materially more restrictive than the provisions of this Agreement.
11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, ideas, writings, copyrights,
publications, study protocols, study results, computer data or programs, or
other intellectual property, whether or not subject to patent or copyright laws,
which Executive shall conceive solely or jointly with others, in the course or
scope of his employment with the Company or in any way related to the Company's
business, whether during or after working hours, or with the use of the
Company's equipment, materials or facilities (collectively referred to herein as
"Intellectual Property"), shall be the sole and exclusive property of the
Company without further compensation to Executive. As used in this Section 11
and the following Section 12, it is understood that the Company's principal
"business" is marketing internet related products such as benefits, mortgages,
and web sites. Executive shall take such steps as are deemed necessary to
maintain complete and current records of the Intellectual Property conceived by
the Executive, and Executive shall assign to the Company or its designees, the
entire right, title and interest in said Intellectual Property.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to
5
<PAGE>
the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred to herein, Executive
covenants and agrees that Executive will not, directly or indirectly, whether as
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent (other than as the holder of not more than 10% of the total
outstanding stock of any company the securities of which are traded on a regular
basis on recognized securities exchanges):
(a) while employed under this Agreement and for any period during
which Executive is receiving payments from the Company (pursuant to Section 8
hereof) following a termination as a result of Employee's Disability, (i) work
for (in any capacity, including without limitation director, officer or
employee) any other business or company that competes with the Company and is
located in the United States or within 50 miles of any branch office of the
Company, or (ii) recruit, or otherwise influence or attempt to induce employees
of the Company to leave the employment of the Company; and
(b) for the one-year period immediately following the termination of
this Agreement due to the expiration of the term of this Agreement, termination
of Executive for Cause, or Executive's voluntary resignation; and for the
one-year period immediately following the last date on which Employee shall
receive payments from the Company pursuant to Section 8 hereof following a
termination of employment as a result of Employee's Disability, work for a
company or business (in any capacity, including without limitation as director,
officer, or employee) that is in the business of marketing internet related
products such as benefits, mortgages, and web sites , that competes with the
Company and is located in the United States or within 50 miles of any branch
office of the Company.
Executive has carefully read and considered the provisions of Sections 10,
11, and 12 hereof and agrees that the restrictions set forth in such sections
are fair and reasonable and are reasonably required for the protection of the
interests of the Company, its officers, directors, shareholders, and other
employees, for the protection of the business of the Company, and to ensure that
Executive devotes his full-time and efforts to the business of the Company.
Executive acknowledges that he is qualified to engage in businesses other than
those that are subject to this Section 12. It is the belief of the parties,
therefore, that the best protection that can be given to the Company that does
not in any way infringe upon the rights of Executive to engage in any unrelated
businesses is to provide for the restrictions described above. In view of the
substantial harm which would result from a breach by Executive of Sections 10,
11 and 12, the parties agree that the restrictions contained therein shall be
enforced to the maximum extent permitted by law. In the event that any of said
restrictions shall be held unenforceable by any court of competent jurisdiction,
the parties hereto agree that it is their desire that such court shall
substitute a reasonable judicially enforceable limitation in place of any
limitation deemed unenforceable and that as so modified, the covenant shall be
as fully enforceable as if it had been set forth herein by the parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in
6
<PAGE>
Sections 10, 11 and 12 are considered to be reasonable for the purposes of
protecting the business of the Company. The Company and Executive acknowledge
that the Company would be irreparably harmed and that monetary damages would not
provide an adequate remedy to the Company if the covenants contained in Sections
10, 11 and 12 were not complied with in accordance with their terms.
Accordingly, Executive agrees that the Company shall be entitled to injunctive
and other equitable relief to secure the enforcement of these provisions, in
addition to any other remedy which may be available to the Company, and that the
Company shall be entitled to receive from Executive reimbursement for reasonable
attorneys' fees and expenses incurred by the Company in enforcing these
provisions.
14. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
If to the Executive: To the address set forth below his signature on the
signature page hereof.
If to the Company:
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the Company and
Executive, and the Company and Executive hereby acknowledge and agree that this
Agreement supersedes any prior statements, writings, promises, understandings or
commitments.
(b) No future oral statements, promises or commitments with respect
to the subject matter hereof, or other purported modification hereof, shall be
binding upon the parties hereto unless the same is reduced to writing and signed
by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the
7
<PAGE>
validity or enforceability of, or liability under any provision of this
Agreement or any guarantee of performance thereof, in each case plus interest,
provided that the Executive is the prevailing party in any such contest. If the
Executive is not the prevailing party each party shall pay its own legal fees
and expenses except that if such contest is the result of a claimed breach of
Section 10, 11 or 12, and the Company shall be the prevailing party, the
Executive shall pay the reasonable legal fees and expenses of the Company. The
determination of the prevailing party in any contest shall be made by the
tribunal which shall resolve such contest, or by the parties if such contest is
settled without resort to any such tribunal.
18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the laws of
the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or the interpretation of this
Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be sent
postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this Agreement
shall for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Agreement shall be unimpaired, and the invalid, illegal or
unenforceable provision shall be replaced by a mutually acceptable valid, and
enforceable provision which comes closest to the intent of the parties.
(f) This Agreement may be executed in any number of counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
Interactive Technologies.com, Ltd., a Delaware corporation
By:_______________________________________________________
Its:
__________________________________________________________
William R. Becker
9
Exhibit 6.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of September 12,1999, is entered
into between Interactive Technologies.Com Inc., a Delaware corporation (the
"Company"), and Matthew Cohen (the "Executive").
Recitals
Executive is currently employed by the Company as a senior executive
officer and is an integral part of its management. The Board of Directors of the
Company recognizes the Executive as a key founding officer of the Company's
operating business, and consequently has approved the terms and conditions of
the continued employment of Executive as set forth herein and has authorized the
execution and delivery of this Agreement.
Agreement
For and in consideration of the foregoing and of the mutual covenants of
the parties herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall terminate at the close of business on
September 12, 2004, subject to earlier termination in accordance with Section 9
hereof and the other terms, provisions, and conditions set forth herein.
3. DUTIES. Executive shall serve as and have the title of President and Chief
Executive Officer of the Company and shall be the chairman of the Company's
Board of Directors. Executive agrees to devote substantially all of his business
time, energy, and skills to such employment while so employed.
4. COMPENSATION.
(a) Base Compensation. The Company shall pay Executive, and
Executive agrees to accept, base compensation at the rate of not less than
$120,000 per year in equal, weekly installments commencing as of January 01,
1999, through the term of this Agreement ("Base Compensation"). The Base
Compensation specified in this Section 4(a) may be increased at any time during
the term of this Agreement in the discretion of the Board of Directors and will
be reviewed no less frequently than during the first quarter of each calendar
year beginning in 2000. No increase in the Base Compensation pursuant to this
Section 4(a) shall at any time operate as a cancellation of this Agreement; any
such increase shall operate merely as an amendment hereof, without any further
action by Executive or the Company. If any such increase or increases shall be
so authorized, all of the terms, provisions and conditions of this Agreement
shall remain in effect as herein provided, except that the Base Compensation set
forth
<PAGE>
in this Section 4(a) shall be deemed amended to set forth the higher amount of
such Base Compensation to Executive.
(b) Bonus Compensation. The Company shall pay Executive an annual
bonus ("Bonus Compensation") within 90 days following the end of each fiscal
year of the Company during the term of Executive's employment under this
Agreement. The amount of Executive's Bonus Compensation shall be determined by
the Board of Directors of the Company, after consideration of any
recommendations made by the Compensation Committee of the Board of Directors,
based upon Executive's performance and the performance of the Company during
such year. See attached bonus plan.
(c) Annual Stock Options. Employee shall be eligible to receive an
annual stock option award (the "Annual Stock Options") following each fiscal
year of the Company in amounts, at such exercise prices, and on such terms as
the Board of Directors determines, based upon the performance of the Employee
and the Company during such fiscal year. See attached option schedule.
5. FRINGE BENEFITS.
(a) Generally. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, automobile allowance and compensation, which
matters shall be governed exclusively by the terms hereof.
(b) Vacation. During the term of this Agreement, Executive shall be
entitled to four(4) weeks paid vacation per calendar year and any vacation time
not taken during any calendar year shall be carried over into subsequent
calendar years.
(c) Automobile. The Company shall provide Executive with an
automobile expense, appropriate for Executive's position and title, for
Executive's business and personal use.
6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred, but Executive shall be entitled to not less than
first-class for air travel. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i)
2
<PAGE>
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the date of receipt
of such notice, specifies the termination date, which date shall not be more
than sixty (60) calendar days after the giving of such notice. The death or
disability of Executive shall in no event be deemed a termination of employment
by Executive.
(a) Mutual. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) Death. In the event of the death of Executive, the Company may
terminate Executive's employment under this Agreement.
(c) Disability. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred eighty
(180) days, then the Company may, upon sixty (60) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) Cause. Executive's employment under this Agreement may be
terminated by the Company, with Cause as herein defined upon giving Executive
sixty (60) days written notice. For purposes of this Agreement, the term "Cause"
shall mean the termination of the Executive by the Board of Directors of the
Company as a result of the existence or occurrence of one or more of the
following conditions or events:
(i) An act or acts of fraud, misappropriation, or embezzlement
on the Executive's part that result in or are intended to result in his personal
enrichment at the expense of the Company or its subsidiaries or affiliates.
(ii) Conviction of a felony that (a) arises in connection with
the Company's business and (b) has a material adverse effect on the Company's
business.
(iii) The Executive's willful or intentional failure to
perform his duties as required under this Agreement; provided, that the Company
shall provide Executive with written notice of such failure and Executive shall
have thirty (30) days from the date Executive receives such notice to remedy
such failure to perform.
(e) Change of Control. In the event of a "Change in Control" (as
defined in this Section 7(e)), Executive may elect, at any time during the
180-day period immediately following such Change in Control, to deliver 60 days'
written notice to the Company of his termination of employment hereunder.
Termination of Executive's employment under this Agreement pursuant to the
provisions of the preceding sentence shall be deemed a termination without Cause
for purposes of Section 9 hereof and shall not be deemed to be a voluntary
3
<PAGE>
resignation or termination by Executive. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred when:
(i) any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, who owns less than
20% of the Company's capital stock on the date hereof, becomes the beneficial
owner of twenty-five percent or more of the capital stock of the Company;
(ii) the Company is merged with or into any other company
where members of the board of directors of the Company immediately prior to such
transaction do not constitute a majority of the board of directors of the
Company of the surviving entity immediately following such transaction, or
substantially all of the Company's assets are acquired by any other company; or
(iv) three or more directors nominated by the Board of
Directors to serve as a director, each having agreed to serve in such capacity,
fail to be elected in a contested election of directors.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives): (i) Executive's Base Compensation, unused vacation
entitlement, and other benefits until termination date of contract, and (ii)
Executive's Bonus Compensation payable under Section 4 and Executive's Annual
Stock Options for the fiscal year in which Executive's termination occurred, as
if Executive had been employed by the Company for the full fiscal year.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) With Cause or Voluntary Resignation. If Executive is terminated
for Cause (as defined in Section 7(d) of this Agreement), or if Executive
voluntarily terminates his employment by the Company, the Company shall pay
Executive, within five (5) business days after the date of termination,
Executive's Base Compensation, unused vacation entitlement and all expenses in
connection with Executive's use of the automobile under Section 5(c) hereof
through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
(b) Without Cause or Due to Change of Control. If terminated by the
Company without Cause or by the Executive as a result of a Change of Control,
Executive shall receive the Base Compensation, Bonus Compensation, Annual Stock
Options, and the other
4
<PAGE>
benefits under this Agreement until the later to occur of (x) the date
thirty-six (36) months from the date of such termination and (y) February 26,
2000.
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period of five (5)
years immediately following the date of termination of this Agreement, Executive
agrees not to disclose or use any confidential information, including without
limitation, information regarding research, developments, "know-how," prices,
suppliers, customers, costs or any knowledge or information with respect to
confidential or trade secrets of the Company, it being understood that such
confidential information does not include information that is publicly available
unless such information became publicly available as a result of a breach of
this Agreement. Executive acknowledges and agrees that all notes, records,
reports, sketches, plans, unpublished memoranda or other documents belonging to
the Company, but held by Executive, concerning any information relating to the
Company's business, whether confidential or not, are the property of the Company
and will be promptly delivered to it upon Executive's leaving the employ of the
Company. Executive also agrees to execute such confidentiality agreements that
the Board may adopt, and may modify from time to time, as a standard form to be
executed by all employees of the Company, to the extent such standard forms are
not materially more restrictive than the provisions of this Agreement.
11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, ideas, writings, copyrights,
publications, study protocols, study results, computer data or programs, or
other intellectual property, whether or not subject to patent or copyright laws,
which Executive shall conceive solely or jointly with others, in the course or
scope of his employment with the Company or in any way related to the Company's
business, whether during or after working hours, or with the use of the
Company's equipment, materials or facilities (collectively referred to herein as
"Intellectual Property"), shall be the sole and exclusive property of the
Company without further compensation to Executive. As used in this Section 11
and the following Section 12, it is understood that the Company's principal
"business" is marketing internet related products such as benefits, mortgages,
and web sites. Executive shall take such steps as are deemed necessary to
maintain complete and current records of the Intellectual Property conceived by
the Executive, and Executive shall assign to the Company or its designees, the
entire right, title and interest in said Intellectual Property.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred to herein, Executive
covenants and agrees that Executive will not, directly or indirectly, whether as
principal, agent, trustee or through the
5
<PAGE>
agency of any corporation, partnership, association or agent (other than as the
holder of not more than 10% of the total outstanding stock of any company the
securities of which are traded on a regular basis on recognized securities
exchanges):
(a) while employed under this Agreement and for any period during
which Executive is receiving payments from the Company (pursuant to Section 8
hereof) following a termination as a result of Employee's Disability, (i) work
for (in any capacity, including without limitation director, officer or
employee) any other business or company that competes with the Company and is
located in the United States or within 50 miles of any branch office of the
Company, or (ii) recruit, or otherwise influence or attempt to induce employees
of the Company to leave the employment of the Company; and
(b) for the one-year period immediately following the termination of
this Agreement due to the expiration of the term of this Agreement, termination
of Executive for Cause, or Executive's voluntary resignation; and for the
one-year period immediately following the last date on which Employee shall
receive payments from the Company pursuant to Section 8 hereof following a
termination of employment as a result of Employee's Disability, work for a
company or business (in any capacity, including without limitation as director,
officer, or employee) that is in the business of marketing internet related
products such as benefits, mortgages, and web sites , that competes with the
Company and is located in the United States or within 50 miles of any branch
office of the Company.
Executive has carefully read and considered the provisions of Sections 10,
11, and 12 hereof and agrees that the restrictions set forth in such sections
are fair and reasonable and are reasonably required for the protection of the
interests of the Company, its officers, directors, shareholders, and other
employees, for the protection of the business of the Company, and to ensure that
Executive devotes his full-time and efforts to the business of the Company.
Executive acknowledges that he is qualified to engage in businesses other than
those that are subject to this Section 12. It is the belief of the parties,
therefore, that the best protection that can be given to the Company that does
not in any way infringe upon the rights of Executive to engage in any unrelated
businesses is to provide for the restrictions described above. In view of the
substantial harm which would result from a breach by Executive of Sections 10,
11 and 12, the parties agree that the restrictions contained therein shall be
enforced to the maximum extent permitted by law. In the event that any of said
restrictions shall be held unenforceable by any court of competent jurisdiction,
the parties hereto agree that it is their desire that such court shall
substitute a reasonable judicially enforceable limitation in place of any
limitation deemed unenforceable and that as so modified, the covenant shall be
as fully enforceable as if it had been set forth herein by the parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in Sections 10, 11 and 12 are considered
to be reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that monetary damages would not provide an adequate remedy to the
6
<PAGE>
Company if the covenants contained in Sections 10, 11 and 12 were not complied
with in accordance with their terms. Accordingly, Executive agrees that the
Company shall be entitled to injunctive and other equitable relief to secure the
enforcement of these provisions, in addition to any other remedy which may be
available to the Company, and that the Company shall be entitled to receive from
Executive reimbursement for reasonable attorneys' fees and expenses incurred by
the Company in enforcing these provisions.
14. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
If to the Executive: To the address set forth below his signature on the
signature page hereof.
If to the Company:
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the Company and
Executive, and the Company and Executive hereby acknowledge and agree that this
Agreement supersedes any prior statements, writings, promises, understandings or
commitments.
(b) No future oral statements, promises or commitments with respect
to the subject matter hereof, or other purported modification hereof, shall be
binding upon the parties hereto unless the same is reduced to writing and signed
by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each case plus
interest, provided that the Executive is the prevailing party in any such
contest. If the Executive is not the prevailing party each party shall pay its
own
7
<PAGE>
legal fees and expenses except that if such contest is the result of a claimed
breach of Section 10, 11 or 12, and the Company shall be the prevailing party,
the Executive shall pay the reasonable legal fees and expenses of the Company.
The determination of the prevailing party in any contest shall be made by the
tribunal which shall resolve such contest, or by the parties if such contest is
settled without resort to any such tribunal.
18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the laws of
the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or the interpretation of this
Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be sent
postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this Agreement
shall for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Agreement shall be unimpaired, and the invalid, illegal or
unenforceable provision shall be replaced by a mutually acceptable valid, and
enforceable provision which comes closest to the intent of the parties.
(f) This Agreement may be executed in any number of counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
Interactive Technologies.com, Ltd., a Delaware corporation
By:_______________________________________
Its:
__________________________________________
Matthew J. Cohen
9
Exhibit 6.3
Commercial Office Lease (Triple Net)
THIS COMMERCIAL OFFICE LEASE ("Lease") is entered into as of the 15th day
of April, 1999 ("Lease Date") by and between Landlord and Tenant as described in
the following Lease Summary on the Lease Date. Landlord leases to Tenant and
Tenant rents from Landlord the Premises upon the terms and conditions
hereinafter set forth:
1 LEASE SUMMARY
1.1 Summary of Basic Lease Information. The following terms are a
summary of the basic provisions of this Lease:
<TABLE>
<S> <C> <C>
1.1.1 Landlord: Grip Development, Inc.
1.1.2 Landlord's Address: 110 East Atlantic Avenue, Suite 325
Delray Beach, Florida 33444
1.1.3 Tenant: Interactive Technologies.com, Ltd.,
United Interactive Technologies, Inc.,
Integrated Merchant Services, Inc.,
Web Classified.net, Inc.,
Soc Sec/Fed Tax Id # 65-0484771
1.1.4 Tenant's Address: 110 East Atlantic Avenue, Suite 400
Delray Beach, Florida 33444
1.1.5 Guarantor(s): None
1.1.6 Guarantor(s) Address: N/A
1.1.7 Guarantor(s) SS#:
1.1.8 Bldg. Name and Address: The Grip Building
110 East Atlantic Avenue
Delray Beach, Florida 33444
1.1.9 Premises: Suite 400
as shown on the "Floor Plan" attached
hereto as Exhibit "A".
</TABLE>
================================================================================
Commercial Office Lease. The Grip Building
page 1 of 28 pages
<PAGE>
<TABLE>
<S> <C> <C>
1.1.10 Gross Rentable Area Approximately 12044.77 square feet.
of the Premises:
1.1.11 Term: One Hundred and twenty (120) months,
beginning on the Commencement Date
and ending on the Expiration Date, unless
sooner terminated as hereinafter
provided.
1.1.12 Commencement Date: August 1, 1999
1.1.13 Expiration Date: July 31, 2009.
1.1.14 Security Deposit: First, last and one month's additional
security plus operating expenses for first
and last months.
1.1.15 Monthly Base Rent:
</TABLE>
- --------------------------------------------------------------------------------
Amount Per Month Commencing On Ending On
(plus applicable sales tax)
- --------------------------------------------------------------------------------
$9,755.28 August 1, 1999 July 31, 2000
- --------------------------------------------------------------------------------
$14,163.64 August 1, 2000 July 31, 2001
- --------------------------------------------------------------------------------
$14,584.55 August 1, 2001 July 31, 2002
- --------------------------------------------------------------------------------
$15,022.09 August 1, 2002 July 31, 2003
- --------------------------------------------------------------------------------
$15,472.75 August 1, 2003 July 31, 2004
- --------------------------------------------------------------------------------
$15,936.93 August 1, 2004 July 31, 2005
- --------------------------------------------------------------------------------
$16,415.04 August 1, 2005 July 31, 2006
- --------------------------------------------------------------------------------
$16,907.49 August 1, 2006 July 31, 2007
- --------------------------------------------------------------------------------
$17,414.71 August 1, 2007 July 31, 2008
- --------------------------------------------------------------------------------
$17,937.15 August 1, 2008 July 31, 2009
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1.1.16 Operating Expense: This is a triple net lease. The Operating
Expenses are not included in Monthly
</TABLE>
================================================================================
Commercial Office Lease. The Grip Building
page 2 of 28 pages
<PAGE>
<TABLE>
<S> <C> <C>
Base Rent described above.
(Operating Expenses for 1998
are estimated to be $4.50 per
square foot).
1.1.17 Tenant's Share: 29.089 percent (determined by dividing
the Gross Rentable Area of the Premises
by the Gross Rentable Area of the
Building, multiplying the resulting
quotient by 100, and rounding to the 3rd
decimal place).
1.1.18 Parking Spaces: 23 spaces 4 covered
1.1.19 Parking Charge: Included in Tenant's Share of Operating
Expenses. See, P. 1.1.17
1.1.20 Broker: Jack Lupo
1.1.21 Electric: Included in Tenant's Share of Operating
Expenses. See, P. 1.1.17
1.1.22 Tenant Improvements: See, EXHIBIT "D"
1.1.23 Prepaid Rent: First month's Minimum Rent prepaid
with the execution of this Lease.
1.1.24 Permitted Use Internet company.
of Premises:
</TABLE>
2 EXHIBITS. The following exhibits and addenda which are attached to this
Lease are incorporated into and made a part of this Lease as though fully
set forth herein:
EXHIBIT A - Floor Plan showing the Premises
EXHIBIT B - Legal Description of the Building
EXHIBIT C - Rules and Regulations
EXHIBIT D - Tenant Improvements
EXHIBIT F - Guaranty of Lease
3 TERM.
3.1 Grant; Term. In consideration of the performance by the Tenant of
its obligations under this Lease, the Landlord leases to the Tenant
and Tenant
================================================================================
Commercial Office Lease. The Grip Building
page 3 of 28 pages
<PAGE>
leases from the Landlord, for the Term, the "Premises," which
Premises are shown outlined on the floor plan attached hereto and
made a part hereof as Exhibit "A." The Premises, are located in that
certain office building, called The Grip Building (the "Building"),
located in Palm Beach, Florida, as more particularly described in
Exhibit "B", attached hereto and made a part hereof. The Gross
Rentable Area of the Premises, as described in the Lease Summary, is
equal to the sum of the net useable area of the Premises plus a
proportionate share of the Common Areas (according to B.O.M.A.
standards).
The 'Term" of the Lease is the period from the Commencement Date as
specified in the Lease Summary, through the Expiration Date, as
specified in the Lease Summary. If the Premises are ready for
occupancy prior to the Commencement Date, then Tenant shall take
occupancy on such date and Tenant's obligations to pay Minimum Rent
and all other charges shall commence on such date. If Landlord
cannot deliver possession of the Premises to Tenant on the
Commencement Date, this Lease shall not be void or voidable, nor
shall Landlord be liable to Tenant for any loss or damage resulting
therefrom; but, in that event, this Lease shall in all ways remain
in full force and effect except that Minimum Rent and other charges
shall be waived for the period between the Commencement Date and the
time when Landlord can deliver possession; provided, however, if
delivery of possession is delayed more than ninety (90) days past
the scheduled Commencement Date, Tenant may terminate this Lease
upon fifteen (15) days' written notice to Landlord, whereupon both
parties shall be relieved of all further obligations hereunder.
Notwithstanding the foregoing, if delivery of possession is delayed
due to any act or omission of Tenant, then the Commencement Date
shall be the date Landlord would have delivered possession, but for
Tenant's delay.
The Landlord shall have no construction or improvement obligation
with respect to the Premises unless expressly provided for in a work
letter agreement, which, if executed by Landlord and Tenant, shall
be incorporated as Exhibit "D" to this Lease. Upon the expiration of
five (5) business days following the Commencement Date, the Premises
shall conclusively be assumed to be accepted by Tenant unless Tenant
shall have given Landlord written notice of any contended defects in
the Premises.
================================================================================
Commercial Office Lease. The Grip Building
page 4 of 28 pages
<PAGE>
4 RENT.
4.1 Covenant to Pay. The Tenant shall pay to Landlord all sums due
hereunder from time to time from the Commencement Date, without
prior demand, together with all applicable Florida sales tax
thereon; however, unless otherwise provided in this Lease, payments,
other than Tenant's regular monthly payments of Minimum Rent and
Operating Costs shall be payable by Tenant to Landlord within five
(5) days following demand. All rent and other charges that are
required to be paid by Tenant to Landlord shall be payable at
Landlord's address indicated on the Lease Summary. Monthly Rent,
Operating Costs and any other charges for any "Lease Year"
consisting of less than twelve (12) months shall be prorated on a
per diem basis, based upon a period of 365 days. "Lease Year" means
the twelve (12) full calendar months commencing on the Commencement
Date. However, the final Lease Year may contain less than twelve
(12) months due to expiration or sooner termination of the Term. The
Tenant agrees that its covenant to pay rent, Operating Costs and all
other sums due under this Lease is an independent covenant and that
all such amounts are payable without counterclaim, set-off,
deduction, abatement, or reduction whatsoever, except as expressly
provided for in this Lease.
4.2 Minimum Rent. Subject to any escalation which may be provided for in
this Lease, the Tenant shall pay Minimum Rent for the Term in the
initial amount specified in the Lease Summary, which, except for the
first installment, shall be payable throughout the Term in equal
monthly installments on the first day of each calendar month of each
year of the Term. Such monthly installments shall be in the amounts
(subject to escalation, if any) specified in the Lease Summary. The
first monthly installment of Minimum Rent shall be due upon
execution of this Lease. The Minimum Rent described above shall be
adjusted at the beginning of the second and each succeeding Lease
Year during the Term of this Lease as provided in the Lease Summary.
4.3 Operating Costs. The Tenant shall pay to the Landlord the Tenant's
proportionate share of the annual Operating Costs, as hereinafter
defined, for each month of the Term. The amount of Operating Costs
payable to the Landlord may be estimated by the Landlord for such
period as the Landlord determines from time to time (not to exceed
twelve (12) months), and the Tenant agrees to pay to the Landlord
the amounts so estimated in equal installments, in advance, on the
first day of each month during such period. Notwithstanding the
foregoing, when bills for all or any portion of Operating Costs so
estimated are actually received by Landlord, the Landlord may bill
the Tenant for the Tenant's proportionate share thereof, less any
amount
================================================================================
Commercial Office Lease. The Grip Building
page 5 of 28 pages
<PAGE>
previously paid by Tenant to Landlord on account of such item(s) by
way of estimated Operating Costs payments.
Within a reasonable period of time after the end of the period for
which estimated payments have been made, the Landlord shall submit
to the Tenant a statement from the Landlord setting forth the actual
amounts payable by the Tenant based on actual costs. If the amount
the Tenant has paid based on estimates is less than the amount due
based on actual costs, the Tenant shall pay such deficiency within
five (5) days after submission of such statement. If the amount paid
by the Tenant is greater than the amount actually due, the excess
may be retained by the Landlord to be credited and applied by the
Landlord to the next due installments of the Tenant's proportionate
share of Operating Costs, or as to the final Lease Year, provided
Tenant is not in default, Landlord will refund such excess to
Tenant. The Tenant's proportionate share of Operating Costs for the
final estimated period of the Term of this Lease shall be due and
payable even though it may not be finally calculated until after the
expiration of the Term. Accordingly, Landlord shall have the right
to continue to hold Tenant's security deposit following expiration
of the Term until Tenant's share of actual Operating Costs has been
paid.
For purposes of this Lease, Tenants proportionate share shall be a
fraction, the numerator of which is the Gross Rentable Area of the
Premises and the denominator of which is the Gross Rentable Area of
the Building. Tenant's proportionate share is as set forth in the
Lease Summary. The term "Operating Costs" shall mean any amounts
paid or payable whether by the Landlord or by others on behalf of
the Landlord, arising out of Landlord's maintenance, operation,
repair, replacement (if such replacement increases operating
efficiency) and administration of the Building and Common Areas,
including, without limitation:
4.3.1 the cost of all real estate, personal property and other ad
valorem taxes, and any other levies, charges, local
improvement rates, and assessments whatsoever assessed or
charged against the Building and Common Areas, the equipment
and improvements therein contained, and including any amount
assessed or charged in substitution for or in lieu of any
such taxes, excluding only income or capital gains taxes
imposed upon Landlord, and including all costs associated
with the appeal of any assessment on taxes;
4.3.2 the cost of insurance which the Landlord is obligated or
permitted to obtain under this Lease and any deductible
amount applicable to any
================================================================================
Commercial Office Lease. The Grip Building
page 6 of 28 pages
<PAGE>
claim made by the Landlord under such insurance;
4.3.3 the cost of security, janitorial, landscaping, garbage
removal, and trash removal services,
4.3.4 the cost of heating, ventilating, and air conditioning, to
the extent incurred with respect to Common Areas or with
respect to any shared systems;
4.3.5 the cost of all fuel, water, electricity, telephone, and any
other utilities used in the maintenance, operation, or
administration of the Building and Common Areas;
4.3.6 salaries, wages, and any other amounts paid or payable for
the personnel involved in the repair, maintenance,
operation, security, supervision, or cleaning of the
Building and Common Areas; and
4.3.7 a reasonable management fee.
4.4 Payment of Personal Property Taxes. Tenant shall pay, when due, all
taxes attributable to the personal property, trade fixtures,
business, occupancy, or sales of Tenant or any other occupant of the
Premises and to the use of the Building by Tenant or such other
occupant.
4.5 Rent Past Due. If any Payment due from Tenant shall be overdue, a
late charge of five (5%) percent of the delinquent sum may be
charged by Landlord. If any payment due from Tenant shall remain
overdue for more than fifteen (15) days, an additional late charge
in an amount equal to the lesser of the highest rate permitted by
law or one and one-half (1.5% percent per month or eighteen (18%)
percent per annum) of the delinquent amount may be charged by
Landlord, such charge to be computed for the entire period for which
the amount is overdue and which shall be in addition to and not in
lieu of the five (5%) percent late charge or any other remedy
available to Landlord.
4.6 Security Deposit. The Landlord acknowledges receipt of a security
deposit in the amount specified on the Lease Summary to be held by
the Landlord, without any liability for interest thereon, as
security for the performance by the Tenant of all its obligations
under this Lease. Landlord shall be entitled to commingle the
security deposit with Landlord's other funds. If Tenant should
default in any of its obligations under this Lease, the Landlord may
at its option, but without prejudice to any other rights which the
Landlord
================================================================================
Commercial Office Lease. The Grip Building
page 7 of 28 pages
<PAGE>
may have, apply all or part of the security deposit to compensate
the Landlord for any loss, damage, or expense sustained by the
Landlord as a result of such default. If all or any part of the
security deposit should be so applied, then the Tenant shall restore
the security deposit to its original amount on demand of the
Landlord. Subject to the provisions of section 4.3, within thirty
(30) days following termination of this Lease, if the Tenant is not
then in default, the security deposit will be returned by the
Landlord to the Tenant.
4.7 Landlord's Lien. To secure the payment of all rent and other sums of
money due and to become due hereunder and the faithful performance
of this Lease by Tenant, Tenant hereby gives to Landlord an express
first and prior contract lien and security interest on all property
now or hereafter acquired (including fixtures, equipment, chattels,
and merchandise which may be placed in the Premises) and also upon
all proceeds of any insurance which may accrue to Tenant by reason
of destruction of or damage to any such property. Such property
shall not be removed therefrom without the written consent of
Landlord until all arrearages in rental and other sums of money then
due to Landlord hereunder shall first have been paid. All exemption
laws are hereby waived in favor of said lien and security interest.
This lien and security interest is given in addition to Landlord's
statutory lien and shall be cumulative thereto. Landlord shall, in
addition to all of its rights hereunder, have all of the rights and
remedies of a secured party under the Florida Uniform Commercial
Code. To the extent permitted by law, this Lease shall constitute a
security agreement under Article 9 of the Florida Uniform Commercial
Code.
5 USE OF PREMISES.
5.1 Permitted Use. The Premises shall be used and occupied only for the
use specified in the Lease Summary. Tenant shall carry on its
business on the Premises in a reputable manner and shall not do,
omit to do, permit, or suffer to be done or exist upon the Premises
anything which shall result in a nuisance, hazard, or bring about a
breach of any provision of this Lease or any applicable municipal or
other governmental law or regulation. Tenant shall observe all
reasonable rules and regulations established by Landlord from time
to time for the Building. The rules and regulations in effect as of
the date hereof are attached to and made a part of this Lease as
Exhibit "C." The names for the Building, which the Landlord may from
time to time adopt, and every name or mark adopted by the Landlord
in connection with the Building shall be used by the Tenant only in
association with the business carried on in the Premises during the
Term and the Tenant's use thereof shall
================================================================================
Commercial Office Lease. The Grip Building
page 8 of 28 pages
<PAGE>
be subject to such regulation as the Landlord may, from time to
time, impose.
5.2 Compliance with Laws. The Premises shall be used and occupied in a
safe, careful, and proper manner so as not to contravene any
governmental or quasi-governmental laws, regulations, or orders, or
the requirements of the Landlord's or Tenant's insurers which may be
in effect from time to time throughout the Term of the Lease. If,
due to the Tenant's use of the Premises, repairs, improvements, or
alterations should become necessary to comply with any of the
foregoing, then the Tenant shall pay the entire cost thereof.
5.3 Signs. Except with the prior written consent of the Landlord, the
Tenant shall not erect, install, display, inscribe, paint, or affix
any signs, lettering, or advertising medium upon or above any
exterior portion of the Premises. Landlord, at its expense, will
provide one building standard identification sign outside the
principal entry to the Premises and will provide space on a
directory in the Building lobby.
5.4 Environmental Provisions. Tenant warrants and represents that it
will not use or employ the Landlord's and/or the Building property's
facilities, equipment, or services to handle, transport, store,
treat, or dispose of any hazardous waste or hazardous substance,
whether or not it has generated or produced same on the Premises.
Tenant further warrants and represents that any activity on or
relating to the Premises shall be conducted in full compliance with
all applicable laws. Tenant agrees to defend, indemnify, and hold
harmless Landlord against any and all claims, costs, expenses,
damages, liability, and the like, which Landlord may hereafter be
liable for, suffer, incur, or pay arising under any applicable laws
which may result from or arise out of any breach of the warranties
and representations by Tenant contained in this section 5.4, or out
of any act, activity, violation of any applicable laws by Tenant,
its agents, employees, or assigns. Tenant's liability under this
section 5.4 shall survive the expiration of any termination of this
Lease.
6 ACCESS AND ENTRY.
6.1 Right of Examination. The Landlord shall be entitled at all
reasonable times, and upon reasonable notice (but no notice shall be
required in emergencies) to enter the Premises to examine them; to
make such repairs, alterations, or improvements thereto as the
Landlord considers necessary or reasonably desirable; to have access
to underfloor facilities and access panels to mechanical shafts and
to check, calibrate, adjust and balance controls and other parts of
the heating, air conditioning, ventilating, and meter control
================================================================================
Commercial Office Lease. The Grip Building
page 9 of 28 pages
<PAGE>
systems. The Landlord reserves to itself the right to install,
maintain, use, and repair pipes, ducts, conduits, vents, wires, and
other installations leading in, through, over, or under the Premises
and for this purpose, the Landlord may take all material into and
upon the Premises which is required therefore. The Tenant shall not
unduly obstruct any pipes, conduits, or mechanical or other
electrical equipment so as to prevent reasonable access thereto. The
Landlord reserves the right to use all exterior walls and roof area.
The Landlord shall exercise its rights under this section, to the
extent possible in the circumstances, in such manner so as to
minimize interference with the Tenant' s use and enjoyment of the
Premises.
6.2 Right to Show Premises. The Landlord and its agents have the right
to enter the Premises at all reasonable times and upon reasonable
notice to show them to prospective purchasers, lenders, or anyone
else having a prospective interest in the Building, and, during the
last six (6) months of the Term (or the last six (6) months of any
renewal term if this Lease is renewed) to show them to prospective
tenants.
7 MAINTENANCE, REPAIRS, AND ALTERATIONS.
7.1 Maintenance and Repairs by Landlord. The Landlord covenants to keep
the following in good repair as a prudent owner:
7.1.1 the structure of the Building including exterior walls and
roof;
7.1.2 the mechanical, electrical, HVAC and other base building
systems (except such as may be installed by or be the
property of the Tenant or as may be serving only the
Premises), and
7.1.3 the entrances, sidewalks, corridors, parking areas and other
facilities that, from time to time, may comprise the Common
Areas. So long as the Landlord is acting in good faith, the
Landlord shall not be responsible for any damages caused to
the Tenant by reason of failure of any equipment or
facilities serving the Building or delays in the performance
of any work for which the Landlord is responsible pursuant
to this Lease. Notwithstanding any other provisions of this
Lease, if any part of the Building is damaged or destroyed
or requires repair, replacement, or alteration as a result
of the act or omission of the Tenant, its employees, agents,
invitees, licensees, or contractors, the Landlord shall have
the right to perform same, and the cost of such repairs,
replacement or alterations shall be paid by the Tenant to
the Landlord upon demand. In addition, if, in an emergency,
it shall
================================================================================
Commercial Office Lease. The Grip Building
page 10 of 28 pages
<PAGE>
become necessary to make promptly any repairs or
replacements required to made by Tenant, Landlord may enter
the Premises and proceed forthwith to have such repairs or
replacements made and pay the costs thereof. Upon demand,
Tenant shall reimburse Landlord for the cost of making such
repairs or replacements.
7.2 Maintenance and Repairs by Tenant. The Tenant shall, at its sole
cost, repair or maintain the Premises (including, without
limitation, floor and wall coverings, electric light bulbs and tubes
and tube casings) exclusive of base building mechanical and
electrical systems, all to a standard of a first class office
building, with the exception only of those repairs which are the
obligation of the Landlord pursuant to this Lease. All repairs and
maintenance performed by the Tenant in the Premises shall be
performed by contractors or workmen designated or approved by the
Landlord. At the expiration or earlier termination of the Term, the
Tenant shall surrender the Premises to the Landlord in as good
condition and repair as the Tenant is required to maintain the
Premises throughout the Term.
7.3 Approval of Tenant's Alterations. No alterations (including, without
limitation, repairs, replacements, additions, or modifications to
the Premises by Tenant) other than cosmetic alterations which are
interior and nonstructural, shall be made to the Premises without
the Landlord's written approval, which, as to exterior or structural
alterations may be withheld in the Landlord's sole discretion. Any
alterations by Tenant shall be performed at the sole cost of the
Tenant, by contractors and workmen approved by Landlord in a good
and workmanlike manner, and in accordance with all applicable laws
and regulations.
7.4 Removal of Improvements and Fixtures. All Leasehold improvements and
fixtures (other than those which can be removed without damage to
the Premises), at the expiration of the Term or upon earlier
termination of this Lease, shall become the Landlord's property.
During the Term, in the usual course of its business, the Tenant may
remove its trade fixtures, provided the Tenant is not in default
under this Lease. Tenant shall, at the expiration or earlier
termination of the Term, at its sole cost, remove such of the
leasehold improvements (except for improvements installed by
Landlord prior to the Commencement Date) and trade fixtures in the
Premises as the Landlord shall require to be removed and restore the
Premises to the condition that existed prior to Tenants installation
of such fixtures. The Tenant shall, at its own expense, repair any
damage caused to the Building or the Premises by such removal. If
the Tenant does not remove its trade fixtures at the expiration or
earlier termination of the Term, the trade fixtures shall, at the
================================================================================
Commercial Office Lease. The Grip Building
page 11 of 28 pages
<PAGE>
option of the Landlord, either be removed by Landlord at the expense
of the Tenant or become the property of the Landlord and may be
removed from the Premises and sold or disposed of by the Landlord in
such manner as it deems advisable without any accounting to Tenant.
7.5 Liens. The Tenant shall promptly pay for all materials supplied and
work done in respect of the Premises so as to ensure that no lien is
recorded against any portion of the Building or against the
Landlord's or Tenant's interest therein. If a lien should be so
recorded, the Tenant shall discharge it promptly by payment or
bonding. If any such lien against the Building or Landlord's
interest therein is recorded and not discharged by Tenant as above
required within fifteen (15) days following recording, the Landlord
shall have the right to remove such lien by bonding or payment and
the cost thereof shall be paid immediately by Tenant to Landlord.
Landlord and Tenant expressly agree and acknowledge that no interest
of Landlord in the Premises or the Building shall be subject to any
lien for improvements made by Tenant in or for the Premises, and the
Landlord shall not be liable for any lien for any improvements made
by Tenant. Such liability is expressly prohibited by the terms of
this Lease. In accordance with applicable laws of the State of
Florida, Landlord has filed in the public records of Palm Beach
County, Florida, a public notice containing a true and correct copy
of this paragraph; and, Tenant hereby agrees to inform all
contractors and materialmen performing work in or for or supplying
materials to the Premises of the existence of said notice.
7.6 Services; Utilities. Landlord shall, as part of Operating Costs,
furnish the Premises with the following services in the manner that
such services are provided to comparable office buildings in the
area:
7.6.1 electricity for lighting and for the operation of office
machines;
7.6.2 heating, ventilation and air conditioning ("HVAC") to the
extent reasonably required for the comfortable occupancy by
the Tenant in its use of the Premises during the period on
weekdays, Monday through Friday, from 8:00 a.m. to 6:00
P.M., except for holidays declared by the federal government
or such shorter periods as may be prescribed by any
applicable policies or regulations adopted by any utility or
governmental agency;
7.6.3 elevator service;
7.6.4 rest room supplies;
================================================================================
Commercial Office Lease. The Grip Building
page 12 of 28 pages
<PAGE>
7.6.5 window washing with reasonable frequency;, and
7.6.6 daily janitor service Monday through Friday
HVAC service for common areas at times other than 8:00 a.m. to 6:00
p.m., Monday through Friday shall be provided by Landlord, at
Tenant's expense, upon written request by Tenant delivered to
Landlord prior to 1:00 p.m. at least one (1) business day in advance
of the date for which such service is needed. In addition, Landlord
shall provide security to the Building in the manner required by
this Lease. The Tenant shall pay to the Landlord, or as the Landlord
directs, all gas, electricity, water, and other utility charges
applicable to the Premises as separately metered or, if not so
metered, as part of Tenant's proportionate share of Operating Costs.
8 INSURANCE AND INDEMNITY.
8.1 Tenant's Insurance. The Tenant shall, throughout the Term (and any
other period when Tenant is in possession of the Premises), maintain
at its sole cost the following insurance:
8.1.1 All risks property insurance. Such policy shall name the
Tenant and the Landlord as insured parties, containing a
waiver of subrogation rights which the Tenant's insurers may
have against the Landlord and against those for whom the
Landlord is in law responsible including, without
limitation, its directors, officers, agents, and employees,
and (except with respect to the Tenant's chattels)
incorporating a standard New York mortgagee endorsement
(without contribution). Such insurance shall insure property
of every kind owned by the Tenant in an amount not less than
the full replacement cost thereof (new), with such cost to
be adjusted not less than annually.
8.1.2 Comprehensive general liability insurance. Such policy shall
contain inclusive limits per occurrence of not less than the
amount specified in the Lease Summary; provide for
cross-liability; and include the Landlord and any mortgagee
of Landlord as additional insureds.
8.1.3 Worker's compensation and employer's liability insurance.
Such policy(ies) shall be in compliance with applicable
legal requirements.
Any other form of insurance which the Tenant or the Landlord, acting
reasonably, should require, from time to time, in such form and
amount, and
================================================================================
Commercial Office Lease. The Grip Building
page 13 of 28 pages
<PAGE>
for risks against which a prudent tenant would insure. All policies
referred to above shall be
8.1.4 taken out with insurers licensed to do business in Florida
and reasonably acceptable to the Landlord;
8.1.5 be in a form reasonably satisfactory to the Landlord;
8.1.6 be non-contributing with, and shall apply only as primary
and not as excess to any other insurance available to the
Landlord or any mortgagee of Landlord;
8.1.7 contain an undertaking by the insurers to notify the
Landlord by certified mail not less than thirty (30) days
prior to any material change, cancellation, or termination,
and
8.1.8 with respect to subsection 8.1., contain replacement cost,
demolition cost and increased cost of construction, and
endorsements.
Certificates of insurance on the Landlord's standard form (if
provided by Landlord), or, if required by a mortgagee, copies of
such insurance policies certified by an authorized officer of
Tenant's insurer as being complete and current shall be delivered to
the Landlord promptly upon request. If the Tenant has to take out or
keep in force any insurance referred to in this section 8.1 or
should any such insurance not be approved by either the Landlord or
any mortgagee, and the Tenant does not commence and continue
diligently to cure such default within forty-eight (48) hours after
written notice by the Landlord to the Tenant specifying the nature
of such default, then the Landlord shall have the right, without
assuming any obligation in connection therewith, to effect such
insurance at the sole cost of the Tenant and all outlays by the
Landlord shall be paid by the Tenant to the Landlord without
prejudice to any other rights or remedies of the Landlord under this
Lease. The Tenant shall not keep or use in the Premises any article
which may be prohibited by any fire or casualty insurance policy in
force from time to time covering the Premises or the Building.
8.2 Loss or Damage. The Landlord shall not be liable for any death or
injury arising from or out of
8.2.1 any occurrence in, upon, at, or relating to the Building or
damage to property of the Tenant or of others located on the
Premises or elsewhere in the building, or
================================================================================
Commercial Office Lease. The Grip Building
page 14 of 28 pages
<PAGE>
8.2.2 any loss of or damage to any property of the Tenant or
others,
from any cause whatsoever, including those caused by Landlord's
negligence, UNLESS SUCH DEATH, INJURY, LOSS, OR DAMAGE SHOULD BE
PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE LANDLORD. Without limiting the generality of the foregoing, the
Landlord shall not be liable for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, falling
ceiling tile, falling fixtures, steam, gas, electricity, water,
rain, flood, or leaks from any part of the Premises or from the pipe
sprinklers, appliances, plumbing works, roof, windows, or subsurface
of any floor or ceiling of the Building or from the street or any
other place or by dampness, or by any other cause whatsoever.
The Tenant agrees to indemnify the Landlord and hold it harmless
from and against any and all loss including loss of Minimum Rent and
Operating Costs payable in respect to the Premises, claims, actions,
damages, liability, and expense of any kind whatsoever (including
attorneys' fees and costs at all tribunal levels), arising from any
occurrence in, upon, or at the Premises, or the occupancy, use, or
improvement by the Tenant or its agents or invitees of the Premises
or any part thereof, or occasioned wholly or in part by any act or
omission of the Tenant, its agents, employees and invitees or by
anyone permitted to be on the Premises by the Tenant, or resulting
from any cause whatsoever including, but not limited to, the
negligence of Landlord UNLESS SUCH LOSS SHOULD BE PROXIMATELY CAUSED
BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD.
8.3 Landlord's Insurance. Throughout the Term, the Landlord shall carry:
8.3.1 "all risks" insurance on the Building and the machinery and
equipment contained therein or servicing the Building and
owned by the Landlord (excluding any property with respect
to which the Tenant and other tenants are obliged to insure
pursuant to section 8.1 or similar sections of their
respective leases);
8.3.2 public liability and property damage insurance, with respect
to the Landlord's operations in the Building; and
8.3.3 such other forms of insurance as the Landlord or its
mortgagee reasonably considers advisable. Such insurance
shall be in such reasonable amounts and in such reasonable
deductions as would be
================================================================================
Commercial Office Lease. The Grip Building
page 15 of 28 pages
<PAGE>
carried by a prudent owner of a similar building, having
regard to size, age, and location.
9 DAMAGE AND DESTRUCTION
9.1 Damage to Premises. If the Premises are partially destroyed due to
fire or other casualty, the Landlord shall diligently repair the
Premises, to the extent of its obligations under section 7.1, and
Minimum Rent shall abate proportionately to the portion of the
Premises, if any, rendered untenantable from the date of the
destruction or damage until the Landlord's repairs have been
substantially completed. If the Premises are totally destroyed due
to fire or other casualty, the Landlord shall diligently repair the
Premises only to the extent of its obligations pursuant to section
7.1; and, Minimum Rent shall abate entirely from the date of
destruction or damage to such date which is the earlier of the date
tenantable, or thirty (30) days after Landlord's repairs have been
substantially completed. Upon being notified by the Landlord that
the Landlord's repairs have been substantially completed, the Tenant
shall diligently perform all other work required to fully restore
the Premises for use in the Tenants business, in every case at the
Tenant' s cost and without any contribution to such cost by the
Landlord, whether or not the Landlord has at any time made any
contribution to the cost of supply, installation, or construction of
leasehold improvements in the Premises. Tenant agrees that during
any period of reconstruction or repair of the Premises, it will
continue the operation of its business, within the Premises to the
extent practicable. If all or any part of the Premises shall be
damaged by fire or other casualty and the fire or other casualty is
caused by the fault of neglect of Tenant or Tenant's agents, guests,
or invitees, then Minimum Rent and all other charges shall not
abate.
9.2 Termination for Damage. Notwithstanding section 9.1, if damage or
destruction that should occur to the Premises or the Building is
such that in the reasonable opinion of the Landlord such
reconstruction or repair cannot be completed within one hundred
twenty (120) days of the happening of the damage or destruction,
then the Landlord may, at its option, terminate this Lease on notice
to the Tenant given within thirty (30) days after such damage or
destruction; and, the Tenant shall immediately deliver vacant
possession of the Premises in accordance with the terms of this
Lease.
10 ASSIGNMENT, SUBLEASES, AND TRANSFERS.
10.1 Transfer by Tenant. The Tenant shall not enter into, consent to, or
otherwise permit any Transfer, as hereinafter defined, without the
prior written consent
================================================================================
Commercial Office Lease. The Grip Building
page 16 of 28 pages
<PAGE>
of the Landlord in each instance, which consent shall not be
unreasonably withheld. For purposes of this Lease, "Transfer" means
an assignment of this Lease in whole or in part, a sublease of all
or any part of the Premises, any transaction whereby the rights of
the Tenant under this Lease or to the Premises are transferred to
another, any mortgage or encumbrance of this Lease or the Premises
or any part thereof or other arrangement under which either this
Lease or the Premises become security for any indebtedness or other
obligations; and, if Tenant is a corporation or a partnership, then
"Transfer" shall include the transfer of a controlling interest in
the stock of the corporation or partnership interests, as
applicable. If there is a permitted Transfer, the Landlord may
collect Minimum Rent, Operating Costs and other payments from the
transferee and apply the net amount collected to the rent or other
payments required to be paid pursuant to this Lease; but, in no
event shall acceptance by the Landlord of any payments by a
transferee be deemed a waiver of any provisions hereof regarding
Tenant. Notwithstanding any Transfer, the Tenant shall not be
released from any of its obligations under this Lease. The
Landlord's consent to any Transfer shall be subject to the further
condition that if the sum paid by such transferee to Tenant pursuant
to such Transfer exceeds the Minimum Rent, Operating Costs and other
charges (if any) payable under this Lease, the amount of such excess
shall be paid to the Landlord. If, pursuant to a permitted Transfer,
the Tenant should receive for such Transfer from the transferee,
either directly or indirectly, any consideration other than Minimum
Rent, Operating Costs and other charges payable pursuant to this
Lease, either in the form of cash, goods, or services, then the
Tenant shall, upon receipt thereof, pay to the Landlord an amount
equivalent to such consideration.
10.2 Assent by Landlord. The Landlord shall have the unrestricted right
to sell, lease, convey, or otherwise dispose of the Building or any
part thereof and this Lease or any interest of the Landlord in this
Lease. To the extent that the purchaser or assignee from the
Landlord assumes the obligations of the Landlord under this Lease,
the Landlord shall thereupon and without further agreement be
released of all further liability under this Lease. If the Landlord
sells its interest in the Premises, it shall deliver the security
deposit to the purchaser, and the Landlord will thereupon be
released from any further liability with respect to the security
deposit and its return to the Tenant and the purchaser shall become
directly responsible to Tenant.
11 DEFAULT.
11.1 Defaults. A default by Tenant shall be deemed to have occurred
hereunder, if and whenever:
================================================================================
Commercial Office Lease. The Grip Building
page 17 of 28 pages
<PAGE>
11.1.1 any Minimum Rent or Tenant's proportionate share of
Operating Costs is not paid when due whether or not any
notice or demand for payment has been made by the Landlord;
11.1.2 any other charge which is the obligation of the Tenant under
this Lease is in arrears and is not paid within five (5)
days after written demand by the Landlord;
11.1.3 the Tenant should breach any of its obligations in this
Lease (other than the payment of Minimum Rent or Operating
Costs) and the Tenant should fail to remedy such breach
within fifteen (15) days (or such shorter period ds may be
provided in this Lease);
11.1.4 if such breach cannot reasonably be remedied within fifteen
(15) days (or such shorter period), then if the Tenant
should fail to immediately commence to remedy and thereafter
diligently proceed to remedy such breach, in each case after
written notice from the Landlord;
11.1.5 the Tenant should become bankrupt or insolvent;
11.1.6 any of the Landlord's policies of insurance with respect to
the Building should be canceled or adversely changed as a
result of Tenant' s use or occupancy of the Premises; or
11.1.7 the business operated by Tenant in the Premises should be
closed by governmental or court order for any reason.
11.2 Remedies. In the event of any default hereunder by Tenant, then
without prejudice to any other rights which it has pursuant to this
Lease or at law or in equity, the Landlord shall have the following
rights and remedies, which shall be cumulative ind not alternative:
11.2.1 Landlord may cancel this Lease by notice to the Tenant and
retake possession of the Premises for Landlord's account.
Tenant shall then quit and surrender the Premises to
Landlord. Tenant's liability under this section 11.2 of this
Lease shall continue notwithstanding any expiration and
surrender by Tenant, or any re-entry, repossession, or
disposition hereunder by Landlord.
11.2.2 Landlord may enter the Premises as agent of the Tenant to
take possession of any and all property of the Tenant on the
Premises, to
================================================================================
Commercial Office Lease. The Grip Building
page 18 of 28 pages
<PAGE>
store such property at the expense and risk of the Tenant or
to sell or otherwise dispose of such property in such manner
as the Landlord may see fit without notice to the Tenant.
Re-entry and removal may be effectuated by summary
dispossession proceedings, by any suitable action or
proceeding, or otherwise. Landlord shall not be liable in
any way in connection with its actions pursuant to this
section, to the extent that its actions are in accordance
with law.
11.2.3 If this Lease should be canceled pursuant to subsection
11.2.1 above, then Tenant shall remain liable (in addition
to accrued liabilities) to the fullest extent legally
permissible for all rent and all of the charges Tenant would
have been required to pay until the date this Lease would
have expired had such cancellation not occurred. Tenant's
liability for rent shall continue notwithstanding re-entry
or repossession of the Premises by Landlord. In addition to
the foregoing, Tenant shall pay to Landlord such sums as the
court which has jurisdiction thereover may adjudge as
reasonable attorneys' fees with respect to any successful
lawsuit or action instituted by Landlord to enforce the
provisions of this Lease.
11.2.4 Landlord may relet all or any part of the Premises for all
or any part of the unexpired portion of the Term of this
Lease or for any longer period, and may accept any rent then
attainable. Landlord may grant any concessions of Rent, and
agree to paint or make any special repairs, alterations, and
decorations for any new Tenant as it may deem advisable in
its sole and absolute discretion. Landlord shall not be
under any obligation either to relet or to attempt to relet
the Premises.
11.2.5 If this Lease should be canceled in accordance with
subsection 11.2.1 above, and Landlord should so elect, the
Minimum Rent and Operating Costs hereunder shall be
accelerated, and Tenant shall pay Landlord damages in the
amount any and all sums which would have been due for the
remainder of the Term.
11.2.6 Landlord may remedy or attempt to remedy any default of the
Tenant under this Lease for the account of the Tenant and to
enter upon the Premises for such purposes. Landlord need not
provide Tenant with any notice of its intention to perform
such covenants unless expressly required by this Lease. The
Landlord shall not be liable to the Tenant for any loss or
damage caused by acts of the Landlord in remedying or
attempting to remedy such default, and the Tenant shall pay
to the
================================================================================
Commercial Office Lease. The Grip Building
page 19 of 28 pages
<PAGE>
Landlord all expenses incurred by the Landlord in connection
with remedying or attempting to remedy such default. Any
expenses incurred by Landlord shall accrue interest from the
date of payment by Landlord until the date of repayment by
Tenant at the highest rate permitted by law.
11.3 Costs. The Tenant shall pay to the Landlord on demand the costs
incurred by the Landlord, including attorneys' fees and costs at all
tribunal levels, incurred by the Landlord in enforcing any of the
obligations of the Tenant under this Lease. In addition, upon any
default by Tenant, Tenant shall also be liable to Landlord for the
expenses to which Landlord may be put in re-entering the Premises,
repossessing the Premises, painting, altering, or dividing the
Premises, combining the Premises with an adjacent space for any new
tenant, putting the Premises in proper repair, protecting and
preserving the Premises by placing watchmen and caretakers therein,
reletting the Premises (including attorneys' fees and disbursements,
marshal's and brokerage fees, in so doing); and any other expenses
reasonably incurred by Landlord.
11.4 Additional Remedies; Waiver. The rights and remedies of Landlord set
forth herein shall be in addition to any other right and remedy now
and hereinafter provided by law. All rights and remedies shall be
cumulative and non-exclusive of each other. Any delay or omission by
Landlord in exercising a right or remedy shall not be deemed to
exhaust or impair the Landlord's rights, constitute a waiver of its
rights, or be considered acquiescence by Landlord to a default by
Tenant.
11.5 Default by Landlord. In the event of any default by Landlord,
Tenant's exclusive remedy shall be an action for damages, but prior
to any such action Tenant shall give Landlord written notice
specifying such default with particularity; whereupon, Landlord
shall have a period of thirty (30) days following its actual receipt
of such notice within which to commence an appropriate cure of such
default. Unless and until Landlord should fail to commence and
diligently pursue the appropriate cure of such default after such
notice or complete same within a reasonable period of time, Tenant
shall not have any remedy or cause of action by reason thereof.
Notwithstanding any provision of this Lease, Landlord shall not have
any personal liability, at any time, under this Lease. In the event
of any breach or default by Landlord of any term or provision of
this Lease, Tenant agrees to look solely to the equity or interest
then-owned by Landlord in the Building; and, in no event shall any
deficiency judgment or any money judgment of any kind be sought or
obtained against Landlord.
================================================================================
Commercial Office Lease. The Grip Building
page 20 of 28 pages
<PAGE>
12 ESTOPPEL CERTIFICATE; SUBORDINATION
12.1 Estoppel Certificate. Within ten (10) days after written request by
the Landlord, the Tenant shall deliver in a form supplied by the
Landlord, an estoppel certificate to the Landlord as to
12.1.1 the status of this Lease, including whether 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 identifying the modification
agreements),
12.1.2 the amount of Minimum Rent and Operating Costs then being
paid and the dates to which same have been paid,
12.1.3 whether or not there is any existing or alleged default by
either party with respect to which a notice of default has
been served, or any facts existing which, with the passing
of time or giving of notice, would constitute a default and,
if there is any such default or fact, specifying the nature
and extent thereof, and
12.1.4 any other matters pertaining to this Lease as to which the
Landlord shall request in such certificate.
The Landlord and any prospective purchaser, lender, or ground lessor
shall have the right to rely on such certificate.
12.2 Subordination; Attornment. This Lease and all rights of the Tenant
shall be subject and subordinate to any and all mortgages, security
agreements, or like instruments resulting from any financing,
refinancing of collateral financing (including renewals or
extensions thereof), and to any and all ground leases, made or
arranged by Landlord of its interests in all or any part of the
Building), from time to time in existence against the Building,
whether now existing or hereafter created. Such subordination shall
not require any further instrument to evidence such subordination.
However, on request, the Tenant shall further evidence its agreement
to subordinate this Lease and its rights under this Lease to any and
all documents and to all advances made under such documents. The
form of such subordination shall be made as required by the
Landlord, its lender, or ground lessor. The Tenant shall promptly on
request attorn to any mortgagee, or to the future owner(s) of the
Building, or the purchaser at any foreclosure or sale under
proceedings taken under any mortgage, security agreement, like
instrument
================================================================================
Commercial Office Lease. The Grip Building
page 21 of 28 pages
<PAGE>
or ground lease, and shall recognize such mortgagee, owner, or
purchaser as the Landlord under this Lease.
13 USE AND MAINTENANCE OF COMMON AREAS.
13.1 Use and Maintenance of Common Areas. The Tenant and those doing
business with Tenant for purposes associated with the Tenant's
business on the Premises, shall have a nonexclusive license to use
the Common Areas for their intended purposes during normal business
hours in common with others entitled thereto and subject to any
rules and regulations imposed by the Landlord. The Landlord shall
keep the Common Areas in good repair and condition and shall clean
the Common Areas when necessary. Subject to all of the terms,
provisions, covenants, and conditions contained herein, Tenant shall
have the right to use the number of parking spaces indicated in the
Lease Summary in the parking lot which Landlord shall provide for
the use of Tenants of the Building. Landlord shall not be liable for
any damage to automobiles of any nature whatsoever to, or any theft
of automobiles or other vehicles or the contents thereof, while in
or about the parking lots. The Tenant acknowledges that its
non-exclusive right to use any parking facilities forming part of
the Building may be subject to such rules and regulations as
reasonably imposed by the Landlord from time to time. The Tenant
acknowledges that all Common Areas shall at all times be under the
exclusive control and management of the Landlord. For purposes of
this Lease, "Common Areas" shall mean those areas, facilities,
utilities, improvements, equipment and, installations of the
Building which serve or are for the benefit of the tenants of more
than one component of the Building and which are not designated or
intended by the Landlord to be leased, from time to time, or which
are provided or designated from time to time by the Landlord for the
benefit or use of all tenants in the Building, their employees,
customers, and invitees, in common with others entitled to the use
or benefit of same.
13.2 Alterations by Landlord. The Landlord may
13.2.1 alter, add to, subtract from, construct improvements on,
re-arrange, and construct additional facilities in,
adjoining, or proximate to the Building;
13.2.2 relocate the facilities and improvements in or comprising
the Building or erected on the land;
================================================================================
Commercial Office Lease. The Grip Building
page 22 of 28 pages
<PAGE>
13.2.3 do such things on or in the Building as required to
comply with any laws, by-laws, regulations, orders,
or directives affecting the land or any part of the
Building; and
13.2.4 do such other things on or in the Building as the
Landlord, in the use of good business judgment
determines to be advisable, provided that
notwithstanding anything contained in this section
13.2, access to the Premises shall be available at
all times. The Landlord shall not be in breach of its
covenants for quiet enjoyment or liable for any loss,
costs, or damages, whether direct or indirect,
incurred by the Tenant due to any of the foregoing.
13.3 Tenant Relocation. Landlord shall have the right, at any time
upon sixty (60) days written notice to Tenant, to relocate
Tenant into other space within the Building comparable to the
Premises. Upon such relocation, such new space shall be deemed
the Premises and the prior space originally demised shall in
all respects be released from the effect of this Lease. If the
Landlord elects to relocate Tenant as above described.
13.3.1 the new space shall contain approximately the same
as, or greater usable area than the original space,
13.3.2 the Landlord shall improve the new space, at
Landlord's sole cost, to at least the standards of
the original space,
13.3.3 the Landlord shall pay the reasonable costs of moving
Tenant's trade fixtures and furnishings from the
original space to the new space,
13.3.4 as total compensation for all other costs, expenses,
and damages which Tenant may suffer in connection
with the relocation, including but not limited to,
lost profit or business interruption, no Minimum Rent
or Operating Costs shall be due or payable for the
first full calendar month of Tenant's occupancy of
the new space, and Landlord shall not be liable for
any further indirect or special expenses of Tenant
resulting from the relocation,
13.3.5 Minimum Rent, Tenant's proportionate share of
Operating Costs, and all other charges hereunder
shall be the same for the new space as for the
original space, notwithstanding that the new space
may be larger than the original space, and
================================================================================
Commercial Office Lease. The Grip Building
page 23 of 28 pages
<PAGE>
13.3.6 all other terms of this Lease shall apply to the new space
as the Premises, except as otherwise provided in this
paragraph.
14 CONDEMNATION.
14.1 Total or Partial Taking. If the whole of the Premises, or such
portion thereof as will make the Premises unusable for the purposes
leased hereunder, shall be taken by any public authority under the
power of eminent domain or sold to a public authority under threat
or in lieu of such taking, the Term shall cease as of the day
possession or title shall be taken by such public authority,
whichever is earlier ("Taking Date"), whereupon the rent and all
other charges shall be paid up to the Taking Date with a
proportionate refund by Landlord of any rent and all other charges
paid for a period subsequent to the Taking Date. If less than the
whole of the Premises, or less than such portion thereof as will
make the Premises unusable for the purposes leased hereunder, the
Term shall cease only as to the part so taken as of the Taking Date,
and Tenant shall pay rent and other charges up to the Taking Date,
with appropriate credit by Landlord (toward the next installment of
rent due from Tenant) of any rent or charges paid for a period
subsequent to the Taking Date. Minimum Rent, Operating Costs and
other charges payable to Landlord shall be reduced in proportion to
the amount of the Premises taken.
14.2 Taking For Temporary Use. If there is a taking of the Premises for
temporary use, this Lease shall continue in full force and effect
and Tenant shall continue to comply with Tenant's obligations under
this Lease, except to the extent compliance shall be rendered
impossible or impracticable by reason of the taking. Minimum Rent
and other charges payable to Landlord shall be reduced in proportion
to the amount of the Premises taken for the period of such temporary
use.
14.3 Award. All compensation awarded or paid upon a total or partial
taking of the Premises or Building including the value of the
leasehold estate created hereby shall belong to and be the property
of Landlord without any participation by Tenant. Tenant shall not
have any claim to any such award based on Tenant's leasehold
interest. However, nothing contained herein shall be construed to
preclude Tenant, at its cost, from independently prosecuting any
claim directly against the condemning authority in such condemnation
proceeding for damage to, or cost of removal of, stock, trade
fixtures, furniture, and other personal property belonging to
Tenant; provided, however, that no such claim shall diminish or
otherwise adversely affect Landlord's award or the award of any
mortgagee.
================================================================================
Commercial Office Lease. The Grip Building
page 24 of 28 pages
<PAGE>
15 GENERAL PROVISIONS.
15.1 Delay. Except as expressly provided in this Lease, whenever the
Landlord or Tenant is delayed in the fulfillment of any obligation
under this Lease, other than the payment of Minimum Rent, Operating
Costs, or other charges, by an unavoidable occurrence which is not
the fault of the party delayed in performing such obligation, then
the time for fulfillment of such obligation shall be extended during
the period in which such circumstances operate to delay the
fulfillment of such obligation.
15.2 Holdover tenancy. If the Tenant should remain in possession of the
Premises after the end of the Term without having executed and
delivered a new lease or an agreement extending the Term, there
shall not exist any tacit renewal of this Lease or the Term; and,
the Tenant shall be deemed to be occupying the Premises as a Tenant
from month-to-month at a monthly Minim um Rent payable in advance on
the first day of each month equal to twice the monthly amount of
both Minimum Rent and Operating Costs payable during the last month
of the Term, and otherwise upon the same terms as are set forth in
this Lease, so far as they are applicable to a monthly tenancy.
15.3 Waiver, Partial Invalidity. If either the Landlord or Tenant should
excuse or condone any default by the other of any obligation under
this Lease, this shall not constitute a waiver of such obligation in
respect of any continuing or subsequent default; and in no event
shall any waiver be implied. All of the provisions of this Lease are
to be construed as covenants even though not expressed as such. If
any such provision is held or rendered illegal or unenforceable,
then it shall be considered separate and severable from this Lease
and the remaining provisions of this Lease shall remain in force and
effect to bind the parties as though the illegal or unenforceable
provision had never been included in this Lease.
15.4 Recording. Neither the Tenant nor anyone claiming under the Tenant
shall record this Lease or any memorandum hereof in any public
records without the prior written consent of the Landlord.
15.5 Notices. In every case where, under the provisions of this Lease, it
shall be necessary or desirable for Landlord to give to or serve
upon Tenant any notice or demand, it shall be sufficient for
Landlord
15.5.1 to deliver or cause to be delivered to Tenant at the
Premises a written or printed copy of such notice or demand,
or
================================================================================
Commercial Office Lease. The Grip Building
page 25 of 28 pages
<PAGE>
15.5.2 to send a written or printed copy of such notice or demand
by certified mail, return receipt requested postage prepaid,
addressed to Tenant at the Premises, or
15.5.3 to leave a written or printed copy of said notice or demand
upon the Premises, or to post the same upon the door leading
into the Premises.
15.6 Attorney's Fees. Tenant agrees to pay all attorney's fees and
expenses of Landlord incurred in enforcing any of the obligations of
Tenant under this Lease or in any negotiation in which Landlord
shall, without his fault, become involved through or on account of
this Lease. If either party or the broker named herein (if any)
brings an action to enforce the terms hereby or declare rights
hereunder, the party awarded the net judgment in any such action on
trial or appeal shall be entitled to reasonable attorney's fees to
be paid by the losing party as fixed by the court.
15.7 Locks; Keys. No additional locks shall be placed upon any doors of
the Premises or of the Building; and, Tenant will not permit any
duplicate keys to be made. All necessary keys will be furnished by
Landlord, but if more than two keys for any door lock shall be
desired, the additional number must be paid for by Tenant. Upon the
termination of this Lease, Tenant shall surrender to Landlord all
keys to the premises.
15.8 Authority. If Tenant is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duty authorized to
execute and deliver this Lease on behalf of said entity. If Tenant
is a corporation, trust, or partnership, Tenant shall, within thirty
(30) days after execution of this Lease, deliver to Landlord
evidence of such authority satisfactory to Landlord.
15.9 Conflict. Any conflict between the printed provisions of this Lease
and typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions provided such is signed by the
party against whom enforcement is sought.
15.10 Brokerage. Tenant and Landlord acknowledge that they have not dealt,
consulted or negotiated with any real estate broker, sales person or
agent other than the Broker, if any, set forth in Section 1.1.21 of
the Lease and each party hereby agrees to indemnify and hold
harmless the other from and against any and all loss and liability
resulting from or arising out of any claim that the indemnifying
party has dealt or negotiated with any other real estate broker,
sales person or agent in connection with this Lease.
================================================================================
Commercial Office Lease. The Grip Building
page 26 of 28 pages
<PAGE>
15.11 Entire Agreement. Tenant agrees that Landlord has not made any
statement, promise or agreement, or taken upon itself any engagement
whatsoever, verbally or in writing, in conflict with the terms of
this Lease, or which in any way modifies, varies, alters, enlarges
or invalidates any of its provisions. This Lease sets forth the
entire understanding between Landlord and Tenant, and shall not be
changed, modified or amended except by an instrument in writing
signed by the party against whom the enforcement of any such change,
modification or amendment is sought. The covenants and agreements
herein contained shall bind, and the benefit and advantages herein
shall inure to the respective heirs, legal representatives,
successors and assigns of Landlord and Tenant. Whenever use, the
singular number shall include the plural and the plural shall
include the singular and the use of any gender shall include all
genders. The headings set forth in this Lease are for ease of
reference only and shall not be interpreted to modify or limit the
provisions hereof.
15.12 Governing law; time of essence. This Lease shall be construed in
accordance with the laws of the State of Florida. Time is of the
essence in the performance of all obligations under this Lease.
15.13 RADON GAS. Radon is a naturally occurring radioactive gas that when
it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding
radon and radon testing may be obtained from one's county public
health unit.
15.14 Successors; joint and several liability. The rights and liabilities
created by this Lease extend to and bind the successors and assigns
of the Landlord and the heirs, executors, administrators, and
permitted successors and assigns of the Tenant. No rights, however,
shall inure to the benefit of any transferee unless such Transfer
complies with the provisions of Section 10 above. If there is at any
time more than one Tenant or more than one person constituting the
Tenant, their covenants shall be considered to be joint and several
and shall apply to each and every one of them.
15.15 Captions and Section Numbers. The captions, section numbers, article
numbers and table of contents appearing in this Lease are inserted
only as a matter of convenience and in no way affect the substance
of this Lease.
================================================================================
Commercial Office Lease. The Grip Building
page 27 of 28 pages
<PAGE>
15.16 Extended meanings. The words "hereof," "hereto," "hereunder," and
similar expressions used in this Lease relate to the whole of this
Lease and not only to the provisions in which such expressions
appear. This Lease shall be read with all changes in number and
gender as may be appropriate or required by the context. Any
references to the Tenant includes, when the context allows, the
employees, agents, invitees, and licensees of the Tenant and all
others over whom the Tenant might reasonably be expected to exercise
control. This Lease has been fully reviewed and negotiated by each
party and its counsel and shall not be more strictly construed
against either party.
15.17 No Partnership. Nothing in this Lease shall create any relationship
between the parties other than that of lessor and lessee; and,
nothing in this Lease shall be deemed to imply or infer that the
Landlord is a partner of, joint venturer with or member of a common
enterprise with the Tenant.
15.18 Quiet Enjoyment. If the Tenant pays rent and other charges and fully
observes and performs all of its obligations under this Lease, the
Tenant shall be entitled to peaceful and quiet enjoyment of the
Premises for the Term without interruption or interference by the
Landlord or any person claiming through the Landlord.
15.19 Waiver of Trial by Jury. LANDLORD AND TENANT HEREBY KNOWINGLY,
IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM BASED ON THIS LEASE OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS LEASE OR ANY DOCUMENT OR INSTRUMENT EXECUTED IN
CONNECTION WITH THIS LEASE, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY
PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LANDLORD
AND TENANT TO ENTER INTO THIS LEASE.
15.20 [End of Lease terms; signature Page follows]
================================================================================
Commercial Office Lease. The Grip Building
page 28 of 28 pages
Exhibit 6.4
STANDARD LEASE
This Lease ("Lease") is made and entered into as of the 6th day of July
1999, by and between Wiles Road Business Center, Ltd. ("Landlord"), having an
office at 2240 Woolbright Road, Suite 300, Boynton Beach, Florida 33426 and
Integrated Merchant Service, Inc. ("Tenant"). (If more than one person and/or
entity shall be named herein as Tenant, their liability under this Lease shall
be joint and several).
For and in consideration of the mutual covenants herein contained,
Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord, certain
premises which are situated within the Wiles Road Business Center ("Building"),
and which are more particularly described as follows 1133 Wiles Road, Coral
Springs, Broward County, Florida 33065 ("Premises"). The Premises are accepted
by Tenant for all purposes. As Is, Where Is. Tenant and Landlord hereby
stipulate and agree for all purposes that the Premises consist of approximately
2,033 Rentable Square Feet including a portion of the Common Areas of the
Building as reasonably determined by Landlord.
The use and occupancy by Tenant of the Premises shall include the use in
common with other Building Tenants of the "Common Areas", which shall include
but not be limited to, Building lobbies, hallways, bathroom facilities,
stairwells, elevators, loading facilities, sidewalks, landscaped and vacant
areas, and such other areas as reasonably determined by Landlord.
1. TERM. The term of this Lease shall be 24 Months , commencing on the 1st
day of December, 1999 or upon notice by Landlord to Tenant that the Premises are
substantially ready for occupancy ("Commencement Date") and ending 24 Months
after Commencement Date ("Term").
Landlord shall use its best efforts to tender possession of the Premises
to Tenant at the commencement of the Lease Term. Landlord shall not be subject
to any liability for any failure to tender possession of the Premises to Tenant,
provided that such failure occurred as a consequence of any circumstance or
cause beyond Landlord's reasonable control, including but not limited to any Act
of God or the failure of a prior tenant to vacate all or any portion of the
Premises.
2. GROSS RENT. For the first year of the Term (12 months' occupancy),
Tenant shall pay to Landlord Twenty Six Thousand Four Hundred Twenty Nine and
00/100 Dollars ($26,429.00) as gross rent ($13.00 per rentable square foot) for
the Premises (the "Annual Gross Rent"), due and payable on the first day of each
calendar month (first month's Rent and Security Deposit due upon Tenants'
execution of this Lease) during the first year of the Term at Two Thousand Two
Hundred Two and 42/100 Dollars ($2,202.42 ) per month ("Monthly Rent") together
with any and all applicable sales and other taxes now or later enacted. Tenant
covenants to pay without notice, deduction, set-off or
<PAGE>
abatement to Landlord the Gross Rent. All sums due and payable by Tenant to
Landlord under the terms and provisions of this Lease shall constitute
"Additional Rent" under this Lease. All checks or negotiable drafts for Monthly
Rent and any Additional Rent are to be made payable to the order of Landlord and
mailed or hand delivered to Landlord's office or to any other office so
designated by Landlord. If the Commencement Date is not on the first day of a
calendar month, the first payment due and payable shall include a per diem
proration payment for such partial calendar month together with Monthly Rent for
the month next following the Commencement Date.
Commencing in the second (2nd) Lease Year (after 12 months of occupancy),
and each Lease Year thereafter, the Annual Gross Rent shall escalate on the
basis of five percent (5%) over the previous Lease Year's Annual Gross Rent plus
applicable sales and other taxes thereon, now existing or later enacted.
However, if the amount of Real Estate Taxes, Utilities (total of electricity,
water, garbage removal) or Insurance increase in excess of 5% during any
calendar year of this Lease over the previous calendar year, Tenant will be
charged its proportionate share of such increase over 5%. Tenant's share of such
increased costs shall be determined by multiplying the increase over 5% by a
fraction, the numerator of which shall be the square footage of the Tenant's
Premises and the denominator of which shall be the total leased space of the
Building as reasonably determined by Landlord. For years where occupancy is less
than a calendar year, Tenant's proportionate share, if any, will be prorated
accordingly.
3. SECURITY DEPOSIT. Tenant shall deposit with Landlord the sum of Two
Thousand Four Fifty One and 29/100 Dollars ($2,451.29) ("Security Deposit") upon
execution of this Lease. This sum shall be retained by Landlord as security for
the payment by Tenant of the Annual Gross Rent and other sums payable by Tenant
under this Lease ("Additional Rent") and for the faithful performance by Tenant
of all the other terms, covenants and conditions of this Lease. Tenant has
$2,148.20 security deposit on file with Landlord. Balance of $303.09 due upon
execution of this Lease Agreement.
It is understood that the Security Deposit is not to be considered as the last
month's rent. However, Landlord, at Landlord's option may, at any time, apply
the Security Deposit or any part thereof toward the payment of the Annual Gross
Rent and/or Additional Rent toward the performance of Tenant's obligations under
this Lease. Landlord may, but is not obligated to, apply a portion of the
Deposit to cure any default hereunder, and Tenant shall pay on demand the amount
necessary to restore the Deposit in full. The Security Deposit shall not
constitute liquidated damages. Landlord shall return the unused portion of the
Security Deposit to Tenant within thirty (30) days after the expiration of the
Term if Tenant is not breach of this Lease, but not otherwise. If the Security
Deposit is insufficient to cover Landlord's actual damages, Tenant shall pay on
demand to Landlord an amount sufficient to fully compensate Landlord for
Tenant's breach. Landlord may (but is not obligated to) exhaust any and all
rights and remedies against Tenant before resorting to the Security
2
<PAGE>
Deposit. Landlord shall not be required to pay Tenant any interest on the
Security Deposit nor hold same in a separate account. If Landlord sells the
Building, Landlord shall deliver the Security Deposit or the unapplied portion
thereof to the new owner. Tenant agrees that if Landlord turns over the Security
Deposit or the unapplied portion thereof to the new owner, Tenant shall look to
the new owner only and not to Landlord for its return upon expiration of the
Term. If Tenant assigns this Lease, the Security Deposit shall remain with
Landlord for the benefit of the Tenant and shall be returned to such Tenant upon
the same conditions as would have entitled Tenant to its return. No mortgagee of
the Building will be liable for the return of any portion of the Security
Deposit, except to the extent actually received by such mortgagee.
4. CONDITION OF PREMISES. Tenant shall accept the Premises "AS IS", in the
condition the Premises are in at the commencement of the Term. Tenant
acknowledges that Tenant has inspected and knows the condition of the Premises
and acknowledges to Landlord that the Premises are in good order and repair as
of the date the Term commences. No promise of Landlord to alter, remodel or
improve the Premises or the Building and no representation respecting the
condition of the Premises of the Building has been made by Landlord to Tenant
other than as may be specifically contained in this Lease.
5. LATE CHARGES. If Monthly Rent or any Additional Rent is not received by
Landlord within 10 days of the due date, including any prior amounts remaining
unpaid (without in any way implying Landlord's consent to such late payment),
Tenant shall, in addition, pay a late charge equal to five percent (5%) of the
total amount not timely paid. Non receipt of monthly rent statement by Tenant
shall not be an acceptable reason for late rent payments since monthly rent
statements may be sent to Tenant merely as a reminder of Monthly Rent and
Additional Rent due. If Tenant shall pay Monthly Rent or any Additional Rent
with a check or bank draft which is returned unpaid or uncollected, Tenant shall
pay to Landlord, in addition to the total amount due and to a 5% late charge, a
Fifty Dollar ($50.00) processing fee for each such check or bank draft. In the
event that two or more of Tenant's checks or bank drafts are returned unpaid or
uncollected during the Term, Landlord may require, as a condition of Tenant
continuing its tenancy hereunder, that all subsequent payments of Monthly Rent
and Additional Rent be in the form of cash, cashier's checks or money orders. In
addition, Tenant shall reimburse Landlord upon demand for all reasonable costs
incurred by Landlord in the enforcement of any of the provisions of this Lease
and/or the collection of any sums due to Landlord under this Lease including,
without limitation, collection agency fees and attorneys' fees through all
appellate actions and proceedings, if any.
6. HOLDING OVER. If Tenant retains possession of the Premises, or any part
thereof, beyond the end of the Term, Tenant shall pay to Landlord an amount
equal to double the Monthly Rent plus double any Additional Rent for the time
Tenant thus remains in possession. In addition thereto, Tenant shall pay
Landlord for all damages,
3
<PAGE>
consequential as well as direct, sustained by reason by Tenant's retention of
possession. If Tenant remains in possession of the Premises, or any part
thereof, after the end of the Term, such holding over, at the election of
Landlord, shall constitute a renewal of this Lease for another Term at double
the Annual Gross Rent for the last calendar year of the Term. The provisions of
this Paragraph shall not limit or in any way impair or waive Landlord's right to
possession, right of re-entry or any other right or remedy given hereunder or
pursuant to State or federal law.
7. LANDLORD'S LIEN. Tenant hereby pledges and conveys to Landlord a
security interest ("Landlord's Lien") in all of Tenant's furniture, furnishings,
goods, chattels and fixtures of every nature, kind and description whatsoever
situated upon the Premises as collateral security for tile full all and prompt
payment of Monthly Rent and any Additional Rent as and when due and the full and
faithful performance of Tenant's covenants herein contained. Tenant also agrees
that this Landlord's Lien may be enforced by distress sale, foreclosure, or by
any other method, and that any and all costs incurred by Landlord by enforcement
of this Landlord's Lien shall be payable to Landlord by Tenant.
8. MAINTENANCE AND REPAIR. Tenant shall at all times, and at Tenant's
expense, maintain the Premises in a clean, orderly, tenantable and sanitary
condition, including Building areas of common usage. Tenant shall return the
Premises at the end of the Term in good order and repair, and shall be obligated
to keep repaired and maintained during the Term (i) any glass windows, doors and
door hardware, (ii) interior walls, floor coverings, columns and partitions,
(iii) fixtures, (iv) heating, ventilating and air conditioning appliances, (v)
plumbing, electrical and sewage facilities, and (vi) any and all other
appurtenances of the Premises. In the event Tenant fails to maintain the
Premises as provided for herein Landlord shall have the right , but not the
obligation, to perform such maintenance as is required of Tenant in which event
Tenant shall reimburse Landlord for its costs in providing such maintenance or
repairs together with a ten (10%) percent charge for Landlord's overhead and
Tenant shall promptly reimburse Landlord for the amount so billed to Tenant by
Landlord. At the end of the Term, Tenant shall pay Landlord for damages to any
of the foregoing, whether or not such damages were caused by the act or neglect
of Tenant or any person invited or employed by, or under the control of Tenant.
Landlord shall not be responsible to make any improvements or repairs to the
Premises, and Landlord's sole obligation shall be to keep the Building's roof,
walls and foundation structurally sound, except that Landlord shall not be
responsible to make any such repairs made necessary by any act or neglect of
Tenant or any person invited or employed by, or under the contract of Tenant.
Tenant will obtain at its own expense a preventative maintenance contract on its
air conditioning system for the term of the Lease, and shall provide a copy of
the maintenance agreement to the Landlord.
9. ACCESS TO PREMISES. Tenant shall permit Landlord, and Landlord's
4
<PAGE>
agents and independent contractors, during customary business hours or, if
Landlord reasonably deems an emergency situation to exist, at any time, to enter
the Premises for (i) the purpose of making inspections and repairs, (ii)
removing fixtures, alterations, additions, signs or placards not in conformity
with those rules and regulations prescribed by Landlord from time to time, or
(iii) exhibiting the Premises for lease, appraisal, sale or mortgage, which
right of Landlord shall include, within one hundred eighty (180) days prior to
the end of the Term, the posting of any sign to such effect. If Landlord makes
repairs or causes repairs to be made to the Premises, Tenant shall immediately
pay to Landlord the costs of same after notice from Landlord.
10. BUILDING ADDITIONS & ALTERNATIONS. Landlord shall have the absolute
right to make changes in and about the Building, including, without limitation,
employing electrical submetering or direct metering for the Premises, and build
additions to or otherwise alter the Building, without liability to Tenant,
provided such alterations do not constitute a constructive eviction of Tenant
from the Premises.
11. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not voluntarily or involuntarily transfer or assign
this Lease or any right under it nor sublet the Premises or any part of the
Premises, nor convey, mortgage, pledge, encumber or otherwise grant any
interest, privilege or license whatsoever in connection with this Lease or the
Premises, except with the prior written consent of Landlord, which consent will
not be unreasonably withheld. Consent by Landlord to one or more assignments,
sublettings or encumbrances shall not operate as a consent to any subsequent
assignment, subletting or encumbrance (Tenant will be charged a $500
administrative fee for each such assignment or sublet), each of which shall
require Landlord's separate consent. Any and all other costs incurred in
connection with the permitted assignment or subletting of this Lease or the
permitted grant of any encumbrance or other interest in connection with this
Lease or the Premises shall be paid by the Tenant, which sums shall be added to
and become a part of the Additional Rent.
(b) In the event of a permitted assignment of this Lease, or
subletting of the Premises, Tenant shall remain fully liable and shall not be
released from Tenant's obligations hereunder should any assignee or subtenant
fail to fully and faithfully perform each and every of Tenant's covenants herein
contained, including without limitation, the payment of Monthly Rent and any
Additional Rent as and when due.
(c) Any sale or other transfer, or any series of sales or transfers,
including by consolidation, merger or reorganization, of a majority of the
voting stock of Tenant, if Tenant is a corporation, or any sale or other
transfer, or any series of sales or transfers, of a majority of the partnership
interests of Tenant, if Tenant is a partnership, shall be an assignment for
purposes of this Section 12. As used in this paragraph 12(c), the term
5
<PAGE>
"Tenant" shall also mean any entity which has guaranteed Tenant's obligations
under this Lease, and the prohibition hereof shall be applicable to any sales or
transfers of the stock or partnership interests of said guarantor.
(d) If Landlord consents to a Transfer, Tenant shall pay Landlord
fifty percent (50%) of any Transfer Premium derived by Tenant from such
Transfer. "Transfer Premium" shall mean all rent, Monthly Rent, Additional Rent
or other consideration paid by such Transferee in excess of the Rent payable by
Tenant under this Lease (on a monthly basis during the Term). If part of the
consideration for such Transfer shall be payable other than in cash, Landlord's
share of such non-cash consideration shall be in such form as is reasonably
satisfactory to Landlord. The percentage of the Transfer Premium due Landlord
hereunder shall be paid within the (10) days after Tenant receives any Transfer
Premium from the Transferee.
(e) Notwithstanding any other provision contained in this paragraph
concerning Assignment and Subletting of the Premises, Landlord shall have a
Right of First Refusal within ten (10) days of it's receipt of executed sublease
documents, to cancel Tenant's Lease and take back the Premises, in lieu of
agreeing to a sublet or assignment.
(f) In the event Landlord consents to any assignment of this Lease,
or subletting of the Premises, or any renewal of this Lease, or the exercise of
any right of first refusal options granted Tenant by Landlord pursuant to this
Lease or any amendments thereof, Tenant, assignee or subtenant will he requited
to execute the Landlord's then current Standard Lease format.
12. LIENS BY TENANT. Tenant shall keep the Premises and the real estate of
which the Premises forms a part free from any liens arising out of any work
performed, materials furnished, or obligations incurred by Tenant. In the event
that Tenant shall not, within five (5) days following the imposition of any such
lien, cause the same to be released of record by payment or bonding over said
Lien, Landlord shall have in addition to all other remedies provided herein and
by law, the right but not the obligation to cause the same to be released by
such means as it shall deem proper. All sums paid by Landlord and all expenses
incurred by it in connection therewith shall automatically create an obligation
of Tenant to pay, on demand, an equivalent amount times two to Landlord.
No work which Landlord permits Tenant to perform shall be deemed to be for
the immediate use and benefit of Landlord, and no mechanic's or other lien shall
be allowed against the estate of Landlord by reason of its consent to such work.
13. RULES AND REGULATIONS. Tenant shall abide by and comply with all rules
and regulations now or hereinafter prescribed by Landlord for the Building and
the Premises which shall be deemed part of this Lease and shall abide by and
comply with all
6
<PAGE>
laws, ordinances and regulations enacted by those governmental entities, whether
federal, state or municipal, having jurisdiction over the Building or the
Premises. Tenant shall neither permit nor commit any immoral or unlawful
practice or act in or upon the Building or the Premises. Tenant shall not permit
any noxious, foul or disturbing odors to emanate from the Premises nor use
loudspeakers, sound systems, stereos, cassette players, CD players, phonographs,
radio broadcasts or the like in a manner so as to be heard outside of the
Premises. Landlord shall have no duty to enforce any rules and regulations, or
the covenants contained in any other Building lease, as against any other Tenant
or occupant of the Building, and Landlord shall not be liable to Tenant for
violation of the same or fur any act or omission by any other tenant or occupant
of the Building.
14. USE.
(a) Tenant will use and occupy the Premises for General Office and
for no other use or purpose. Tenant shall not suffer or permit the Premises or
any part thereof to be used in any other manner, or suffer or permit anything to
be done or brought into or kept in the Premises, which would in any way: (i)
violate any law or requirement of public authorities; (ii) cause injury to the
Building or any part thereof, (iii) interfere with the normal operations of air
conditioning, ventilating, plumbing or other mechanical or electrical systems of
the Building; (iv) constitute a public or private nuisance; (v) alter the
appearance of the exterior of the Building or any portion of the interior other
than the Premises pursuant to the provisions of this Lease; or (vi) commit such
actions or inactions that generate a direct increase in Landlord's expenses to
operate the Building in which the Premises are located, which cannot be fairly
allocated amongst other tenants in the Building.
(b) Tenant shall not make any alterations or additions to the
Premises, or install any high voltage or amperage electrical equipment or
plumbing apparatus in the Premises, without the prior written consent of
Landlord. If Tenant shall require special electrical, plumbing, maintenance or
other special services or equipment during the Term, and Landlord consents
thereto, Tenant agrees to pay for all installation costs and all expenses
incurred in connection with Tenant's use of such special services and equipment.
(c) At the termination of this Lease, Tenant shall, at Landlord's
option, restore the Premises to its "as is" original condition within ten (10)
days from Lease Termination. If Tenant fails to do so, Landlord shall charge
Tenant for such work and Tenant shall immediately pay such charge upon demand by
Landlord.
15. INDEMNITY AND INSURANCE
(a) Tenant agrees to indemnity, defend and save and hold Landlord,
and Landlord's agents, managing agent, independent contractors, successors and
assigns,
7
<PAGE>
harmless against any and all liabilities, losses, costs and expenses (including,
without limitation, any and all attorneys' fees and court costs through trial
and on appeal) or any death, personal injury or property damage occurring in, on
or about the Premises or the Building arising from or in any way connected with
any acts, omissions, neglect or fault of Tenant, or any of Tenant's employees,
agents, invitees, licensees, representative, successors or assigns, including
but not limited to, any Default (hereinafter defined).
(b) Tenant shall during the Term, at Tenant's sole cost and expense,
keep in full force and effect a policy of public liability insurance, including
workers compensation coverage, and property damage insurance, with respect to
all matters which arise in connection with Tenant's operation of the Premises.
The limits of public liability coverage shall not be less than $1,000,000.00 per
person and $1,000,00.00 per occurrence, and the property damage liability shall
not be less than $250,000.00. The insurance policy or policies shall name
Landlord, Landlord's managing agent and Tenant as additional insureds, and shall
contain a clause that the insurer will not cancel or change insurance coverage
without first giving Landlord twenty (20) days' prior written notice of same.
The insurance shall be underwritten by a company or companies approved by
Landlord, and a copy of the policy or policies and of the certificate(s) of such
insurance and all endorsements or replacements thereof, shall be delivered to
Landlord prior to or immediately upon Commencement Date.
(c) Tenant shall comply, at Tenant's cost and expense, with any and
all requirements of the Southern Underwriters' Board and of any federal, State,
and municipal government applicable to the Premises for the correction,
prevention and abatement of nuisances, unsafe or hazardous conditions, or other
grievances arising from Tenant's occupancy of the Premises. Tenant shall also
comply in a timely manner with all occupational, professional and licensing
requirements applicable to Tenant's use of the Premises.
Tenant shall promptly comply with any and all fire, emergency and
evacuation procedures ordered by safety and regulatory officials having
jurisdiction over the Building or the Premises.
(d) Tenant shall comply with any and all requests made by Landlord's
fire or liability insurers with respect to the Building or the Premises, or
both, at Tenant's cost and expense. Tenant agrees to pay any increase(s) in
Landlord's fire and/or liability insurance premiums over and above the rate in
effect immediately prior to the date the Term commences caused by Tenant's use
or occupancy of the Premises.
(e) In no event shall Tenant engage in any business or activity or
permit on the Premises any hazardous wastes or any inflammables such us
gasoline, turpentine, kerosene, naphtha and benzine, or explosives or any other
article of intrinsically dangerous
8
<PAGE>
nature, and in no event shall Tenant, its agents, employees or invitees bring
any such hazardous wastes, flammables or other articles onto the Premises. If by
reason of the failure of Tenant to comply with the provisions of this paragraph,
any insurance coverage is jeopardized or insurance premiums or other costs are
increased, Landlord shall have the option either to terminate this lease or to
require Tenant to make immediate payment of the increased costs or insurance
premium, as the case may be, and the same shall be deemed Additional Rent due
hereunder.
16. DIRECT CHARGES. Electricity to the Premises shall be individually
metered in Tenant's name and Tenant shall pay utility company directly for
monthly electricity charges to the Premises. Tenant shall also pay for any
special or excessive use of building services (including, but not limited to,
utilities, maintenance, cleaning, heating, cooling, and repair services provided
by Landlord for the benefit of the Premises or the Building where the Premises
are located), including but not limited to, excessive trash removal or water
usage, and unusual sewage disposal needs. Landlord shall have the sole and
exclusive right to determine if any use of the building services by Tenant is
special or excessive.
17. DAMAGES TO PREMISES. If the Premises, the Building/s or any part
thereof is damaged by fire or other casualty, cause or condition whatsoever and
Landlord shall determine not to restore said Premises or Building/s, Landlord
may, by written notice to Tenant given within sixty (60) days after such damage,
terminate this Lease. Such termination shall become effective as of the date of
the damage. If this Lease is not terminated as above provided and if the
Premises are made partially or wholly untenantable, Landlord, at its expense,
shall restore the same with reasonable promptness to the condition in which
Landlord furnished the Premises to Tenant at the commencement of the Lease Term
as to those items that were provided to the Premises at Landlord's expense
without any reimbursement by Tenant. Landlord shall be under no obligation to
restore any alteration, improvements or additions to the Premises made by Tenant
or paid for by Tenant, including, but not limited to, any of the initial tenant
finish done or paid for by Tenant or any subsequent changes, alterations or
additions made by Tenant or reimbursed by Tenant.
If as a result of fire or other casualty, cause or condition whatsoever
the Premises are made partially or wholly untenantable and, if Landlord has not
given the sixty (60) days notice above provided for and fails within one hundred
twenty (120) days after such damage occurs to eliminate substantial interference
with Tenant's use of said Premises or substantially to restore said Premises,
Tenant may terminate this Lease as of the end of said one hundred twenty (120)
days by notice to Landlord given not later than five (5) days after expiration
of said one hundred twenty (120) day period. If the Premises are rendered
totally untenantable but this Lease is not terminated, all rent shall abate from
the date of the fire or other relevant cause or condition until the Premises are
ready for occupancy and
9
<PAGE>
reasonably accessible to Tenant. If a portion of the Premises is untenantable,
rent shall be prorated on a per diem basis and apportioned in accordance wit the
portion of the Premises which is usable by the Tenant until the damaged part is
ready for the Tenant's occupancy. In all cases, due allowance shall be made for
reasonable delay caused by adjustment of insurance loss, strikes, labor
difficulties or any cause beyond Landlord's reasonable control. For the purposes
of this Lease, said Premises shall be considered tenantable so long as and to
the extent that the Premises are occupied. In any event, Tenant shall he
responsible for the removal, or restoration, when applicable, of all its damaged
property and debris from the Premises, upon request by Landlord or else Tenant
must reimburse Landlord for the cost of removal.
18. PERSONAL PROPERTY. Tenant will be solely responsible for security of
the Premises and the contents thereof. All of Tenant's personal property placed
upon, or moved into the Premises shall be at the sole risk of Tenant, and
Landlord shall not be liable (i) for any damage or loss to any such personal
property, or to Tenant or any third party, arising from the bursting or leaking
of water pipes or theft or misappropriation or from any other act whether by
Landlord or by a third person, or (ii) for the negligence of any co-tenant or
other occupant(s) of the Premises or of the Building, or of any person whomever,
including without limitation, Landlord and Landlord's agents, independent
contractors, representatives, successors and assigns.
19. CONDEMNATION. If all or any portion of the Premises shall be taken,
except temporarily, by any condemnation or eminent domain proceedings, this
Lease shall terminate on the effective date of the final judicial order of
taking. Landlord shall be entitled to all awards for such taking, except that
Tenant shall be entitled to make a separate claim at the expense of Tenant
against the condemning authority for moving expenses and for damages to
permitted fixtures installed in the Premises; provided, however, that any award
made to Tenant shall be in addition to, and shall not reduce, any award which
Landlord may claim in connection with such taking, and further provided that in
no event shall Tenant have any claim for the value of any remaining portion of
the Term. If only a part of the Premises shall be condemned, Monthly Rent and
Additional Rent shall be apportioned for the remaining tenantable area as
determined by Landlord, in Landlord's sole discretion.
20. LANDLORD'S INABILITY TO PERFORM. If, by reason of inability to obtain
and utilize labor, materials or supplies; circumstances directly or indirectly
the results of a state of war or national or local emergency; any laws, rules,
orders, regulations or requirements of any governmental authority now or
hereafter in force; strikes or riots, accident in, damage to or the making of
repairs, replacements or improvement to the Premises or any of the equipment
thereof; or by reason of any other cause beyond the reasonable control of the
Landlord including "Acts of God," Landlord shall be unable to perform or shall
be delayed in the performance of any covenant to supply any service, such
10
<PAGE>
nonperformance or delay in performance shall not render Landlord liable in any
respect for damages to either person or property, constitute a total or partial
eviction, constructive or otherwise, work an abatement of rent or relieve Tenant
from the fulfillment of any covenant or agreement contained in this Lease.
21. QUIET ENJOYMENT. Upon payment by Tenant of the Monthly Rent and any
Additional Rent as and when due, and upon the faithful observance and
performance of all of Tenant's covenants herein contained, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord, or by any other person or persons lawfully or
equitably claiming by, through or under Landlord, subject, nevertheless, to all
of the provisions and conditions of this Lease.
22. SIGNAGE. Tenant at its own expense may provide signage on its doors
and on the structure, only in conformity with prescribed building specifications
and with the prior written consent of the Landlord. Tenant shall maintain such
signage in good condition at all times. No other signs, banners, placards or
other advertising shall be permitted. All required regulatory permits must be
obtained at Tenant's expense. Landlord reserves the right to change the name or
street address of the Property.
23. CONVEYANCES AND ENCUMBRANCES. Landlord shall have the unrestricted
right to convey, transfer, mortgage or otherwise encumber the Premises. This
Lease is and at all times shall be automatically by its terms subject and
subordinate to all present and future mortgages to which Landlord is a party and
which in any way affect the Premises or any interest therein, and to all
recastings, renewals, modifications, consolidations, replacements or extensions
of any such mortgage(s). Tenant agrees, within seven (7) days of any such
request, to execute any and all documents or instruments requested by Landlord
or by any mortgagee(s) to evidence the said subordinate condition of this Lease,
as the same may have been amended, to any such financing, and certify, when
requested by Landlord or by any mortgagee(s), that this Lease is in full force
and effect. This statement, commonly referred to as an "estoppel certificate",
shall be for the benefit of Landlord, and any purchaser or mortgagee of
Landlord. Landlord shall be released from all liability and obligation under
this Lease upon the conveyance, assignment or other transfer of this Lease or
the Premises.
24. POSSESSION OR OWNERSHIP BY MORTGAGEE' AND TENANT'S ATTORNMENT.
(a) If any mortgagee comes into possession or ownership of the
Premises or of the Building, or acquires Landlord's interest by foreclosure of a
mortgage or otherwise, Tenant will attorn to such mortgagee. Tenant will not be
entitled to a credit for Monthly Rent or any Additional Rent paid in advance in
such event.
11
<PAGE>
(b) If any mortgagee(s) shall request reasonable modifications to
this Lease as a condition to disbursing any monies to be secured by a mortgage
encumbering the Premises, Tenant agrees that within seven (7) days after such a
request from Landlord, Tenant shall execute and deliver to Landlord an
agreement, in form and substance satisfactory to Landlord and to said
mortgagee(s), evidencing such modifications; provided, however, that such
modifications do not increase Tenant's monetary obligations under this Lease or
materially adversely affect Tenant's leasehold interest created by this Lease.
25. NOTICES. Whenever this Lease requires that notice or demand shall be
given or served on either party to this Lease, such notice or demand may be
given orally or in writing if given by the Landlord, but must be in writing by
Tenant and shall be delivered personally or forwarded by certified or registered
mail, return receipt required, addressed as follows:
Landlord: Wiles Road Business Center, Ltd.
2240 Woolbright Road, Suite 300
Boynton Beach, Florida 33426
Tenant: Integrated Merchant Services,
11336 Wiles Road
Coral Springs, FL 33076
Attn: Bill Becker
Copy:
Attn:
26. ENTIRE AGREEMENT. This Lease contains the complete and entire
agreement between Landlord and Tenant regarding use of the Building and lease of
the Premises, and supersedes any and all prior oral and written agreements
between Landlord and Tenant regarding such matters. This Lease may be modified
only by an agreement in writing signed by both Landlord and Tenant, and no offer
of surrender of the Premises by Tenant shall be binding unless accepted by
Landlord in a writing signed by Landlord.
27. BENEFITS; BINDING EFFECT. This Lease shall be binding upon and inure
to the benefit of the heirs, legal representatives and successors of Landlord
and Tenant, and the assigns of Landlord and permitted assigns of Tenant, and
shall be construed and enforced in accordance with the laws of the State of
Florida. Venue for any litigation which may arise in connection with this Lease,
the Building or the Premises shall be in the county
12
<PAGE>
wherein the Premises is located.
28. SEVERABILITY. If any covenant or provision of this Lease, or the
application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of such
covenant provision to persons or circumstances (other than those as to which it
is held invalid or unenforceable) shall not be affected thereby, and each and
every other such covenant and provision of this Lease or portion thereof shall
be valid and be enforced to the fullest extent permitted by law.
29. EVENTS OF DEFAULT. If Tenant shall (i) fail to pay to Landlord as and
when due Monthly Rent or any Additional Rent, including but not limited to, late
charges, processing fees or other monetary obligations as herein set forth, or
(ii) file a voluntary petition in bankruptcy or reorganization, or make any
assignment for the benefit of creditors, or seek any similar relief under any
present or future statute, law or regulation relating to relief of debtors, or
(iii) be adjudicated a bankrupt or have any involuntary petition in bankruptcy
filed against it, or (iv) abandon or vacate the premises during the Term, or (v)
fail to keep and perform any one or more of the covenants and conditions herein
contained, then and in any of such events, Tenant will be deemed to be in
default under this Lease ("Tenant's Default" or"Default"). If Tenant shall be in
Default, Landlord will have any and all rights and remedies which the law of
Florida confers upon a Landlord against a Tenant in breach or default of a Lease
including, without limitation, thee right to(i) terminate this Lease and bring a
lawsuit for Monthly Rent and any Additional Rent then past due, (ii) elect to
accelerate the entire unpaid balance of the rent for the Term and bring a
lawsuit for the collection of Monthly Rent and any Additional Rent, (iii) take
possession of and lease the Premises for the account of Tenant, and (iv) seek
all available equitable remedies, including without limitation, injunction. If
Landlord elects to terminate this Lease for Tenant's Default and if at such time
there remains any unapplied Security Deposit, then Landlord may (without waiver
or impairment of Landlord's other remedies for Tenant's Default) retain the
Security Deposit as liquidated and agreed upon damages, and Landlord shall also
have the further right in such instance to immediate possession of the Premises.
Tenant waives, on both a present and prospective basis, any and all defenses to
eviction except payment of the full amount of all monies due to Landlord (with
acknowledging that it may solely bring a separate action for money damages as
redress for liability of Landlord, if any, to the extent provided for by the
Lease). All Monthly Rent, Additional Rent or monies due of any nature under a
work-out agreement and/or this Lease will not be subject to any set-off, claim
or credit by the Tenant, and any claim by Tenant is only separately assertable
against Landlord, if assertable at all, with no claim by Tenant being any basis
for withholding or delaying payment of any Rent. Landlord's acceptance of any
Rent following an event of default hereunder shall not be construed as
Landlord's waiver of such event of default. No forbearance or delay by Landlord
in asserting its right under this agreement or the Lease
13
<PAGE>
will be the waiver of Landlord's right to enforce when Landlord determines to do
so.
30. REMEDIES CUMULATIVE. Landlord's remedies under this Lease are
cumulative, and the election of any right or remedy by Landlord shall not be
deemed a waiver of any other right or remedy of Landlord under this Lease or
otherwise.
31. ATTORNEYS' FEES AND JURY TRIAL. In the event that it shall become
necessary for Landlord or Tenant to employ the services of an attorney to
enforce of its rights under this Lease or to collect any sums due to it under
this Lease or to remedy the breach of any covenant of this Lease on the part of
the other party Tenant regardless of whether suit be brought, Tenant shall pay
to Landlord such reasonable fee as shall be charged by Landlord's attorney
including court and other costs associated with such services the prevailing
party in any such action shall be entitled to recover all reasonable attorney's
fees and costs which it may have incurred or expended in connection therewith.
The Landlord and Tenant hereby expressly waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Premises, including, without limitation, any claim of injury or damage. Tenant
shall not interpose any counterclaim of any kind in any action or proceeding
commenced by Landlord to recover possession of the Premises.
32. NO WAIVER. The failure of Landlord to insist on the performance or
observance by Tenant of any one or more conditions or covenants of this Lease
shall not be construed as a waiver or relinquishment of the future performance
of any such covenant or condition, and Tenant's obligation with respect to such
future performance shall continue in full force and effect.
33. LANDLORD'S PROPERTY. Tenant shall look solely to Landlord's ownership
interest in the Building for the satisfaction of any judgment or decree
requiring the payment of money by Landlord, or by Landlord's agents,
representatives, successors or assigns, to Tenant, or to any person claiming by
or through Tenant, in connection with this Lease, and no other property or asset
of Landlord real or personal, tangible or intangible, shall be subject to levy,
execution or other enforcement procedure for the satisfaction of any such
judgment or decree.
34. GENDER. The terms Landlord and Tenant as herein contained shall
include the singular and/or the plural, the masculine, the feminine, and/or the
neuter, the heirs, successors, executors, administrators, personal
representatives and/or assigns, wherever and whenever the context so requires or
admits.
35. CAPTIONS. The captions of the various paragraphs of this Lease have
been inserted for the purpose of convenience only. Such captions are not a part
of this Lease and
14
<PAGE>
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions contained in this Lease.
36. COUNTERPARTS. This Lease may be executed in several counterparts, all
of which shall constitute one and the same Lease between Landlord and Tenant.
37. FORCE MAJEURE. Landlord does not warrant that any of the services
which Landlord may supply, will be free from interruption. Tenant acknowledges
that any one or more of such services may be suspended by reason of accident or
repair, alterations or improvements necessary to be made, or by strikes or
lockouts, or by reason of operation of law, or other causes beyond the
reasonable control of Landlord. No such interruption or discontinuance of
service shall ever be deemed an eviction or a disturbance of Tenant's use,
enjoyment and possession of the Premises or any part thereof, or render Landlord
liable to Tenant for damages by abatement or reduction of Annual Gross Rent or
any Additional Rent or relieve Tenant from the performance of any of Tenant's
obligations under this Lease.
38. BROKERS. Each party represents to the other that they have dealt with
no real estate or leasing brokers in conjunction with this Lease except the
following broker which broker shall be entitled to a commission from Landlord:
N/A
Each party agrees and warrants to indemnify and hold harmless the other
from any claims of other brokers for payment of fees or charges of any kind
including attorneys' fees, in conjunction with this transaction. The foregoing
shall survive the end of the Term.
39. TIME OF THE ESSENCE. Each of Tenant's covenants herein is a condition
and time is of the essence with respect to the performance of every provision of
this Lease and the strict performance of each shall be a condition precedent
Tenant's rights to remain in possession of the Premises or to have this Lease
continue in effect.
40. HAZARDOUS WASTE. Tenant warrants and represents that it will, during
the period of its occupancy of the Premises under this Lease, comply with all
federal, State and Local laws, regulations and ordinances with respect to the
use, storage, treatment, disposal or transportation of Hazardous Substances.
Tenant shall indemnify and hold Landlord harmless from and against any claims,
fines, judgments, penalties, costs to detect and rectify such condition,
liabilities or losses (including, without limitation, reasonable attorneys' fees
and costs at trial and on appeal) arising from the breach of the preceding
warranty and representation.
For the purposes of this Paragraph, the term "Hazardous Substances" shall
be
15
<PAGE>
interpreted broadly to include but not be limited to, substances designated as
hazardous under the Resource Conservation and Recover Act, 42 U.S.C. ss.9601, et
seg., the Federal Water Pollution Control Act, 33 U.S.C. ss. 1257, et seg., the
Clean Air Act, 42 U.S.C. ss.200 1, et seg., or the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. ss.9601, et seg., any
applicable State Law or regulation. The term shall also be interpreted to
include but not be limited to any substance which after release into the
environment and upon exposure, ingestion, inhalation or assimilation, either
directly from the environment or directly by ingestion through food chains, will
or may reasonably be anticipated to cause death, disease, behavior
abnormalities, cancer and/or genetic abnormalities, and oil and petroleum based
derivatives.
The provisions of this Paragraph shall be in addition to any other
obligations or liabilities Tenant may have to Landlord at law and equity and
shall survive termination of this Lease.
Tenant shall not store or dispose of any hazardous material or waste in or
about the Premises. Tenant shall indemnify and hold Landlord harmless from and
against any claims, damages, costs, expenses or actions which arise out of any
breach of this provision and such indemnity shall survive the termination of the
Lease, except those specifically used in Tenant's business, which use has been
disclosed to and approved in writing by Landlord. In such event, Tenant shall
(a) properly dispose of same and shall provide Landlord with a written plan
detailing such disposal and (b) during the Term, at Tenant's cost and expense,
keep in full force and effect a Hazardous Material Facility License. Tenant
shall provide to Landlord a copy of the Hazardous Material Facility License.
41. RADON GAS. Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health unit.
42. NO PARTNERSHIP. Nothing contained in this Lease shall constitute or be
construed to be or create a partnership, joint venture or any other relationship
between Landlord and Tenant other than the relationship of Landlord and Tenant.
43. RECORDING. Tenant shall not record this Lease or any portion hereof or
any reference hereto. If Tenant shall record this Lease, or shall permit or
cause this Lease, or any portion hereof or reference hereto be recorded, this
Lease shall terminate at Landlord's option or Landlord may declare default
hereunder and pursue any and all of its remedies provided in this Lease.
Executed as of the date above first-written.
16
<PAGE>
Signed and delivered in presence of:
(Two witnesses required)
LANDLORD:
_________________________________ By:_________________________________
Wiles Road Business Center, Ltd.
_________________________________
(As to Landlord)
CORPORATE TENANT:
_________________________________ By: ________________________________
_________________________________ _____________________________________
(As To Tenant) Print Name
NON CORPORATE TENANT:
_________________________________ By: _________________________________
_________________________________ ______________________________________
(As To Tenant) Print Name
17
<PAGE>
WILES ROAD BUSINESS CENTER
EXHIBIT"A"
Addendum No. One to Lease Agreement
THIS ADDENDUM TO LEASE AGREEMENT is made and entered into as of the 6th day of
July 1999 by and between Wiles Road Business Center, Ltd. ("Landlord") and
Integrated Merchant Services. Inc. ("Tenant").
WITNESSETH
WHEREAS, Landlord and Tenant are entering into a certain Lease agreement (the
"Lease"), simultaneously with the execution of this Addendum, under which
Landlord leases to Tenant and Tenant leases from Landlord approximately 2,033
rentable square feet at the Wiles Road Business Center, 11336 Wiles Road, Coral
Springs, FL 33065.
Landlord and Tenant desire this Addendum to form a part of the Lease. Except as
modified below, all other terms, provisions, and conditions of the Lease shall
remain unchanged.
1) Landlord will allow Integrated Merchant Services, Inc. to lease 11340 &
11342 Wiles Road, located within the Wiles Road Business Center, which
consists of 2,725 rentable square feet, in "AS IS" condition, for a term
of ninety (90) days, commencing on July 1, 1999, at a flat rate of $600.00
per mouth plus sales tax. This agreement is cancelable by Landlord with
thirty (30) days written notice to Tenant.
2) Tenant shall be responsible to maintain insurance coverage on 11340 &
11342 Wiles Road in accordance with paragraph 15(b) of the Lease
Agreement.
3) Tenant shall be responsible for all telephone and electricity charges in
connection with conducting business in 11340 & 11342 Wiles Road.
18
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant having duly executed this Addendum No. 1
to Lease Agreement as of the day and year first above written, each acknowledges
receipt of an executed original hereof.
Witnesses: LANDLORD:
Wiles Road Business Center, Ltd.
_____________________________ By:__________________________________
_____________________________
(As to Landlord)
Witnesses: TENANT:
_________________________________ By:___________________________________
_________________________________ ______________________________________
(As to Tenant) Print Name
19
Exhibit 6.5
ATRIUM FINANCIAL CENTER
LEASE AGREEMENT
THIS LEASE, made and entered into this 28 day of October, 1991, by and
between MASS MUTUAL LIFE INSURANCE CO. (the "Lessor") , whose address is 3475
Lenox Road, Suite 600, Atlanta, Ga. 30326, and EXPRESS FINANCIAL CORPORATION
(the "Lessee") whose address is 1515 N. Federal Highway, Suite 107, Boca Raton,
Florida 33432.
WITNESSETH THAT:
In consideration of the mutual promises, covenants and conditions herein
contained, and the rent reserved by Lessor, to be paid by Lessee to Lessor,
Lessor hereby leases to Lessee and Lessee hereby rents from Lessor, that certain
real property situated in Palm Beach County, Florida, hereinafter described, for
the term and at the rentals and upon the terms and conditions hereinafter set
forth.
1. PREMISES. The real property (the "Premises") hereby leased, let and
demised by Lessor unto Lessee, is Suite #107 (formerly known as Suite 100)
located on the 1st floor of a four (4) story office building (the "Building") at
1515 North Federal Highway, Boca Raton, Florida 33432, known as Atrium Financial
Center, and located as shown on Exhibit 1 hereto. The rentable square footage of
the Premises is 3,503 square feet, which is the sum of the actual square footage
plus fifteen percent (15%) of such square footage which is deemed to be allotted
for hallways, elevators, stairways, toilets, electrical, janitorial and other
such common areas. The location of the Premises within the Building is more
particularly depicted in Exhibit 2 attached hereto.
2. TERM. The term of this Lease, and the accrual of rents hereunder shall
commence on the date (the "Commencement Date") hereinafter defined and shall
extend to the 5th anniversary (the "Expiration Date") at 12:00 P.M. (midnight).
The Commencement Date shall be April 1, 1992 as verified by an executed document
which is a part of this Lease Agreement (Exhibit 3) attached hereto.
3. RENT. Lessee agrees to pay Lessor, without demand, set off or
deduction, a fixed annual minimum rent (the "Base Rent"), net for the first year
of this Lease the total amount of $28,024.00 payable in equal monthly
installments of $2,335.33 subject to upward adjustment commencing in the third
(3rd) Lease Year, for increases on an annual basis of CPI, maximum five percent
(5%) per annum, plus one-twelfth (1/12) of the prorata share of the Building
operating costs as it relates to the Premises in square foot cost annually over
the life of this Lease. The total square footage of the leased area is
approximately 3,503 square feet, which equals 3.85 percent of the leasable area
in the Building (91,000 square feet). The Base Rent will not begin to accrue
until the Commencement Date.
Each monthly installment of Base Rent shall be payable in advance on
the first
<PAGE>
(1st) day of each calendar month of the term to Lessor c/o Peterson Management
Company, Inc., P.O. Box 102228, Atlanta, Georgia 30368-0228, or at such other
place Lessor may from time to time designate in writing. If the Commencement
Date, as hereinabove defined, is not on the first (1st) day of a calendar month,
Base Rent for the period beginning with and between the Commencement Date and
the first (1st) day of the following month shall be apportioned on a per diem
basis at the monthly rental rate hereinabove provided and shall be payable on
the Commencement Date.
In addition to the Rent hereinabove reserved, Lessee shall also pay
the amount of any use or sales tax on rent imposed by the State of Florida and
any Federal or local government, which taxes and other assessments shall be paid
at the same time and in the same manner as each payment of rent. There shall be
due with any payment of rent received after the fifth (5th) day of the month a
late payment service charge equal to ten (10%) percent of the payment of rent.
Lessee agrees that commencing at the beginning of the third (3rd)
Lease Year, the Base Rent shall be adjusted for increases in the Consumer Price
Index (CPI), however, any increase shall not exceed five percent (5%) per annum.
Lessor and Lessee intend that the Base Rent, as adjusted from time to time as
hereinabove provided, shall be paid to Lessor absolutely net, without notice or
demand.
4. ASSIGNMENT. Lessee shall not assign this Lease nor any rights
hereunder, nor let or sublet all or any part of the Premises, nor suffer or
permit any person or corporation to use any part of the Premises, without first
obtaining the express written consent of Lessor which shall not be unreasonably
withheld. Should Lessor consent to such assignment of this Lease, or to a
sublease of all or any part of the Premises, Lessee does hereby guarantee
payment of all rent herein reserved until the expiration of the term hereof and
no failure of Lessor to promptly collect from any assignee or sublessee, or any
extension of the time for payment of such rents, shall release or relive Lessee
from its guaranty of obligation of payment of such rents.
5. QUIET ENJOYMENT. Lessor covenants that so long as Lessee pays the rent
reserved in this Lease and performs its agreements hereunder, Lessee shall have
the right quietly to enjoy and use the Premises for the term hereof, subject
only to the provisions of this Lease.
6. USE. Lessee, its successors and assigns, shall use the Premises
exclusively for the purpose of general office use and related activities and for
no other use or purpose whatsoever. Lessee shall comply with all laws,
ordinances, rules and regulations of applicable governmental authorities
respecting the use, operation and activities of the Premise (including
sidewalks, streets, approaches, drives, entrances and other Common Areas serving
the Premises), and Lessee shall not make suffer or permit any unlawful,
2
<PAGE>
improper or offensive use of the Premises, or such other areas, or any part
thereof, or permit any nuisance thereon. Lessee shall not make use of the
Premises in any way which would make void or voidable any policy of fire or
extended coverage insurance covering the Premises. Lessee shall maintain all
interior windows, if any, in a neat and clean condition and Lessee shall not
permit rubbish, refuse or garbage to accumulate or any fire or health hazard to
exist upon or about the Premises. Lessee shall use the Premises only for the
purpose stated in this Lease. Lessee agrees the abide by any rules or
regulations promulgated by Lessor which shall not discriminate against Lessee.
7. SIGNS. Lessee shall not place or suffer to be placed or maintained upon
any exterior door, roof, wall or window of the Premises any sign, awning, canopy
or advertising matter or other thing of any kind, and will not place or maintain
any decoration, lettering or advertising matter on the glass of any window or
door of the Premises and will not place or maintain any freestanding standard
within or upon the Common Area of the Premises or immediately adjacent thereto,
without first obtaining Lessor's expressed prior written consent. Lessor agrees
to grant approval of any sign located within the Premises or entry to the
Premises on glass or in conformity with the sign criteria attached hereto as
Exhibit 4. No exterior sign visible from the exterior of the Building shall be
permitted. Lessee further agrees to maintain such sign, lettering or other thing
as may be approved by Lessor in good condition and repair at all times and to
remove the same at the end of the term of this Lease as and if requested by
Lessor. Upon removal thereof, Lessee agrees to repair any damage to the Premises
caused by such installation and/or removal.
8. PARKING, COMMON AREAS AND BUILDING SECURITY. In addition to Premises,
Lessee shall have the right to non-exclusive use, in common with Lessor, other
Lessees, and the guests, employees and invitees of same of (a) automobile
parking areas, driveways and footways, and (b) such loading facilities, freight
elevators and other facilities as may be designated from time to time by Lessor,
subject to the terms and conditions of this Lease and to reasonable rules and
regulations for the use thereof as prescribed from time to time by Lessor. The
parking area shall be provided with adequate lighting and shall be maintained in
good condition by Lessor; provided that Lessor shall have the right at any time
and from time to time to change or modify the design and layout of the parking
area(s).
The Common Areas shall be subject to the exclusive control and
management of Lessor and Lessor shall have the right to establish, modify and
change and enforce from time to time rules and regulations with respect to the
Common Areas so long as such rules are not discriminatory against Lessee; and
Lessee agrees to abide by and conform with such rules and regulations.
Lessee agrees that it and its officers and employees will park their
3
<PAGE>
automobiles only in such areas as Lessor may from time to time designate. Lessee
agrees that it will, within five (5) days after written request therefore by
Lessor, furnish to Lessor the state automobile license numbers assigned to its
cars and the cars of all of its employees. Lessee shall not park any truck or
delivery vehicle in the parking areas, nor permit deliveries at any place other
than as designated by Lessor.
Neither the parking area nor any Common Area in the Building shall
be used by Lessee, its successors and assigns, or any agent, employee, invitee,
licensee, or customer of Lessee, for any advertising, political campaigning or
other similar use, including without limitation, the dissemination of
advertising or campaign leaflets or flyers.
Lessor expressly reserves the right at any time during the term of
this Lease to impose a charge for parking and/or a validation system for the
parking of cars in the areas reserved for Bank parking. Lessor further reserves
the right to charge for covered parking which may be available in the garage of
the Building. Notwithstanding anything contained herein to the contrary, Lessee
shall be granted the use of four (4) covered reserved parking spaces during the
term of this Lease at no charge.
In the event Lessor deems it necessary to prevent the acquisition of
public rights in and to the Building, Lessor may from time to time temporarily
close portions of the Common Areas, and may erect private boundary markers or
take such steps as deemed appropriate for that purpose. Such action shall not
constitute or be considered an eviction or disturbance of Lessee's quiet
possession of the Premises.
9. REPAIRS, MAINTENANCE, SURRENDER AND OPERATIONAL COSTS. Lessor shall not
be called upon and shall have no obligation to make any repairs, improvements or
alterations whatsoever to the Premises except as hereinafter specified. During
the term of this Lease, Lessor shall maintain the exterior walls in good repair,
and shall keep the roof the Building water tight, and Lessor shall provide
maintenance, a tenant directory located on the first (1st) floor of the
Building, trash removal and daily custodial services to the Common Areas within
the Building and site as needed to keep the Building in a "clean and neat"
condition. Lessor shall not be liable for or required to make any repairs, or
perform any maintenance, to or upon the Premises which are required by, related
to or which arise out of negligence, fault, misfeasance of and by Lessee, its
employees, agents, invitees, licensees or customers, in which event Lessee shall
be responsible thereof.
Lessee agrees to pay Lessor Lessee's proportionate share of the
Building operating costs and expenses (the "Operating Costs") including, but not
limited to the following:
A. Utilities which are not separately metered;
4
<PAGE>
B. Trash removal;
C. Pest Control;
D. Casualty and general comprehensive insurance;
E. Landscaping and landscaping maintenance;
F. Water and sewer charges;
G. Elevator service and maintenance;
H. Common Area maintenance;
I. Janitorial service applicable to the Premises and Common
Areas;
J. Electrical and telecommunication systems benefitting the
Common Areas or for the Common benefit of the Building;
K. Real estate taxes and assessments;
L. Security Guard service;
M. Any other reasonable cost whatsoever which Lessor may incur
for maintenance or operation of the Building;
N. Management fee,
and such proportionate share shall be in the same ratio that the total square
footage of the Premises bears to the total square footage of all gross leasable
area within the Building. Notwithstanding anything contained herein to the
contrary, Lessee's proportionate share of Operating Costs shall not exceed $5.25
per rentable square foot during the first year of the Lease. Thereafter, with
the exception of Taxes, Insurance and Utilities, Lessee's prorata share of
Operating Costs shall not aggregately increase yearly, as a percentage, more
than five percent (5%) over the actual costs in the previous year.
Lessor shall furnish to Lessee on or before January 1st of each year
an annual budget itemizing all estimated Operating Costs for such year including
a statement of Lessee's prorata share of such costs and expenses. Thereafter
Lessee shall pay to Lessor with each monthly installment of Base Rent (as it may
be adjusted) additional rent equal to one-twelfth (1/12) of Lessee's annual
prorata share of the estimated Operating Costs based upon the budget for that
year. Lessee's prorata share of the actual annual Operating Costs shall be
adjusted upward or downward, on an annual basis within ninety (90) days
following January 1st of each year, or as soon as practical thereafter, said
adjustment, if any, to be paid by Lessee to Lessor, or credited by Lessor to
Lessee, as the case may be, with the next payment of Base Rent due (as it may be
adjusted).
Except as provided above for Lessor to maintain, Lessee shall
service, keep and maintain the interior of the Premises, including all exposed
plumbing and fixtures and equipment on the interior of the Premises as well as
the air conditioner, in good and substantial repair during the entire term of
this Lease, but such agreement of Lessee shall not apply to any damage caused by
fire or other casualty which is covered by standard fire and extended coverage
insurance. Lessee agrees to make repairs promptly as they may be needed at its
own expense, and at the end of the term or upon termination of this Lease,
5
<PAGE>
Lessee shall deliver the Premises in good condition and repair, reasonable wear
and tear excepted, and in a broom-clean condition with all glass, keys,
hardware, and all windows and doors intact except for damage to such glass by
fire or other casualty beyond the control of Lessee. At all times during this
Lease, Lessee shall have a maintenance contract for the care and repair of air
conditioning equipment with a contractor approved by Lessor and Lessee shall
provide Lessor with a current copy of aforesaid maintenance contract. Such
contract will provide for preventive maintenance to be performed at least
quarterly. Provided the Lessee keeps aforementioned air conditioning contract in
effect, Lessee shall not be responsible for repairs to air conditioning units
within the demised premises unless caused by negligence of Lessee. Lessee agrees
to provide chair pads to be placed under all appropriate furniture and to steam
clean the carpeting on an annual basis and upon move out or termination of the
lease.
Lessor shall not be liable for any loss or damage to Lessee's
personal property in the Premises even though caused by the negligence of the
Lessor, or its agents, employees or persons under Lessor's control or direction
as and to the extent that such loss is covered by an insurance policy carried by
and for the benefit of the Lessee, and the Lessee shall not be liable for any
loss or damage to the Demised Premises or Building in which the same is located
even though caused by the negligence of the Lessee, its agents, employees or
persons under its control or direction as and to the extent that such loss is
covered by insurance carried by or for the benefit of the Lessor; provided that
the right of either party to collect under their insurance policies is not
affected hereby.
10. UTILITIES. Lessee shall pay all costs and expenses for electricity,
heating and cooling, and any and all other utilities separately metered or as
apportioned as provided in the above Article ("Repairs, Maintenance ...")
herein, furnished to or used in connection with the Premises for any purpose
whatsoever during the term of this Lease, promptly as each cost or expense shall
become due and payable. Lessee shall be responsible, at its own expense, for the
replacement of all electric light bulbs, tubes or ballasts serving the Premises.
11. ALTERATION TO THE PREMISES AND REMOVAL OF EQUIPMENT. Lessee shall not
make any alteration or addition to the Premises without first obtaining the
expressed prior written consent of Lessor. Upon expiration and termination of
this Lease, all installations, fixtures, improvements and alterations made or
installed by Lessee, including electric lighting fixtures made by Lessee, and
all repairs, improvements, replacements and alterations to the Premises made by
Lessee, shall remain a part of the Premises as the property of Lessor, except
for trade fixtures.
12. LIENS. Lessee agrees that it will make full and prompt payment of all
sums necessary to pay for the cost of repairs, alterations, improvements,
changes or other work done by Lessee to the Premises and further agrees to
indemnify and hold harmless Lessor
6
<PAGE>
from and against any and all such costs and liabilities incurred by Lessee, and
against any and all mechanic's, materialmen's or laborer's liens arising out of
or from such work or the cost thereof which may be asserted, claimed or charged
against the Premises or the Building or site on which it is located.
Notwithstanding anything to the contrary in this Lease, the interest
of Lessor in the Premises shall not be subject to liens for improvements made by
or for Lessee, whether or not the same shall be made or done in accordance with
an agreement between Lessor and Lessee, and it is specifically understood and
agreed that in no event shall Lessor or the interest of Lessor in the Premises
be liable for or subjected to any mechanic's, materialmen's or laborer's liens
for improvements or work made by or for Lessee; and this Lease specifically
prohibits the subjecting of Lessor's interest in the Premises to any mechanic's,
materialmen's or laborer's liens for improvements made by Lessee or for which
Lessee is responsible for payment under the terms of this Agreement. All persons
dealing with Lessee are hereby placed upon notice of this provision. In the
event any notice or claim of lien shall be asserted of record against the
interest of Lessor in the Premises or Building or the site on which it is
located on account of or growing out of any improvement or work done by or for
Lessee, or any person claiming by, through or under Lessee, or for improvements
or work the cost of which is the responsibility of Lessee, Lessee agrees to have
such notice of lien cancelled and discharged of record as a claim against the
interest of Lessor in the Premises or the Building or the site on which it is
located (either by payment or bond as permitted by Law) within ten (10) days
after notice to Lessee by Lessor, and in the event Lessee shall fail to do so,
Lessee shall be considered in default under this Lease.
13. CASUALTY. In the event the Premises are rendered untenantable by fire
or other casualty, Lessor shall have the option of terminating this Lease or
rebuilding the Premises and in such event written notice of the election by
Lessor shall be given to Lessee within 30 days (30) days after the occurrence of
such casualty. In the event that Lessor elects to rebuild the Premises, the
Premises shall be restored to its former condition prior to tenant improvement
work whether or not such improvement work may have been performed by Lessor
within two hundred seventy (270) days of the date of election of Lessor to
rebuild Premises. In the event that Lessor elects to terminate this Lease, the
rent shall be paid to and adjusted as of the date of such casualty, and the term
of this Lease shall then expire and this Lease shall be of no further force or
effect and Lessor shall be entitled to sole possession of the Premises.
14. CONDUCT OF BUSINESS. Lessee agrees to open the Premises for business
on the Commencement Date and thereafter, throughout the term of this Lease,
continuously to use all of the Premises for the purpose or purposes stated in
this Lease, diligently carrying on therein Lessee's business undertaking. Lessee
shall keep all of the Premises opened and available for business activity during
normal business hours except
7
<PAGE>
when prevented by strike, fire, casualty or other causes beyond Lessee's
reasonable control.
15. INSPECTION AND REPAIR. Lessor or its representatives shall have the
right at any reasonable time, except in the case of emergency, to enter upon the
Premises for the purpose of inspection or for the purpose of making or causing
to be made any repairs or otherwise to protect its interest, but the right of
Lessor to enter, repair or do anything else to protect its interest, or the
exercise or failure to exercise said right shall in no way diminish Lessee's
obligations or enlarge Lessor's obligations under this Lease, or affect any
right of Lessor, or create any duty or liability by Lessor to Lessee or any
third party. Lessor shall have the right to show the Premises to a prospective
tenant at any time subsequent to the one hundred eightieth (180th) day before
the expiration or termination of this Lease.
16. INSURANCE. Lessor shall not be liable for injury caused to any person
or property by reason of the failure of Lessee to perform any of its covenants
or agreements hereunder, nor for such damages or injury caused by reason of any
defect in the Premises now or in the future existing, or for any damages or
injury caused by reason of any present or future defect in the plumbing, wiring
or piping of the Premises or plumbing leaks or other consequences of such
defects or system failure. Lessee agrees to indemnify and hold harmless Lessor
from and against any and all loss, damage, claim, demand, liability or expense
by reason of any damages or injury to persons (including loss of life) or
property which may arise or be claimed to have arisen as a result of or in
connection with the occupancy or use of the Premises by Lessee. Lessee shall, at
its expense, provide and maintain in force during the entire term of this Lease,
and any extension or renewal hereof, public liability insurance with limits of
coverage not less than One Million and No/100 Dollars ($1,000,000.00) for any
property damage or loss from any one (1) accident, and not less than One Million
and No/100 Dollars ($1,000,000.00) for injury to any one (1) person from any one
(1) accident, applicable to the Premises. Each policy of insurance shall name as
the insured thereunder Lessor and Lessee. Each such liability insurance policy
shall be of the type commonly known as owner's, landlord's and tenant's
insurance and shall be obtained from a company satisfactory to Lessor. The
original of each such policy of insurance or certified duplicates thereof issued
by the insurance or insuring organization shall be delivered by Lessee to Lessor
on or before ten (10) days prior to occupancy of the Premises by Lessee,
providing for thirty (30) days notice of cancellation to Lessor.
Lessor shall maintain throughout the term of this Lease, casualty
insurance and general comprehensive insurance for the Building and Common Areas.
Lessee shall maintain at its sole cost and expense any and all insurance
covering contents, trade fixtures and tenant improvement, work which may have
been performed by Lessee.
17. WAIVER. The failure of Lessor to insist, in any one or more instances,
upon strict performance of any covenants or agreements of this Lease, or
exercise any option of
8
<PAGE>
Lessor herein contained, shall not be construed as a waiver or relinquishment
for the future enforcement of such covenant, agreement or option, but the same
shall continue and remain in full force and effect. Receipt of rent by Lessor,
with knowledge of the breach of any covenant, or agreement hereof, shall not be
deemed a waiver of such breach, and no waiver by Lessor of any provision hereof
shall be deemed to have been made unless expressed in writing and signed by
Lessor.
18. CONDEMNATION. Lessor reserves unto itself, and Lessee assigns to
Lessor, all right to damages accruing on account of any taking or condemnation
of any part of the Premises, or by reasons of any act of any public or
quasi-public authority for which damages are payable. Lessee agrees to execute
such instruments of assignment as may be required by Lessor, to join with Lessor
in any petition for the recovery of damages, if requested by Lessor, and to turn
over to Lessor any such damages that may be recovered in any such proceeding.
Lessor does not reserve to itself, and Lessee does not assign to Lessor, any
damages payable for trade fixtures installed by Lessee at its cost and expense
and which are not part of the realty.
19. DEFAULT. In the event Lessee shall fail (a) to make any rental or
other payment due hereunder within five (5) days after the same shall become
due, or (b) abandons the Premises during the term hereof, or (c) breaches or
fails to perform any of the agreements herein, and shall fail to cure such
agreements within ten (10) days after written notice from Lessor, then Lessor,
in any such event(s), shall have the option to:
1. Sue for rents as they may become due;
2. Terminate this Lease, resume possession of the Premises for
its own account and recover immediately from Lessee the
difference between the rent for which provision is made in
this Lease and fair rental value of the Premises for the
remainder of the lease term, together with any other damage
occasioned by or resulting from the abandonment or a breach or
default other than a default in the payment of rent; or
3. Resume possession and re-lease and re-rent the Premises for
the remainder of the lease term for the account of Lessee and
recover from Lessee, at the end of the lease term or at the
time each payment of rent becomes due under this Lease, as the
Lessor may elect, the difference between the rent for which
provisions are made in this Lease and the rent received on the
re-leasing or re-renting, together with all costs and expenses
of Lessor in connection with such re- leasing or re-renting
and the collection of rent and the cost of all repairs or
renovations reasonably necessary in connection with the re-
leasing or re-renting, and if this option is exercised, Lessor
shall, in
9
<PAGE>
addition, be entitled to recover from Lessee immediately any
other damages occasioned by or resulting from the abandonment
or a breach or default other than a default in the payment of
rent.
4. Upon the happening of any one or more of the aforementioned
defaults, Landlord may elect to declare the entire rent for
the balance of the term of the Lease, or any part thereof, due
and payable forthwith without regard to whether or not
possession shall have been surrendered to or taken by
Landlord, and to bring an action for the recovery thereof.
The remedies for which provision is made in this Article shall not
be exclusive and in addition thereto Lessor may pursue such other remedies as
are provided by law in the event of any breach, default or abandonment by
Lessee. In any event, and irrespective of any option exercised by Lessor, Lessee
agrees to pay and the Lessor shall be entitled to recover all costs and expenses
incurred by Lessor, including reasonable attorneys' fees and appellate
attorney's fees, in connection with collection of rent or damages or enforcing
other rights of Lessor in the event of a breach or default or abandonment by
Lessee, irrespective of whether or not Lessor elects to terminate this Lease by
reason of such a breach, default or abandonment. Lessee waives any right to
trial by jury on any issue which may be litigated herein.
Any and all sums due under this Lease from Lessee to Lessor and not
paid on the due date shall bear interest from the due date at the maximum rate
allowed by law until fully paid.
20. SUBORDINATION. This Lease is subject and subordinate to any mortgages,
deeds of trust, deeds to secure debt, ground rents and to all renewals,
modifications, consolidations, replacements and extensions of any of the
foregoing or of substitutions therefor or any other forms or methods of
financing or refinancing which may now or hereafter affect the real property or
leasehold estates of which the demised Premises form a part whether now in use
or not and any instruments executed for said purposes or hereafter executed by
the owners of the fee or leasehold, if Lessor is not the owner of the fee.
Lessee agrees upon demand to execute, acknowledge and deliver to the owners of
the fee or leasehold estate, without expense to them, any instruments that may
be necessary or proper to confirm this subordination of this Lease and of all of
the rights herein contained to the lien or liens created by any such
instruments. If the Lessee shall fail at any time to execute and deliver any
such subordination instruments upon request, the mortgagors in any such new
mortgage or mortgages or the obligators in any form of refinancing as provided
above, in addition to any other remedies available to them in consequences of
said default may execute, acknowledge and deliver such subordination instruments
as the attorney-in-fact of the Lessee and in the Lessee's name, place and stead;
10
<PAGE>
said Lessee hereby makes, constitutes and irrevocably appoints said mortgagors
or obligators as attorney-in-fact for that purpose.
21. PROOF OF LEASE. Lessee agrees that at any time and from time to time
upon ten (10) days prior written request by Lessor, it will execute, acknowledge
and deliver to the Lessor a statement in writing stating that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
stating the modifications, and that the Lease as so modified is in full force
and effect), and the dates to which the rent and other charges have been paid,
it being intended that any such statements delivered pursuant to this Article
may be relied upon by any prospective purchaser of or any prospective holder of
a mortgage or a deed of trust upon or any interest in the fee or any leasehold
or by the mortgagee, beneficiary or grantee of any security or interest, or any
assignee of any thereof or under any mortgage, deed of trust or conveyance for
security purposes now or hereafter done or made with respect to the fee of or
any leasehold interest in the demised premises.
It is hereby understood and agreed that if Lessee shall fail to
furnish the statement required to be furnished, as hereinabove provided, within
ten (10) days after request therefor by Lessor, then such failure on the part of
the Lessee shall constitute an acknowledgement by Lessee that the Lease (as
modified, if same has been modified) Is in full force and effect and that there
have been no prepayments of rent by Lessee. Should Lessor so elect, it shall be
deemed to be Lessee's attorney-in-fact for the purpose of executing any such
statement if same has not been furnished by Lessee within said ten (10) day
period.
22. DEPOSIT AND ADVANCES. Any funds paid by Lessee to Lessor as a deposit
or advance pursuant to the terms of this Lease, or any exhibit, addendum or
modification hereto, may be commingled with other funds of Lessor and need not
be placed in trust, deposited in escrow or otherwise held in a segregated
account. In addition, if any sum or sums of money shall become payable by Lessee
to Lessor pursuant to the terms of this Lease, or any exhibit, addendum or
modification hereto, or by any law, ordinance or regulation affecting this
Lease, Lessor shall have the right to apply any deposits or advances theretofore
made by Lessee against such sums due by Lessee to Lessor. Deposits shall not
accrue interest.
23. SECURITY DEPOSIT. Lessee has deposited with Lessor and Lessor hereby
acknowledges receipt of the sum of $ 2.112.16 which shall be held by Lessor as
security for the faithful performance by Lessee of all the terms of this Lease
by Lessee to be observed and performed. Said deposit shall not be mortgaged,
assigned, transferred or encumbered by Lessee without the express prior written
consent of Lessor and any such act on the part of Lessee shall be without force
and effect and shall not be binding upon Lessor. Said security deposit shall not
accrue interest. If any of the rents herein reserved or any other
11
<PAGE>
sum payable by Lessee to Lessor hereunder shall be overdue or unpaid, or should
Lessor make payments on behalf of Lessee, or if Lessee shall fail to perform any
of the terms of this Lease, the Lessor, at its option and without prejudice to
any other remedy which Lessor may have on account thereof, may appropriate and
apply said entire deposit, or so much thereof as may be necessary to compensate
Lessor, toward the payment of any rent or additional sum due hereunder or to any
loss or damage sustained by Lessor due to such breach on the part of Lessee; and
Lessee shall forthwith upon demand restore said security deposit to the original
sum deposited. Should Lessee comply with all of the terms and promptly pay all
of the rentals and all other sums payable by Lessee to Lessor as they become
due, said deposit shall be returned in full to Lessee at the end of the lease
term. In the event of bankruptcy or other creditor debt proceedings against
Lessee, the security deposit shall be deemed to be first applied to the payment
of rent and other charges due Lessor for all periods prior to the filing of such
proceedings.
24. PREPAID RENTS. Lessee has deposited with Lessor and Lessor
acknowledges receipt of the sum of $N/A which shall be held by Lessor, without
accrual of interest, as prepaid rent on account of N/A of this Lease. If any of
the rents herein reserved or any other sum payable from Lessee to Lessor
hereunder shall be overdue or unpaid, or should Lessor make payments on behalf
of Lessee, or if Lessee shall fail to perform any of the terms of this Lease,
then Lessor, at its option and without prejudice to any other remedy which
Lessor may have on account thereof, may appropriate and apply said entire
amount, or so much thereof as may be necessary to compensate Lessor, toward the
payment of any rent or additional sum due hereunder or to any loss or damage
sustained by Lessor due to such breach on the part of Lessee; and Lessee shall
forthwith upon demand restore said rents to the original sum deposited.
25. NOTICES. All notices required or contemplated by this Lease shall be
in writing and shall be delivered in person or by United States Certified Mail,
Return Receipt Requested, addressed to the party to whom such notice is directed
at the addresses set forth in the first paragraph of this Lease. By giving at
least two (2) days prior written notice to the other party, either party may
change its address for notices hereunder.
26. BUILDING HOURS. The Building shall be open for regular business from
7:00 A.M. to 8:00 P.M., Monday through Friday, and from 10:00 A.M. to 2:00 P.M.
on Saturdays. Individual Lessee access shall be accommodated by the Building
security system at all other times. Individually metered electrical controls and
air conditioning will provide Lessee with utilization when the Building is not
open for regular business as specified elsewhere in this Lease.
27. BROKERAGE. Lessee acknowledges that it has not dealt, consulted or
negotiated with any real estate broker, sales person or agent other than Arvida
Realty Sales, Inc. and Lessee hereby agrees to indemnify and hold harmless
Lessor from and against any
12
<PAGE>
and all loss and liability resulting from or arising out of any claim that
Lessee has dealt or negotiated with any real estate broker, sales person or
agent other than said Arvida Realty Sales, Inc. in connection with the
transaction which is the subject of this Lease.
28. ENERGY CRITERIA. Lessee acknowledges that the Building is constructed
as an energy efficient structure; therefore, all tenant improvements must meet
minimum standards of ASHRA-0975, effective as of the date of this Lease, as
adopted by Palm Beach County, Florida, and as may from time to time be amended.
All energy consumption must meet the following criteria:
A. Lighting fixtures, including ballast losses, at two hundred sixty
five (265) volts may not exceed three (3) watts per square foot; and
B. Total demand watts at one hundred twenty (120) volts, including
receptacles, incandescent and other lighting and other equipment shall not
exceed one (1) watt per square foot (office building requirement per National
Electrical Code).
29. RADON GAS. Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon gas that
exceed Federal and State guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your County Public Health Unit.
30. ENTIRE AGREEMENT. Lessee agrees that Lessor has not made any
statement, promise, or agreement or taken upon itself any engagement whatsoever,
verbally or in writing, in conflict with the terms of this Lease, or in which
any way modifies, varies, alters, enlarges or invalidates any of its provisions.
This Lease sets forth the entire understanding between Lessor and Lessee, and
shall not be changed, modified or amended except by an instrument in writing
signed by the party against whom the enforcement of any such change,
modification or amendment is sought. The covenants and agreements herein
contained shall bind, and the benefit and advantages hereof shall inure to the
respective heirs, legal representatives, successors and assigns of Lessor and
Lessee, Whenever used, the singular number shall include the plural and the
plural shall include the singular and the use of any gender shall include all
genders. The headings set forth in
13
<PAGE>
this Lease are for ease of reference only shall not be interpreted to modify or
limit the provisions hereof. This Lease shall be construed in accordance with
the laws of the State of Florida.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be
executed as required by law on this 28 day of October, 1991.
Witnesses: MASS MUTUAL LIFE INSURANCE CO.
_________________ By:________________________________________
_________________ Date:______________________________________
EXPRESS FINANCIAL CORPORATION
_________________ By:_______________________________________
_________________ Date:______________________________________
14
Exhibit 21
Subsidiaries
The following corporations are 80% owned subsidiaries of Interactive
Technologies.com, Ltd.:
Ubuy.Com, Ltd., a Delaware corporation
United Interactive Technologies, Inc., a Delaware corporation
Integrated Merchant Services, Inc., a Delaware corporation
Web Classified.net, Inc., a Delaware corporation
The following corporation is a 100% owned subsidiary of Interactive
Technologies.com, Ltd.:
Express Financial Corp., a Florida corporation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at December 31, 1999 and the Consolidated Statement
of Operations for the year ended December 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 9
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23
<PP&E> 115
<DEPRECIATION> 0
<TOTAL-ASSETS> 138
<CURRENT-LIABILITIES> 635
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (497)
<TOTAL-LIABILITY-AND-EQUITY> 138
<SALES> 0
<TOTAL-REVENUES> 4,055
<CGS> 0
<TOTAL-COSTS> 2,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,789
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at September 30, 1999 and the Consolidated Statement
of Operations for the year ended September 30, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 167
<SECURITIES> 0
<RECEIVABLES> 1,519
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,875
<PP&E> 132
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,007
<CURRENT-LIABILITIES> 438
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,417
<TOTAL-LIABILITY-AND-EQUITY> 2,007
<SALES> 0
<TOTAL-REVENUES> 4,855
<CGS> 0
<TOTAL-COSTS> 3,127
<OTHER-EXPENSES> 239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,489
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> .06
<EPS-DILUTED> .06
</TABLE>
