SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
CURRENT REPORT
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER SECTION 12(B) OR 12(G)
OF THE SECURITIES EXCHANGE ACT OF 1934.
WORLDCAST INTERACTIVE, INC.
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(Name of Small Business Issuer in its Charter)
FLORIDA 65-0639498
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(State or Other (Commission File (IRS Employer
Identification No.) Number)
Jurisdiction of
Incorporation)
3835 Park Central Blvd. North, Pompano Beach, Florida 33064
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(Address of Principal Executive Offices) (Zip Code)
(954) 971-2244
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(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: None
Title of Each Class Name of Each Exchange on Which
To be registered Each class is to be registered
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
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(Title of Class)
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Page ___ of ___ pages
Exhibit Index begins on Page ___
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Page No.
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PART 1
Item 1. Description of Business.............................................................. 1
Item 3. Description of Property.............................................................. 8
Item 4. Security Ownership of Certain Beneficial Owners and Management....................... 8
Item 5. Directors, Executive Officers and Control Persons.................................... 9
Item 6. Executive Compensation............................................................... 10
Item 7. Certain Relationships and Related Transactions....................................... 11
Item 8. Description of Securities............................................................ 12
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
And Other Shareholder Matters........................................................ II-1
Item 2. Legal Proceedings.................................................................... II-1
Item 3. Changes in and Disagreements with Accountants........................................ II-1
Item 4. Recent Sales of Unregistered Securities.............................................. II-1
Item 5. Indemnification of Directors and Officers............................................ II-2
PART FS
Financial Statements................................................................. F-1
Table of Contents.................................................................... F-1
PART III
Item 1. Exhibit Index........................................................................ III-1
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This discussion in this report regarding WorldCast Interactive, Inc.
and its business and operations contains "forward-looking statements." These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking words such as "may,"
expect," anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. You are cautioned that all
forward-looking statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward looking statements. We
undertake no obligation to update or revise forward-looking statements, thus you
should not assume that silence over time means that actual events are bearing
out as estimated in such forward looking statements. Unless otherwise specified,
all information in this registration statement gives effect to a one-for-four
reverse stock split effected by Worldcast on April 16, 1999.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART 1
ITEM 1. Description of Business
WorldCast Interactive, Inc. provides satellite television, interactive
content and other information services. In this report, we refer to WorldCast
Interactive, Inc. as "WorldCast," "we" or "us." We provide our services to the
multiple-housing unit market, which includes apartment communities, condominium
communities, college dormitories, hospitals, hotels, mobile home parks and
private residential subdivisions. Our services include the installation of our
signal distribution systems to deliver television and information services
(including DIRECTV(TM) television services and high-speed Internet access) to
subscribers. In November 1999, we amended our articles of incorporation to
change our name from FutureTrak International, Inc. to our present name.
Historically, our business focused upon provision of entertainment and
information services, including weather and stock reports, to customers on
yachts in the United States. This line of business has been detrimentally
affected by problems associated with the quality of the receiver equipment
supplied to us. We are currently evaluating our strategy with regard to this
line of business.
Our strategy is to deliver quality entertainment and information
through various technologies, including satellite and terrestrial means of
communication, to emerging niche markets. We expect to continue our focus on the
multiple housing unit market while pursuing opportunities in other markets. From
time to time we engage in merger, acquisition and related discussions with
entities that provide technologies or services complementary to ours. Although
we are presently engaged in these discussions, we are not a party to any signed
agreement.
We were organized as a Florida corporation in January 1996. In January
1999, we formed our wholly-owned subsidiary, FutureTrak, Inc., to provide, on a
subscription basis, entertainment, information and communication services to
residents of multiple housing units. We operate our marine business through STI
Group, Inc., another wholly-owned subsidiary, formed in January 1999. We intend
to conduct research and development activities through our third wholly-owned
subsidiary, Maxwell Technologies.
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The Multiple Housing Unit Market Business
Under an agreement with Golden Sky Systems, Inc., WorldCast is
authorized to market and provide the programming services of DIRECTV to multiple
housing units for which it has obtained the right to install its signal
distribution system. Worldcast, as a DIRECTV System Operator, receives a
one-time $100.00 activation fee with a free IRD and a monthly residual of 19% of
subscribers' programming from DIRECTV. In addition, Worldcast charges a $10.00
monthly access fee to all tenant subscribers. DIRECTV is a leading provider of
multi-channel direct broadcast satellite television services. Golden Sky is one
of four master system operators DIRECTV has retained to sell its services to
multiple housing units. The initial term of this agreement expires in July 2004.
DIRECTV currently offers in excess of 220 channels of video and audio
programming, including:
o video and audio services available for purchase in tiers for a
monthly subscription fee;
o premium services available a la carte or in tiers for a
monthly subscription fee;
o sports programming (major professional league sports package,
including the exclusive NFL Sunday Ticket, regional sports
networks and seasonal college sports packages) available for a
yearly, seasonal or monthly subscription fee; and
o movies from major Hollywood studios and special events
available for purchase on a pay-per-view basis.
WorldCast proposes to deliver off-air or local television programing,
broadcast programming to multiple housing unit subscribers either free-of-charge
or for a nominal fee through DIRECTV.
WorldCast is also an authorized reseller of financial and weather
information services provided by Data Transmission Network Corporation, and
proposes to provide an array of other programming and services to residents of
multiple housing units across the United States. WorldCast believes that
multiple housing units provide a highly concentrated base of consumers to whom
communications companies can provide cost-effective access due to the large
volume of consumers in a compact area.
Industry analysts have reported that there are almost 20 million
multiple housing units in the United States. WorldCast has identified the
following regions of the United States as potential markets, based on population
growth trends, expressed interest by multiple housing unit owners and other
factors:
o The central region, including Missouri, Kansas and Colorado;
o The southeast region, including Georgia and Florida;
o The southwest region, including Texas, New Mexico and Arizona;
and
o The west region, including California, Washington.
We intend to focus future marketing efforts on direct-marketing to the
largest property management companies in the United States, including real
estate investment trusts. We intend to enter into exclusive
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agreements with the owners of multiple housing units in the target regions
listed above. Because these property owners or managers often own or manage
several multiple housing unit properties, we believe that success at one
multiple housing unit property may result in subscriber growth from other
multiple housing units under common control.
We selectively target multiple housing unit properties to provide
television and high-speed Internet services using a model that evaluates:
o the location of the multiple housing unit;
o multiple housing unit property values;
o average annual income per resident;
o the median age of residents of the multiple housing unit; and
o the average monthly rent.
Our model is designed to identify desirable properties and to exclude
substandard properties from the target market because of increased risk of
equipment loss (i.e., damage to or theft of set top boxes, cabling, or other
equipment comprising our signal distribution system) and the likelihood of
reduced return-on-investment.
The Marine Business and Market
Commencing in 1996, we concentrated our business activities on the
provision of satellite television and other communications services to the
marine market based on the belief that this market had growth potential given
the size of the boating market in the United States.
We have been significantly hampered in our ability to service the
marine market as a result of defects in the Space Scanner receiver we sell to
customers. Because of these defects, we suspended marketing efforts to the
marine market in April 1999. We intend not to resume marketing efforts regarding
the Space Scanner until we have reached satisfactory resolution of disputes with
galaxis GmbH and its affiliates, the supplier of the Space Scanner equipment,
concerning the equipment and the parties' respective obligations.
PRODUCTS AND SERVICES
Signal Distribution Systems
In connection with its multiple housing unit operations, WorldCast
proposes to implement video distribution designs and system architectures, which
will vary based upon the unique layout and service requirements of each multiple
housing unit community. The type of equipment to be used and the method of
signal distribution will be based upon many factors, including:
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o the number of set-top boxes required per unit;
o the number of units in a building;
o the length and condition of the drop wires;
o the location of an external power supply;
o the location of a suitable dish mounting surface;
o the location and exposure of the building; and
o the demographics of the community.
Generally, each signal distribution system will be comprised of:
o a satellite dish and other antenna capable of receiving direct
broadcast satellite programming and off-air television
broadcast signals; and
o wiring from the dish and antenna to each unit in the multiple
housing unit, through which video programming and other
information services can be delivered to subscribers. This
wiring is potentially suitable for the provision of
high-speed, interactive, Internet access.
WorldCast offers a variety of higher speed Internet access technologies
dependent upon factors such as subscriber sign-up rates and the physical
location of subscribers within a property. As our subscriber rates for the
property increase, the property can support wireless platforms including Lucent
Technologies WaveLAN and local area technologies utilizing network wiring and
protocols such as Ethernet and Asynchronous Transfer Mode.
Preliminary estimates by WorldCast of the average cost of constructing
each signal distribution system are between $400 and $750 per unit. This
estimated cost could increase if a more sophisticated signal distribution system
is needed in order to connect multiple housing unit subscribers with networks
maintained outside the multiple housing unit by Internet service providers.
Marine Receiver Equipment
WorldCast intends to offer marine customers a comprehensive satellite
communications solution, including the components, antenna and software needed
to receive and process audio and video programming.
WorldCast is reevaluating whether to continue to base its marine
activities on the Space Scanner satellite receiver equipment. Unless it receives
satisfactory assurances that defects in this equipment will
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be rectified shortly, WorldCast may enter into marketing and distribution
arrangements with the suppliers of other suitable receiver equipment.
In 1998, WorldCast entered into an agreement with Data Transmission
Network pursuant to which it has the right to offer DTN's real-time stock and
other financial information, together with comprehensive weather services, to
multiple housing unit subscribers.
Revenues
WorldCast anticipates earning revenues in two ways. The first is
through ongoing revenue sharing and commission incentives received from DIRECTV
and other suppliers of content or services to WorldCast. The second is through
fees received from subscribers for the right to receive entertainment and
information services through use of signal distribution systems installed by
WorldCast in multiple housing units and receiver equipment installed on boats.
WorldCast may agree to share some of the revenues it earns from the
multiple housing unit market with the owners of multiple housing units in which
it installs and maintains signal distribution systems.
Key Agreements
WorldCast has entered to the following key agreements in connection
with its marine business and its proposed multiple housing unit operations.
Multiple Housing Unit System Operator Agreement Between Golden Sky and
WorldCast.
In an agreement dated July 9, 1999, Golden Sky, a master system
operator to the multiple housing unit market for DIRECTV programming, granted to
WorldCast the right to market and sell DIRECTV programming in multiple housing
unit properties for which WorldCast has obtained a valid right of entry under
this agreement. WorldCast has the right to construct and operate, at its cost, a
signal distribution system in the owner's multiple housing unit. The technical
specifications of each signal distribution system must comply with DIRECTV's
specifications.
For each multiple housing unit subscriber who purchases programming
under this agreement, WorldCast will receive a percentage of net receipts
received by DIRECTV and a prepaid commission. In addition, DIRECTV will
subsidize receiver equipment used by multiple housing unit subscribers, subject
to DIRECTV's approval of the type of receiver equipment provided. WorldCast
cannot sell any DBS services other than DIRECTV services to multiple housing
unit residents. The term of this agreement is five years, to be automatically
renewed for five years unless either party elects to terminate. WorldCast has
not yet commenced its performance under the agreement pending its receipt of
necessary financial resources.
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Master Distribution Agreement Among WorldCast and Galaxis
In June 1997, Galaxis and WorldCast entered into a master distribution
agreement whereby Galaxis granted WorldCast the exclusive right to sell, market
and distribute Space Scanners to the marine market in North America, the Bahamas
and the Caribbean. The term of the agreement was for a initial period of one
year, to be renewed automatically, subject to termination by either party upon
at least 60 days' notice before the expiration date. In addition, WorldCast has
the right to terminate the agreement at any time by three months' written notice
to Galaxis. Galaxis must make Space Scanners available to WorldCast for a price
equal to the lowest price charged to any other customer. All customers to whom
WorldCast sells the Space Scanners are given a free replacement warranty from
WorldCast, backed by Galaxis for 12 months. In addition, the agreement provides
that Galaxis shall indemnify WorldCast against any product liability actions
involving products manufactured by or on behalf of Galaxis.
WorldCast and Galaxis are currently in negotiations concerning how to
resolve difficulties with the quality and supply of Space Scanner equipment. It
is possible that these discussions will result in the termination of the master
distribution agreement and/or litigation.
Sales Representative Agreement Between WorldCast and Gulfstream
In an agreement dated February 8, 1999, WorldCast appointed Gulfstream
its exclusive sales agent for all products sold by WorldCast to the marine
industry, including Space Scanner equipment. The term of the agreement expires
one year from the date of its execution, renewable by agreement for additional
terms of one year each. Under this agreement, Gulfstream is entitled to a
commission of 10% of the net sales price of all WorldCast products sold to
marine industry customers in North America. WorldCast is obligated to indemnify
Gulfstream against claims or loss it incurs in connection with the manufacture,
sale or operation of WorldCast products.
Because of difficulties with the supply and quality of Space Scanner
technology, Gulfstream ceased to perform activities with respect to the sale of
WorldCast products in April 1999. There can be no assurance that these
difficulties will be resolved or that WorldCast will resume selling products to
the marine market at all.
Asset Purchase
On January 5, 1999, WorldCast and Satellite Technology, Inc., entered
into an asset purchase agreement whereby WorldCast purchased certain assets used
in connection with distribution of the Space Scanner. The purchase price paid by
WorldCast consisted of (i) 200,000 shares of common stock and (ii) a $160,347
promissory note, described below.
Terminated Merger with Celerity Systems, Inc.
On Decenber 7, 1999, Worldcast, Celerity Systems, Inc. and FutureTrak
Merger Corp. terminated a merger agreement dated August 10, 1999. The merger was
terminated primarily because efforts to obtain necessary funding for the planned
activities of the parties had not proven successful.
Loans
In March 1, 1999, First Capital Services loaned WorldCast $395,000 in
the form of an unsecured negotiable promissory note. The note's effective date
is January 1, 1998, bears an interest rate of 1.00% per month simple interest,
and is payable in monthly installments of $10,401.86, which payments commenced
February 1, 1999 and continue until January 1, 2003, at which time all unpaid
principal and all accrued and unpaid interest becomes due.
On January 5, 1999, WorldCast issued a $160,347 promissory note to
Satellite Technology, Inc., as part of the purchase price of an asset purchase
of that company by WorldCast of the same date. The note bears an interest rate
of the prime rate plus two percent per annum and is payable in equal monthly
installments of $20,046.75, and is due January 5, 2000.
COMPETITION
The Multiple Housing Unit Business
WorldCast competes in the multiple housing unit market with a broad
range of communications and entertainment service providers, including cable
operators, other satellite service providers, wireless cable operators,
telephone companies, television networks and home video product companies. Many
of WorldCast's competitors will have greater financial and marketing resources
than WorldCast. WorldCast believes that quality and variety of programming,
signal quality and service and cost will be the key points of competition.
WorldCast believes it will obtain a competitive advantage over other
entertainment and information service providers seeking to service the multiple
housing unit market if it succeeds in entering into exclusive
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agreements with the owners of a significant number of multiple housing units in
the various regions in which it is focusing its marketing efforts. Except as
otherwise required by law, these agreements will result in WorldCast's becoming
the sole provider of entertainment and information services to residents of
those multiple housing units.
Cable Television Providers
Many cable television providers are in the process of upgrading their
systems, and other cable operators have announced their intentions to make
significant upgrades. Many proposed upgrades, such as conversion to digital
format, fiber optic cabling, advanced compression technology and other
technological improvements, when fully completed, will permit cable companies to
deliver a better quality signal and to increase channel capacity, which will
increase programming alternatives.
WorldCast believes that these upgrades will increase the level of
competition posed by cable systems that desire to continue servicing the
multiple housing unit market, but will require substantial investments of
capital and time. In the meantime, WorldCast believes it will be able to provide
a competitive entertainment and information service allowing choice of
programming and other services, and competitive signal quality.
Other Digital Broadcast Services
EchoStar is a competitor of DIRECTV in the United States satellite
television market and has developed its own network of multiple housing unit
distributors for its product. WorldCast expects to compete with these
distributors for the right to supply satellite television and other services
exclusively to multiple housing unit subscribers. WorldCast believes that
DIRECTV's brand name and its significantly larger distribution networks will
assist WorldCast in competing with EchoStar distributors.
Larger satellite dish manufacturers, known as C-band/TV providers,
serve subscribers who live in markets not served by cable television. C-band
equipment, including the six-to eight-foot dish necessary to receive the low
power signal, currently costs approximately $2,000 and is distributed by local
satellite dealers. WorldCast believes that direct broadcast services have
significant advantages over lower power C-band service in equipment cost, dish
size and range of programming packages.
The Marine Business
The market for satellite tracking systems and antennas is dominated by
companies including Datron, KVH, and SeaTel. If WorldCast continues to service
the marine satellite markets it will attempt to obtain a competitive advantage
by utilizing currently available technology which it believes more fully
addresses customers demands than addressed by its competitors.
Employees
WorldCast currently has 11 full-time employees.
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Insurance
WorldCast carries general liability insurance and director's and
officer's other insurance it believes necessary for its business operations.
Trademarks
WorldCast has filed an application for federal registration of the
service mark "WorldCast Interactive." WorldCast owns the registered trademark
"FutureTrak". It has registered the domain name "FutureTrak.com."
Legal Proceedings
WorldCast and certain of its officers are named defendants in an action
brought by Charter Memories, Inc. on May 4, 1999 in the United States District
Court, Central District of California, for damages totaling approximately
$96,000, for alleged misrepresentation concerning the qualities and
characteristics of Space Scanner equipment purchased by Charter Memories.
WorldCast is presently conducting discussions regarding settlement of this case.
In addition, WorldCast has received warranty and refund claims, the
aggregate of which is approximately $865,000, related to problems with the
performance of the Space Scanner. WorldCast believes that, under its master
distribution agreement, Galaxis is responsible for all payments due regarding
these claims. WorldCast is pursuing aggressively all available remedies,
including bringing legal proceedings against Galaxis in an attempt to recover
damages under the master distribution agreement in relation to such claims.
As of December 15, 1999, Worldcast was in default under the terms of a
$500,000 loan from M Holdings, although no formal legal proceedings have been
instituted. Worldcast and M Holdings are currently engaged in discussions
regarding extension of the term of the loan, but no formal agreement has been
reached.
Item 3. Description of Property
Properties
WorldCast leases 2,300 square feet of office space at 3835 Park Central
Boulevard North in Pompano Beach, Florida. The lease provides for rental
payments of approximately $2,300 per month. The lease will expire February 15,
2000.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding common
stock beneficially owned on November 1, 1999 for each person or group known to
be the beneficial owner of 5% or more of outstanding common stock, each of our
executive officers and directors and all executive officers and directors as a
group. A person is also deemed to be a beneficial owner of any securities of
which the person has the right to acquire beneficial ownership within 60 days.
At November 30, 1999, there were 9,546,193 shares of common stock outstanding.
The address for each of the persons below is c/o WorldCast Interactive, Inc.,
3835 Park Central Boulevard North, Pompano Beach, Florida 33064.
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Number of
Name Shares Percentage
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Ahmad Moradi 937,500 9.8%
Steven Remondini 2,190,000 22.9%
Robert S. Kelner 937,500 9.8%
William E. Tessaro 2,567,500 26.9%
All Officers and Directors as a Group 6,632,500 69.5%
(4 persons)
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Item 5. Management
Our executive officers and directors are as follows:
Name Position
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Ahmad Moradi Chief Executive Officer and Director
Steven Remondini President
Robert S. Kelner Chief Operating Officer and Director
William E. Tessaro Chief Technical Officer and Director
Ahmad Moradi, 44 years old, has been chief executive officer and a
director since August 1998. Since 1992, he also served as President of g4, Inc.,
an information systems and business strategy consulting firm. Dr. Moradi
presently serves as a director and a consultant to technology-based public
company, including Netgate Inc., Maxwell-Rand Holdings, Inc. and Summus
Technology Ltd. From 1994 to 1996, he provided consulting services to numerous
public companies, including CompuMed, Westmark Mortgage Group Holding, Churchill
Technologies, Inc. and Cyber-care Inc. (formerly known as Heart Labs of America,
Inc.). Dr. Moradi obtained a B.S. and M.A. in the fields of Mathematics,
Engineering and International Business from Florida Atlantic University. He
received a Ph.D. in Management Information Systems (MIS) from LaSalle
University.
Steven Remondini, 44 years old, has served as president and, until
December 1999, chairman of the board, since May 1996. In October 1995, Mr.
Remondini co-founded the Satellite Source, a satellite information technology
services provider. From May 1995 to October 1995, Mr. Remondini served as an
independent consultant, providing consulting services on several national
communication networking projects. From May 1995 to August 1993, Mr. Remondini
served as director of Technical Services for Citrix Systems, a software company.
Mr. Remondini holds a B.S. in Computer Science and Telecommunications, with a
minor in Business Administration, from Gonzaga University.
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Robert Kelner, 45 years old, has served as chief operating officer and
a director since August 1998. He also serves as interim Chief Financial Officer.
Just prior to joining WorldCast, Mr. Kelner served as vice president of
Strategic Alliances for Summus Technologies, a government contractor
specializing in static image and video wavelet compression technologies. From
1995 to 1997, Mr. Kelner worked in the marketing and sales department at Vincam,
a professional employer organization, and in the project management department
at the World Trade Center. From 1979 to 1995, Mr. Kelner served as President of
GKI, an importer and marketer of consumer products to retail outlets. Mr. Kelner
received a B.S. in Business Administration, with a major in Accounting, from the
University of Florida.
William Tessaro, 37 years old, has served as chief technical officer
and a director of WorldCast since August 1998. From August 1993 to April 1998,
he served as a senior engineer and manager for Citrix Systems, a software
company. From September 1985 to August 1993, he served as an advanced
engineering systems engineer and manager for Electronic Data Systems, a
subsidiary of General Motors. Mr. Tessaro received a dual B.S. in Mechanical
Engineering and Public Policy from Carnegie Mellon University.
Item 6. Executive Compensation.
The following table shows, for the past three fiscal years, the total
cash and other compensation paid by WorldCast to its Chief Executive Officer and
each other executive officer whose annual compensation exceeded $100,000. For
1998, each of our executive officers voluntarily accrued his salary until
WorldCast's financial position permits payment to be made.
SUMMARY COMPENSATION TABLE
Name and Principal Position Annual Compensation
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Year Salary
---- ------
Steven Remondini 1998 $65,606
President 1997 $52,600
1996 $ 0
Dr. Ahmad Moradi 1998 $26,250
Chief Executive Officer 1997 $ 0
1996 $ 0
Robert Kelner 1998 $30,000
Chief Operating Officer 1997 $ 0
1996 $ 0
William Tessaro 1998 $43,465
Chief Technical Officer 1997 $ 0
1996 $ 0
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Employment Agreements
WorldCast has entered into employment agreements with each of Mr.
Remondini, Dr. Moradi, Mr. Kelner and Mr. Tessaro, each of which expire
September 1, 2003. Under these employment agreements, each officer receives an
annual base salary of $250,000. In connection with his employment, each of Dr.
Moradi, and Messrs. Remondini, Kelner and Tessaro are entitled to receive an
annual incentive bonus equal to no less than 1.5% of the net profits of
WorldCast. None of Dr. Moradi and Messrs. Remondini, Kelner and Tessaro received
bonuses in 1998. Each employment agreement is terminable by WorldCast for cause
upon the occurrence of certain events, or upon physical or mental disability or
incapacity. In addition, WorldCast may terminate each employment agreement
without cause upon 30 days' written notice.
Pursuant to their respective employment agreements, each of Dr. Moradi
and Messrs. Remondini, Kelner and Tessaro, in the event of a change of control
of WorldCast, are entitled to resign and receive a lump sum cash payment from
WorldCast in an amount equal to (i) the greater of (a) three year's salary or
(b) the base salary due employee for the remainder of the term and (ii) an
amount equal to or multiple of two times the largest total of bonuses previously
paid in any one year to the employee..
Item 7. Certain Relationships And Related Transactions
In 1996 and 1997, Steven Remondini loaned WorldCast amounts totaling
$77,358 and $76,443 at December 31, 1997 and December 31, 1996, respectively.
Each loan has a zero interest rate and no due date. The amounts were paid in
full in 1998.
In March 1999, Dr. Moradi acquired restricted shares valued at
$300,000, Mr. Kelner acquired restricted shares valued at $300,000, Mr.
Remondini acquired restricted shares valued at $525,360. In April 1999, Mr.
Tessaro acquired restricted shares valued at $683,200. In each case, the
purchase price for the shares acquired was paid with the proceeds of a loan to
the purchasers from WorldCast, bearing interest at the prime rate of New York,
adjusted quarterly, plus two (2%) percent per annum. This interest accrues from
March 22, 1999 until September 1, 2001. Commencing September 1, 2001, accrued
and current interest payable under the promissory note relating to each loan
will be paid on a monthly basis through August 20, 2003. Payments of all unpaid
accrued interest and principal are due August 30, 2003. If a borrower defaults
on the loan, WorldCast may accept cancellation of the borrower's employment
agreement as satisfaction of the loan. In addition, if an employment agreement
between WorldCast and any of the borrowers is terminated by notice by WorldCast,
by reason of breach by WorldCast or if WorldCast ceases to conduct business, the
loan from WorldCast may, at the borrower's option, be forgiven.
During 1998, Mr. Tessaro loaned WorldCast an aggregate of $171,204,
evidenced by a promissory note from WorldCast in Mr. Tessaro's favor. The note
bears interest at the Prime Rate of New York, adjusted quarterly, plus two (2%)
percent per annum. The term of the loan expires August 1, 2000.
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Item 8. Description of Securities.
Under its certificate of incorporation, WorldCast is authorized to
issue up to 100,000,000 shares of common stock, par value $.001 per share, of
which 9,546,193 shares were outstanding as of November 30, 1999. WorldCast is
also authorized to issue up to 5,000,000 shares of preferred stock, par value
$.001 per share, none of which shares were issued and outstanding as of November
30, 1999.
Common Stock
Each shareholder is entitled to one vote for each share of common stock
owned of record. The holders of shares of common stock do not possess cumulative
voting rights, which means that the holders of more than 50% of the outstanding
shares voting for the election of directors can elect all of the directors.
Therefore, the holders of the remaining shares will be unable to elect any
directors. Holders of outstanding shares of common stock are entitled to receive
dividends out of assets legally available therefor at such times and in such
amounts as the Board of Directors may from time to time determine. Upon the
liquidation, dissolution, or winding up of WorldCast, the assets legally
available for distribution will be distributed ratably among the holders of the
shares outstanding at the time. Holders of the shares of common stock have no
preemptive, conversion, or subscription rights, and shares are not subject to
redemption. All outstanding shares of common stock will be fully paid and
non-assessable.
Preferred Stock
Under its certificate of incorporation, WorldCast is authorized to
issue preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors will be empowered, without shareholder approval, to issue
additional preferred stock with dividend, liquidation, conversion, voting or
other rights which could adversely affect the voting power or other rights of
the holders of WorldCast's stock. If issued, the preferred stock could be
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change of control of WorldCast.
Florida Legislation
Florida has enacted legislation that may deter or frustrate a takeover
of a Florida corporation. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority of the
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires super majority approval by disinterested directors or
shareholders of certain specified transactions between a corporation and holders
of more than 10% of the outstanding voting shares of the corporation (or their
affiliates). Under Florida Law, WorldCast may require indemnification of its
directors, officers, executive officers and agents.
-12-
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
There are outstanding warrants to purchase 200,000 shares of our common
stock at a purchase price of $1.50 per share, exercisable between December 15,
1999 and December 15, 2001.
Currently, our securities are not traded in any market. We were
delisted from the Over-the-Counter Bulletin Board in December 1999. There were
approximately 456 holders of our common stock as of December 10, 1999. Our
quarterly range of high and low bid prices on our common stock is as follows:
1997 1998 1999
---- ---- ----
High Low High Low High Low
---- --- ---- --- ---- ---
1st Quarter n/a n/a 12.00 4.50 1.52 1.00
2nd Quarter n/a n/a 8.50 4.00 1.75 1.25
3rd Quarter n/a n/a 4.95 3.89 1.63 0.29
4th Quarter 11.00 8.50 2.10 1.43 0.69 0.22
WorldCast's common stock began trading publicly in the fourth quarter
of 1997. All information in this chart has been restated to give effect
retroactively to WorldCast's reverse stock split at the rate of 1:4 in April
1999.
As of December 27, 1999, there were approximately 6,532,001 shares
eligible for resale under Rule 144 of the Securities Act.
We have never paid cash dividends on our common stock. We presently
intend to retain future earnings, if any, to finance the expansion of business
and do not anticipate that any cash dividends will be paid in the foreseeable
future. The future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.
Item 2. Legal Proceedings.
WorldCast and certain of its officers are named defendants in an action
brought by Charter Memories, Inc. on May 4, 1999 in the United States District
Court, Central District of California, for damages totaling approximately
$96,000, for alleged misrepresentation concerning the qualities and
characteristics of Space Scanner equipment purchased by Charter Memories.
WorldCast is presently conducting discussions regarding settlement of this case.
In addition, WorldCast has received warranty and refund claims, the
aggregate of which is approximately $865,000, related to problems with the
performance of the Space Scanner. WorldCast believes that, under its master
distribution agreement, Galaxis is responsible for all payments due regarding
these claims. WorldCast is pursuing aggressively all available remedies,
including bringing legal proceedings against Galaxis in an attempt to recover
damages under the master distribution agreement in relation to such claims.
Item 3. Changes in and Disagreements with Accountants.
In January 1999, the board of directors appointed Grant Thornton as the
accountants of WorldCast replacing Clancy & Co., PLLC. The board recommended the
change in order to engage an accounting firm with a national presence. There
were no disagreements with Clancy & Co. required to be reported under Item 304
of Regulation S-B of the Securities Act of 1933.
Item 4. Recent Sales of Unregistered Securities.
In March 1999, Dr. Moradi acquired restricted shares valued at
$300,000, Mr. Kelner acquired restricted shares valued at $300,000, Mr.
Remondini acquired restricted shares valued at $525,360. In April 1999, Mr.
Tessaro acquired restricted shares valued at $683,200. In each case, the
purchase price
-13-
<PAGE>
for the shares acquired was paid with the proceeds of a loan to the purchasers
from WorldCast, bearing interest at the prime rate of New York, adjusted
quarterly, plus two (2%) percent per annum. This interest accrues from March 22,
1999 until September 1, 2001. Commencing September 1, 2001, accrued and current
interest payable under the promissory note relating to each loan will be paid by
each executive officer on a monthly basis through August 20, 2003. Payments of
all unpaid accrued interest and principal are due August 30, 2003. If a borrower
defaults on the loan, WorldCast may accept cancellation of the borrower's
employment agreement as satisfaction of the loan. In addition, if an employment
agreement between WorldCast and any of the borrowers is terminated by notice by
WorldCast, by reason of breach by WorldCast or if WorldCast ceases to conduct
business, the loan from WorldCast may, at the borrower's option, be forgiven.
In September 1997, Worldcast consummated the sale of 1,000,000 shares
of common stock for a purchase price of $1.00 per share, receiving approximate
net proceeds of $900,000. This offering was made without registration under the
Securities Act to accredited or otherwise qualified investors pursuant to the
exemption from registration afforded by Section 4(2) and Rule 504 of Regulation
D promulgated under the Securities Act.
In October 1997, Worldcast issued 7,500 shares of common stock to the
following individuals or entities in exchange for consulting services rendered
to it: Bernard Little (7,500 shares); Global Consulting Group, Inc. (50,000
shares); Andover Consulting, Inc. (5,000 shares); and Barbara Sullivan (1,250
shares). Inasmuch as each of these individuals or entities had access to
information about Worldcast and were either accredited or otherwise
sophisticated investors, these issuances qualified for exemption from
registration under the exemption set forth in Section 4(2) of the Securities
Act.
On February 2, 1999, Worldcast issued 25,000 shares of common stock to
Satellite Technologies as consideration for the purchase of Satellite's assets.
This company had access to relevant information concerning Worldcast; therefore,
this transaction was exempt from registration pursuant to the exemption set
forth in Section 4(2) of the Securities Act.
On February 23, 1999, Worldcast issued 19,420 shares of common stock to
Shreyas Gandhi, an employee, in consideration of services rendered by Mr.
Gandhi. Inasmuch as Mr. Gandhi, as an employee, had a pre-existing relationship
with Worldcast and access to relevant information concerning Worldcast; this
transaction was exempt from registration pursuant to the exemption set forth in
Section 4(2) of the Securities Act.
On March 17, 1999, Worldcast issued the following shares of common
stock to the following executive officers pursuant to their respective
employment contracts: 1,641,750 shares to Steven Remondini; 937,500 shares to
Ahmad Moradi; 2,135,000 shares to William Tessaro; and 937,500 shares to Robert
Kelner. Inasmuch as each of these individuals are accredited investors within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act,
these transactions were exempt from registration under Section 4(2) of the
Securities Act.
On March 19, 1999, Worldcast issued 6,250 shares to John Muczko, a
consultant, in consideration of consulting services rendered. Inasmuch as Mr.
Muczko had a pre-existing relationship with Worldcast and access to relevant
information concerning Worldcast; this transaction was exempt from registration
pursuant to the exemption set forth in Section 4(2) of the Securities Act.
II-1
<PAGE>
On March 30, 1999, Worldcast issued 10,000 shares of common stock to
each of Steven Chu and Jerry Alexander in consideration of financial consulting
services rendered. Inasmuch as each of Mr. Alexander and Mr. Chu had a
pre-existing relationship with Worldcast and access to relevant information
concerning Worldcast; this transaction was exempt from registration pursuant to
the exemption set forth in Section 4(2) of the Securities Act.
On July 23, 1999, Worldcast issued 40,863 shares of common stock to
Continental Capital & Equity Corp. in consideration of financial consulting
services rendered. Inasmuch as this company is an accredited investor within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act, and
had access to relevant information concerning Worldcast; this transaction was
exempt from registration pursuant to the exemption set forth in Section 4(2) of
the Securities Act.
On November 3, 1999, Worldcast caused the issuance into escrow
2,975,000 shares of common stock to M. Holdings, as collateral to be held for a
$500,000 bridge loan from that company. Inasmuch as M Holdings is an accredited
investor within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, and had access to relevant information concerning Worldcast;
this transaction was exempt from registration pursuant to the exemption set
forth in Section 4(2) of the Securities Act.
On November 22, 1999, Worldcast issued 60,000 shares of common stock to
Ryan Capital Management Corp. in consideration of $15,000. Inasmuch as this
company is an accredited investor within the meaning of Rule 501 of Regulation D
promulgated under the Securities Act, and had access to relevant information
concerning Worldcast; this transaction was exempt from registration pursuant to
the exemption set forth in Section 4(2) of the Securities Act.
In January 1999, Worldcast consummated the sale of 3,542,101 shares of
its common stock for a purchase price of $1.00 per share, receiving approximate
net proceeds of $876,000. This offering was made without registration under the
Securities Act to accredited or otherwise qualified investors pursuant to the
exemption from registration afforded by Section 3(b) and Rule 504 of Regulation
D promulgated under the Securities Act.
Item 5. Indemnification of Directors and Officers.
The Florida Business Corporation Act permits the indemnification of
directors, employees, officers and agents of Florida corporations. Article X of
WorldCast's certificate of incorporation provides as follows:
We may indemnify any director, officer, agent, employee or agent of the
Company to the fullest extent permitted by Florida law.
In addition, Article (IV) of WorldCast's by-laws provides as follows:
Any person, his heirs, or personal representative, made or threatened
to be made a party to any threatened, pending, or completed action or
proceeding, whether civil, criminal, administrative, or investigative,
because he, his testator, or intestate is or was a director, officer,
employee, or agent of this corporation or serves or served any other
corporation or other enterprise in any capacity at the request of this
corporation, shall be indemnified by this corporation, and this
corporation may advance his related expenses to the full extent
permitted by law. In discharging his duty, any director, officer,
employee, or agent, when acting in good faith, may rely upon
information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented
by (1) one or more officers or employees of the corporation whom the
director, officer, employee or agent reasonably believes to be reliable
and competent in the matters presented, (2) counsel, public accountants
or other persons as to matters that the director, officer, employee or
agent believes to be within that person's professional or expert
competence, or (3) in the case of a director, a committee of the board
of directors upon which he does not serve, duly designated according to
law, as to matters within its designated authority, if the director
reasonably believes that the committee is competent. The foregoing
right of indemnification or reimbursement shall not be exclusive of
other rights to which the person, his heirs or personal representatives
may be entitled. The corporation may, upon the affirmative vote of a
majority of its board of directors, purchase insurance for the purpose
of indemnifying these persons. The insurance may be for the benefit of
all directors, officers or employees.
II-2
<PAGE>
PART F/S
The financial statements and supplementary data are included herein.
Financial Statements and Exhibits
The following audited financial statements for WorldCast, including the
audited balance sheet at December 31, 1998 and the related audited statements of
operations, changes in stockholders' equity, and cash flows for each of the
years ended December 31, 1998 and 1997 and the unaudited balance sheet at March
31, 1999 and the related unaudited statements of operations, changes in
stockholders' equity, and cash flows for March 31, 1999.
Contents
PAGE
Report of Independent Auditors F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholders Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-8
F-1
<PAGE>
Accountants and Grant Thornton
Management Consultants GRANT THORNTON LLP
The US Member Firm of
Grant Thornton International
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
WorldCast Interactive, Inc.
We have audited the accompanying balance sheet of WorldCast Interactive, Inc.
(the "Company"), as of December 31, 1998, and the related statements of
operations, shareholders' deficit and cash flows for the year then ended. The
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of WorldCast Interactive, Inc. as
of December 31, 1998 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $1,904,362 for the year ended December 31,
1998, and as of this date, the company's liabilities exceed its assets by
$1,073,800. These factors raise substantial doubt about the Company' ability to
continue as a going concern. Managements' plans in regard to these matters are
also described in Note B. The financial statements do not include any
adjustments that might result from the outcome from this uncertainty.
/s/ Grant Thornton LLP
Weston, Florida
February 26, 1999 (except for Note M, as
to which the date is March 15, 1999)
F-2
<PAGE>
<TABLE>
<CAPTION>
WORLDCAST INTERACTIVE, INC.
BALANCE SHEETS
ASSETS
December 31, December 31, September 30,
1997 1998 1999
---- ---- ----
(Unaudited)
Current assets
<S> <C> <C> <C>
Cash $ 181,966 $ 25,574 $ -
Trade accounts receivable, net of allowance for
doubtful accounts of $-0-, $19,162 and $-0- at
December 31, 1997, 1998 and September 30,
1999, respectively 50,301 26,827 -
Inventory 229,645 61,466 -
Employee advances - - 54,045
Prepaid expenses and other current assets - 6,423 4,611
------------- ------------- -------------
Total current assets 461,912 179,042 58,656
Property and equipment, net 90,365 77,163 77,739
Other assets 20,891 2,492 23,056
Notes receivable - officers 100,000 9,645 -
------------- ------------- -------------
Total assets $ 673,168 $ 209,590 $ 159,451
============= ============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Bank overdraft $ - $ - $ 672
Accounts payable 42,207 295,865 590,510
Accrued payroll - officers - 261,132 429,966
Due to officers - 140,100 182,137
Notes payable, current portion 221,036 105,424 174,490
Accrued expenses 1,957 23,293 52,793
Note payable - STI - - 150,347
Bridge financing - - 652,475
Lease obligation 10,449 - -
------------- ------------- -------------
Total current liabilities 275,649 825,814 2,233,390
Commitments - - -
Long-term liabilities
Capital lease obligation 8,490 - -
Notes payable, net of current portion 77,358 457,576 342,709
Advances from former Parent Company 429,851 - -
------------- ------------- -------------
Total liabilities 791,348 1,283,390 342,709
------------- ------------- -------------
Shareholders' equity (deficit)
Preferred stock, $.001 par value, 5,000,000 shares
authorized none issued - - -
Common stock, $.001 par value, 100,000,000 shares
authorized, 2,757,500, 3,039,200 and 9,385,525
shares issued and outstanding at December 31,
1997, 1998 and September 30, 1999, respectively 11,030 12,157 37,542
Additional paid in capital 978,970 1,926,585 2,403,872
Accumulated deficit (1,108,180) (3,012,542) (4,858,094)
------------- ------------- -------------
Total shareholders' deficit (118,180) (1,073,800) (2,416,648)
------------- ------------- -------------
Total liabilities and shareholders' deficit $ 673,168 $ 209,590 $ 159,451
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
WORLDCAST INTERACTIVE, INC.
STATEMENTS OF OPERATIONS
Nine Months Ended
Year Ended December 31, September 30,
----------------------- -------------
1997 1998 1998 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $ 374,607 $ 442,349 $ 524,990 $ 151,428
Cost of goods sold 277,027 463,416 596,792 423,260
------------- ------------- ------------- -------------
Gross margin 97,580 (21,067) (71,802) (271,832)
Selling, general and
administrative expenses 902,934 1,795,588 1,418,665 1,452,333
------------- ------------- ------------- -------------
Operating loss (805,354) (1,816,655) (1,490,467) (1,724,165)
Other income (expense)
Other income 2,661 1,227 348 603
Interest expense (38,177) (88,934) (66,701) (121,990)
------------- ------------- ------------- -------------
Total other expense (35,516) (87,707) (66,353) (121,387)
------------- ------------- ------------- -------------
Net loss $ (840,870) $ (1,904,362) $ (1,556,820) $ (1,845,552)
============= ============= ============= =============
Net loss per share of common stock:
Basic $ (.47) $ (.68) (.56) (.25)
============ ============ ============ ==============
Weighted average shares
outstanding:
Basic 1,771,542 2,809,600 2,774,161 7,342,312
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
<TABLE>
<CAPTION>
WORLDCAST INTERACTIVE, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
TWO YEARS ENDED DECEMBER 31, 1998 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 (UNAUDITED)
Common Stock Additional
------------ Paid-In Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 24, 1996 250 $ 500 $ 9,500 $ -- $ 10,000
Net loss -- -- -- (267,309)
----------- ----------- ----------- ----------- -----------
(267,309)
Balance, December 31,
1996 250 500 9,500 (267,309) (257,309)
Net loss for 1997 -- -- -- (840,871) (840,871)
Stock split 249,750 999 (999) -- --
Adjustment in par
$.50 to $.001 -- (499) 499 -- --
Offering cost -- -- (100,000) -- (100,000)
Issuance of common
stock 2,507,500 10,030 969,970 --
980,000
Conversion -- -- 100,000 -- 100,000
----------- ----------- ----------- ----------- -----------
Balance, December 31,
1997 2,757,500 11,030 978,970 (1,108,180) (118,180)
Net loss for 1998 -- -- -- (1,904,362) (1,904,362)
Issuance of common
stock 204,641 819 393,072 --
393,891
Conversion of debentures 77,059 308 124,692 -- 125,000
Forgiveness of debt
by a related party -- -- 429,851 -- 429,851
----------- ----------- ----------- ----------- -----------
Balance, December 31,
1998 3,039,200 12,157 1,926,585 (3,012,542) (1,073,800)
Issuance of common
stock 6,346,325 25,385 2,285,847 --
2,311,232
Note receivable
shareholders -- -- (1,808,560) -- (1,808,560)
Net loss for the period
(unaudited) -- -- -- (1,845,552) (1,845,552)
----------- ----------- ----------- ----------- -----------
Balance, September 30,
1999 (unaudited) 9,385,525 $ 37,542 $ 2,403,872 $ 4,858,094 $(2,416,648)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
WORLDCAST INTERACTIVE, INC.
STATEMENTS OF CASH FLOWS
Nine Months Ended
Year Ended September 30, September 30,
------------------------ -------------
1997 1998 1998 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (840,757) $ (1,904,362) $ (1,556,820) $ (1,845,552)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Inventory/reserve - 25,850 25,850 -
Depreciation expense 14,331 37,440 28,080 23,843
Provision for bad debts - 119,162 89,371 -
Common stock issued for services 30,000 139,650 55,000 -
(Increase) decrease in operating assets
Security Deposits (875) - - (900)
Accounts/notes receivable (19,238) (5,333) (147,149) 26,827
Inventory (185,892) 142,328 196,566 61,466
Prepaid expenses and other current
assets (20,130) 11,977 115,350 (40,596)
Increase (decrease) in operating liabilities
Bank overdraft - - - 672
Accounts payable (10,670) 234,719 251,509 294,642
Accrued interest included in notes
payable - 23,024 - -
Accrued expenses 1,957 282,468 50,302 198,334
------------- ------------- ------------- -------------
Total adjustments (190,631) 1,011,285 664,879 564,694
------------- ------------- ------------- -------------
Net cash used in operating
activities (1,031,274) (893,077) (891,941) (1,281,530)
Cash flows from investing activities
Purchases of property and equipment (93,131) (24,237) (40,554) (45,668)
------------- ------------- ------------- -------------
Net cash used in investing
activities (93,131) (24,237) (40,554) (45,668)
------------- ------------- ------------- -------------
Cash flows from financing activities
Proceeds from notes payable 121,280 475,259 403,743 839,859
Proceeds from sale of debentures - 125,000 - -
Proceeds from sale of Common Stock 1,000,000 254,240 392,285 501,894
Net repayments on lease obligation (3,818) - - -
Advances from parent company 429,851 - - -
Repayments to parent company (100,000) - - -
Offering costs paid (150,000) - - -
Gross payments on note payable (885) (93,577) (43,924) (40,801)
------------- ------------- ------------- -------------
Net cash provided by
financing activities 1,296,428 760,922 752,104 1,300,952
------------- ------------- ------------- -------------
(continued)
F-6
<PAGE>
WORLDCAST INTERACTIVE, INC.
STATEMENTS OF CASH FLOWS - CONTINUED
Nine Months Ended
Year Ended September 30, September 30,
1997 1998 1998 1999
(Unaudited) (Unaudited)
Net (decrease) increase in cash $ 172,023 $ (156,392) $ (180,391) $ (25,574)
Cash, beginning of year 9,943 181,966 181,966 25,574
------------- ------------- ------------- -------------
Cash, end of year $ 181,966 $ 25,574 $ 1,575 $ -
============= ============= ============= =============
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest $ 42,996 $ 90,802 $ 66,701 $ 21,990
============= ============= ============= =============
Supplemental disclosure of non-cash
transactions
Common stock issued for services $ 30,000 $ 139,650 $ 55,000 $ -
============= ============= ============= =============
Conversion of debentures $ 100,000 $ 125,000 $ - $ -
============= ============= ============= =============
Notes receivable from shareholder
for common stock issued $ - $ - $ - $ 1,808,560
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE>
WORLDCAST INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 1998 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(INFORMATION RELATING TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization on Nature of Business
----------------------------------
The Company is in the business of providing mobile satellite antennas to
the yachting industry, allowing the yachts to receive satellite
transmissions while at sea. Beginning in fiscal 1999, the Company plans to
provide wiring infrastructure to multi housing communities, which enables
the tenants to obtain Direct TV and high speed internet access.
Futuretrak International, Inc. (the "Company"), was incorporated on January
24, 1996, under the name Future Vision. On June 16, 1997, the Company
amended its articles of incorporation and changed its name to Futuretrak
International, Inc. On May 5, 1997, 90% or 9,000,000 shares of the
outstanding stock was purchased from the existing shareholders by World
Vision Entertainment, Inc. On July 15, 1998, Palm Bay Capital, Inc.
purchased 7,000,000 shares from World Vision Entertainment, See further
detail of this transaction at Note F.
On November 9, 1999, the Company changed its name to WorldCast Interactive,
Inc.
Principals of Consolidation
---------------------------
The financial statements at September 30, 1999 and for the nine months
period ended September 30, 1999 represents the consolidated results of the
Company and its wholly-owned subsidiaries - Futuretrak, Inc., Maxwell
Technologies, Inc. and STI Group, Inc. Futuretrak, Inc. and Maxwell
Technologies, Inc. were incorporated during 1999 and have no operations.
STI Group, Inc. was acquired in January 1999 (see Note L) and has no
operations. All intercompany balances have been eliminated in
consolidation. The financial statements as of December 31, 1997 and 1998
and for the years then ended and the nine months ended September 30, 1998
only included the operations of the Company without any subsidiaries.
Interim Financial Information
-----------------------------
The financial statements at September 30, 1999 and for the nine month
periods ended September 30, 1998 and 1999 are unaudited and prepared on the
same basis as the audited financial statements included herein.
(continued)
F-8
<PAGE>
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Interim Financial Information - Continued
-----------------------------------------
In the opinion of management, such interim financial statements include all
adjustments (consisting of normal recurring adjustments) necessary to
present fairly the results for such periods. The results of operations for
the nine months ended September 30, 1998 and 1999 are not necessarily
indicative of the results to be expected for the full year or any other
interim period.
Inventory
---------
Inventory, consisting of Raw materials and Finished Goods, is stated at the
lower of cost (Average Cost basis) or market.
Depreciation
------------
Property and equipment are stated at cost, net of accumulated depreciation.
Depreciation for financial reporting purposes is computed by using the
straight-line method over the estimated useful life of the related assets,
which are as follows:
Years
-----
Computer equipment 3 - 5
Office equipment 5
Furniture and fixtures 7
For income tax purposes, accelerated methods of depreciation are generally
used. Deferred income taxes are provided for the difference between
depreciation expense for tax and financial reporting purposes.
Income Taxes
The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recorded based on the difference
between the tax basis of assets and liabilities and their carrying amounts
for financial reporting purposes. In addition, the current or deferred tax
consequences of a transaction are measured by applying the provisions of
enacted tax laws to determine the amount of taxes payable currently or in
future years.
(continued)
F-9
<PAGE>
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Estimates
---------
In preparing financial statements in accordance with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts and disclosures of assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Reclassifications
-----------------
Certain reclassifications have been made to the 1997 amounts to conform to
the 1998 presentation.
Earnings Per Share
------------------
The Company adopted Financial Accounting Standards No. 128 (FAS 128),
"Earnings Per Share" in 1997. FAS 128 requires dual presentation of basic
and diluted earnings per share on the face of the income statement as well
as the restatement of prior periods presented.
Basic net earnings per share equals net earnings divided by the weighted
average shares outstanding during the year. Dilutive EPS has not been
presented because common stock equivalents would be anti-dilutive in 1998
and for the nine month ended September 30, 1998 and 1999.
Reverse Stock Split
-------------------
The Board of Directors declared a one-for-four common stock reverse split
for shareholders of record on April 16, 1999. All common stock related data
for all periods presented have been restated to reflect the reverse stock
split.
F-10
<PAGE>
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has sustained
substantial losses from operations since inception which has resulted in a
deterioration in the Company's financial position. In addition, the Company
is delinquent in paying its fourth quarter Federal payroll taxes which
amounts to approximately $23,000.
The recoverability of a major portion of the recorded asset amounts shown
in the accompanying balance sheet is dependent upon commencement of
successful operations of the Company, which in turn is dependent upon the
Company's ability to finance its future operations. The financial
statements do not include any adjustments relating to the recoverability
and classification of recorded assets and liability amounts which might
result from the above uncertainties.
The Company has and will continue to take a number of steps to reduce its
operating losses. The Company will continue to increase its efforts in
marketing Direct TV, real time financial data, weather center information
and high speed internet and telephony solutions focused on its two niche
markets, yachts and RV's and multi housing communities.
Management believes that a result of the action stated above, the Company
can continue in existence for the next twelve months; however, there is no
assurance that such action will be consummated or will eliminate the
Company's need for additional capital.
NOTE C - INVENTORIES
Inventories consist of the following at December 31:
1997 1998
---- ----
Raw materials $129,866 $ 61,466
Finished goods 99,779 --
-------- --------
Total $229,645 $ 61,466
======== ========
F-11
<PAGE>
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 and 1998 consist of the
following:
1997 1998
------------- -------------
Office and computer equipment $ 23,992 $ 44,022
Furniture and fixtures 1,117 3,207
Show displays and equipment 81,880 83,997
Leasehold improvements 2,415 2,415
--------- ---------
109,404 133,641
Less: Accumulated depreciation (19,039) (56,478)
--------- ---------
$ 90,365 $ 77,163
========= =========
NOTE E - INCOME TAXES
The Company has available at December 31, 1998, net operating losses of
$3,000,000, which may be applied against future taxable income. The net
losses expire in 2011 - 2018. A deferred tax asset in the amount of
$327,938 and $988,000 in 1997 and 1998, respectively, which would be
recognized in accordance with the provisions of FASB 109, was reduced by a
valuation allowance equal to the deferred tax asset of $328,000 and
$1,000,000 in 1997 and 1998, respectively.
NOTE F - RELATED PARTY TRANSACTIONS
During 1998, World Vision Entertainment (WVE) sold 7,000,000 of the
9,000,000 shares of the Company that they owned to Palm Bay Capital, Inc.,
which was funded by means of loans from Steve Remondini and William
Tessaro, President and Chief Technical Officer, respectively, and Larry
Schwartz, shareholder. Subsequent to the purchase, 6,000,000 of the shares
were distributed to the three individuals mentioned above. Palm Bay Capital
currently owns 1,000,000 shares.
As a result of the sale of shares from WVE to Palm Bay Capital, WVE forgave
a note in the amount of $429,851 from the Company. Since WVE was a major
shareholder, this forgiveness of debt was recorded as additional paid in
capital.
At December 31, 1998, the Company owes $163,000 and $395,000, to two
financial institutions which are both owned by Larry Schwartz a shareholder
of the Company
F-12
<PAGE>
NOTE G - NOTES PAYABLE
The following is a summary of Notes Payable at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Unsecured note payable, to a financial institution dated
September 11, 1996 with monthly payments of $10,402 including
interest at the rate of 12% per annum. Matures January 2003. $ 196,051 $ 395,000
Line of credit, Barnett Bank of Broward County, NA, dated
August 2, 1996, in the original amount of $25,000, with
interest payable monthly at the rate of 2.5% over the bank's
rate, secured by all inventory, chattel paper, accounts
equipment and general intangibles. This note is due on demand. 24,985 -
Unsecured note payable, to a financial institution, dated June
12, 1998 with monthly payments of $4,292 including interest at
a rate of 12%. Matures January 2003. - 163,000
Noninterest bearing, unsecured note payable toa
former shareholder, due upon demand. - 5,000
------------- -------------
221,036 563,000
Less: current portion 221,036 105,424
------------- -------------
$ - $ 457,576
============= =============
</TABLE>
F-13
<PAGE>
NOTE H - BRIDGE FINANCING (UNAUDITED)
On July 2, 1999, the Company and Celerity Systems, Inc. consummated a joint
financing management with a private investor of which the proceeds to the
Company were $450,000. The total loan amount of $1,000,000 and interest
amounting to $200,000 were to have been converted into shares of the merged
company on October 25, 1999; however, the merger has not occurred and the
parties are considering renegotiating the terms of this obligation. The
loan is collaterallized by $2,000,000 of the Company and Celerity shares in
the rates of 90% of the Company's shares and 10% of Celerity shares. The
loan plus accrued interest is due December 15, 1999. The Company is
currently negotiating with the private investor to extend the term of the
loan. At September 30, 1999, the Company's liability to the private
investor was $550,000 including 100,000 of accrued interest.
On June 1, 1999, the Company obtained a $50,000 Bridge loan from Ryan
Capital Management Corp. with $60,000 (includes $10,000 of accrued
interest) was due September 30, 1999. On November 27, 1999, the term of the
loan was extended for another 121 days.
On June 18, 1999, the Company obtained a $42,475 bridge loan from May Davis
Group which was repaid in November 1999.
NOTE I - DUE TO OFFICERS - STOCKHOLDERS
On August 1, 1998, an officer of the Company loaned the Company $140,100.
The note is non-interest bearing and is due upon demand. The Company
intends to pay the note in full during 1999.
NOTE J - COMMITMENTS
Leases
------
The Company occupies 2,300 square feet of office and warehouse space in
Pompano Beach, Florida under a noncancelable lease which expires in
January, 2000. Lease expense for the years ended December 31,1998 and 1997
was $28,384 and $29,028, respectively.
(continued)
F-14
<PAGE>
NOTE J - COMMITMENTS - Continued
Leases - Continued
------------------
On February 12, 1997, the Company entered into an operating lease with
American Business Credit Corp., which expires January 12, 2001. Also, on
February 16, 1998, the Company entered into an operating lease with Hewlett
Packard, which expires January, 1999. The lease expense combined, for the
years ended December 31, 1998 and 1997 was $13,906 and $1,864,
respectively.
The Company's future minimum operating lease commitments are as follows:
Amount
------
1999 $ 32,026
2000 5,634
2001 419
----------------
Total $ 38,079
================
Employment Agreements
---------------------
The Company has entered into employment agreements with four of its
executive officers for an initial period of five years, and year to year
thereafter unless either party gives 180 days written notice not to renew
the agreement. The agreements provide that if the employee is terminated
after change in control of the Company, the employee is to receive the
larger of (1) three years base salary, or (2) the base salary due to
employee for the remaining term of the agreement, or (3) an amount equal to
two times the largest total of the bonuses previously paid in any one year
by the Company to the employee.
(continued)
F-15
<PAGE>
NOTE J - COMMITMENTS - Continued
Consulting Agreement
--------------------
On January 15, 1997, the Company entered into an agreement with a
financial institution for consulting services in financial matters and
dealings on behalf of the Company. The Company agreed to pay $3,000 per
month beginning February 1, 1997, $4,000 per month beginning February 1,
1998, and $5,000 per month beginning February 1, 1999 for each of the
following 12 months. Future minimum commitments as of December 31, 1998
are as follows:
1999 $ 59,000
2000 $ 5,000
The agreement is for a period of three years and shall be automatically
renewed for a similar term unless either party delivers to the other party
(30) days notice prior to the termination date.
NOTE K - STOCKHOLDERS EQUITY
On August 14, 1997, each share of common stock currently outstanding was
split into ten thousand (10,000) shares of common stock, or an increase of
nine hundred and ninety nine thousand (999,000) shares. Par value per share
was adjusted from $.50 to $.001 as a result of the forward split.
On August 14, 1997, the Company issued 9,000,000 shares of common stock as
part of a shareholder purchase/merger agreement. Costs associated with the
issuance totaled $50,000.
In 1997, the Company issued one million (1,000,000) shares of common stock
for cash in completion of an offering memorandum dated August 25, 1997, at
$1.000 per share, or $1,000,000, less offering costs of $100,000, or a net
of $900,000.
During 1997, Notes Payable, Stockholders for $100,000 was converted to
additional paid in capital.
F-16
<PAGE>
NOTE K - STOCKHOLDERS EQUITY - Continued
On December 19, 1997, the Company issued thirty thousand (30,000) shares of
common stock for services performed which was valued at $1.00 per share, or
$30,000.
During 1998, debentures in the amount of $125,000 were converted into
308,235 shares of common stock.
NOTE L - SUBSEQUENT EVENTS
In January, 1999, Futuretrak entered into an agreement to purchase the
assets of Satellite Technology, Inc. (STI), a former distributor/dealer for
Futuretrak. STI is a distributor of satellite space scanners and antenna
control units. The agreement included the issuance of 200,000 shares of
Futuretrak common stock and promissory note in the amount of $160,347 for
the assets of STI. The note bears interest at a rate of prime plus 2%, with
monthly principal payments of $20,049 beginning no later than May 5, 1999
(unless additional funding becomes available sooner to the maker after the
contemplated 504D, in which case the first payment shall be due within 15
days of the date such funds become available). The note shall mature, and
any remaining principle and accrued but unpaid interest shall be due and
payable on January 5, 2000. At September 30, 1999, the Company has not made
the required monthly principle payments under the terms of the loan and
therefore is currently in default on this loan.
On January 11, 1999, the Company amended its Articles of Incorporation to
increase the authorized shares from 50,000,000 to 100,000,000 shares.
During the nine month period ended September 30, 1999, the Company issued a
total of 76,533 shares of common stock for services for a diminimus amount.
NOTE M - SUBSEQUENT EVENT - STOCK ISSUANCE
On March 15, 1999, the Company issued 5,651,750 (post reverse stock split)
shares of common stock to four officers in exchange for promissory notes of
$1,808,560. The notes are collateralized by officers employment agreements.
Commencing September 1, 2001, accrued interest will be paid on a monthly
basis through August 30, 2003. All unpaid accrued interest and principal is
due August 30, 2003. If the officers default on the loan, the Company may
cancel the officer's employment agreement as satisfaction for the loan.
F-17
<PAGE>
NOTE N - YEAR 2000
The Year 2000 issue relates to limitations in computer systems and
applications that may prevent proper recognition of the Year 2000. The
potential effect of the Year 2000 issue on the Company its business
partners will not be fully determinable until the Year 2000 and thereafter.
If Year 2000 modifications are not properly completed either by the Company
or entities with which the Company conducts business, the Company's
revenues and financial condition could be adversely impacted.
F-18
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
3.1(a) Articles of Incorporation of WorldCast Interactive, Inc. dated January 24, 1996.
3.1(b) Articles of Amendment of WorldCast Interactive, Inc.
3.1(c) Articles of Amendment of WorldCast Interactive, Inc.
3.1(d) Articles of Amendment of WorldCast Interactive, Inc.
3.1(e) Articles of Amendment of WorldCast Interactive, Inc.
3.2 Amended and Restated Bylaws of WorldCast Interactive, Inc.
4.1 Warrant Agreement between WorldCast Interactive, Inc. and M Holdings, Inc.
10.1 Employment Agreement between WorldCast Interactive, Inc. and Ahmad Moradi
10.2 Employment Agreement between WorldCast Interactive, Inc. and Steven Remondini
10.3 Employment Agreement between WorldCast Interactive, Inc. and Robert Kelner
10.4 Employment Agreement between WorldCast Interactive, Inc. and William Tessaro
10.6 $395,000 Negotiable Promissory Note payable by WorldCast Interactive,
Inc. to the order of First Capital Services, Inc.
10.7 $160,347 Promissory Note payable by WorldCast Interactive, Inc. to the
order of Satellite Technology, Inc.
10.8 Promissory Note payable to WorldCast Interactive, Inc. by William E. Tessaro
10.9 Promissory Note payable to WorldCast Interactive, Inc. by Robert S. Kelner
10.10 Promissory Note payable to WorldCast Interactive, Inc. by Ahmad Moradi
10.11 Promissory Note payable to WorldCast Interactive, Inc. by Steve Remondini
10.12 System Operator Agreement between Golden Sky and WorldCast Interactive, Inc.
10.13 Sales Representative Agreement by and between WorldCast Interactive, Inc. and Gulfstream Marine
Products, Inc.
10.14 Agreement for Purchase and Sale of Assets by and among WorldCast Interactive, Inc. and
Satellite Technology, Inc. dated as of January 5, 1999.
10.15 WorldCast Interactive, Inc. 1998 Stock Option Plan
21. Subsidiaries
23. Consent of Independent Auditor
27. Financial Data Schedule
</TABLE>
III-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 30, 1999
WORLDCAST INTERACTIVE, INC.
By: /s/ AHMAD MORADI
------------------------------
Ahmad Moradi,
Chief Executive Officer
III-2
ARTICLES OF INCORPORATION
-------------------------
OF
FUTURETRAK, INC.
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be: FutureTrak, Inc.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is 3635
Park Central Blvd., Pompano Beach, Florida, 33064.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
---------------------------------------
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
ROBERT J. BURNETT, FLA. BAR #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Phone No.: (954) 763-1200
<PAGE>
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 1,000,000 shares of
common stock, par value $.001 per share, and 500,000 shares of preferred stock,
par value $.001 per share. Series of the preferred stock may be created and
issued from time to time, with such designations, preferences, conversion
rights, cumulative, relative, participating, optional, or other rights,
including voting rights, qualifications, limitations, or restrictions thereof as
shall be stated and expressed in the resolution or resolutions providing for the
creation and issuance of such series of preferred stock as adopted by the Board
of Directors pursuant to the authority in this paragraph given.
ARTICLE V
TERM OF EXISTENCE
-----------------
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
------------------------------------
The Registered Agent and the street address of the initial Registered
Office of this Corporation in the State of Florida shall be: Ahmad Moradi, 3635
Park Central Blvd., Pompano Beach, Florida, 33064.
ARTICLE VII
BOARD OF DIRECTORS
------------------
2
<PAGE>
This Corporation shall have one (1) Director initially.
ARTICLE VIII
INITIAL DIRECTORS
-----------------
The name and address of the initial Director of this Corporation are:
Ahmad Moradi, 3635 Park Central Blvd., Pompano Beach, Florida, 33064.
The person named as initial Director shall hold office for the first
year of existence of this Corporation, or until their successors are elected or
appointed and have qualified, whichever occurs first.
ARTICLE IX
INCORPORATOR
------------
The name and address of the person signing these Articles of
Incorporation as the Incorporator is Ahmad Moradi, 3635 Park Central Blvd.,
Pompano Beach, Florida, 33064.
ARTICLE X
INDEMNIFICATION
---------------
This Corporation may indemnify any director, officer, employee or agent
of the Corporation to the fullest extent permitted by Florida law.
ARTICLE XI
AFFILIATED TRANSACTIONS
-----------------------
This Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to affiliated transactions.
3
<PAGE>
ARTICLE XII
CONTROL SHARE ACQUISITIONS
--------------------------
This Corporation expressly elects not to be governed by Section
607.0902 of the Florida Business Corporation Act, as amended from time to time,
relating to control share acquisitions.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on the 9th day of December, 1998.
-----------------------------
Ahmad Moradi, Incorporator
4
<PAGE>
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
FutureTrak, Inc., a corporation existing under the laws of the State of
Florida with its principal office and mailing address at 3635 Park Central
Blvd., Pompano Beach, Florida, 33064, has named Ahmad Moradi, 3635 Park Central
Blvd., Pompano Beach, Florida, 33064, as its agent to accept service of process
within the State of Florida.
ACCEPTANCE:
-----------
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law. In addition, I hereby am familiar with and accept the duties
and responsibilities as Registered Agent for said Corporation.
-------------------------------------
Ahmad Moradi
5
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FUTURETRAK INTERNATIONAL, INC.
Pursuant to Sections 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of FutureTrak International, Inc., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida ("Corporation"), bearing document number
P96000007235, does hereby certify that:
RESOLVED, that at the annual meeting of the shareholders of
the Corporation held on January 11, 1999, a majority of the shareholders of each
outstanding class of the Corporation's stock approved the following amendment to
the Corporation's Articles of Incorporation (said votes cast by the shareholders
being sufficient for approval), increasing the number of shares of Common Stock
the Corporation is authorized to issue as follows:
Articles IV of the Articles of Incorporation of this Corporation is
amended to read in its entirety as follows:
ARTICLE IV. CAPITAL STOCK
-------------------------
The aggregate number of shares which the Corporation shall have
authority to issue is as follows:
1. Authorized Stock. This Corporation is authorized to issue the
following shares of Capital Stock:
ROBERT J. BURNETT, ESQ., FLA. BAR #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Fort Lauderdale, FL 33301
(954) 763-1200
<PAGE>
(a) Common Stock. The aggregate number of shares of Common
Stock which the Corporation shall have authority to issue is 100,000,000 with a
par value of $.001 per share.
(b) Preferred Stock. The aggregate number of shares of
Preferred Stock which the Corporation shall have authority to issue is 5,000,000
with a par value of $.001 per share.
2. Description of Common Stock. Holders of Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders and may not cumulate their votes for the election of
directors. Shares of Common Stock are not redeemable, do not have any conversion
or preemptive rights, and are not subject to further calls or assessments once
fully paid.
Holders of Common Stock will be entitled to share pro rata in such dividends and
other distributions as may be declared from time to time by the Board of
Directors out of funds legally available therefor, subject to any prior rights
accruing to any holders of Preferred Stock of the Corporation. Upon liquidation
or dissolution of the Corporation, holders of shares of Common Stock will be
entitled to share proportionally in all assets available for distribution to
such holders.
3. Description of Preferred Stock. The terms, preferences,
limitations and relative rights of the Preferred Stock are as follows:
(a) The Board of Directors is expressly authorized at any time
and from time to time to provide for the issuance of shares of Preferred Stock
in one or more series, with such voting powers, full or limited, but not to
exceed one vote per share, or without voting powers, and with such designations,
preferences and relative participating, optional or other special rights,
qualifications, limitations or restrictions, as shall be fixed and determined in
the resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors, and as are not stated and expressed in these Articles of
Incorporation or any amendment hereto, including (but without limiting the
generality of the foregoing) the following:
(i) the distinctive designation of such series and the
number of shares which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors in creating
such series) or decreased (but not below the number of shares thereof then
outstanding) from time to time by resolution by the Board of Directors;
ROBERT J. BURNETT, ESQ., FLA. BAR #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Fort Lauderdale, FL 33301
(954) 763-1200
2
<PAGE>
(ii) the rate of dividends payable on shares of such
series, the times of payment, whether dividends shall be cumulative, the
conditions upon which and the date from which such dividends shall be
cumulative;
(iii) whether shares of such series can be redeemed, the
time or times when, and the price or prices at which shares of such series shall
be redeemable, the redemption price, terms and conditions of redemption, and the
sinking fund provisions, if any, for the purchase or redemption of such shares;
(iv) the amount payable on shares of such series and the
rights of holders of such shares in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation;
(v) the rights, if any, of the holders of shares of such
series to convert such shares into, or exchange such shares for, shares of
Common Stock or shares of any other class or series of Preferred Stock and the
terms and conditions of such conversion or exchange; and
(vi) the rights, if any, of the holders of shares of
such series to vote.
(b) Except in respect of the relative rights and preferences
that may be provided by the Board of Directors as hereinbefore provided, all
shares of Preferred Stock shall be of equal rank and shall be identical, and
each share of a series shall be identical in all respects with the other shares
of the same series.
ROBERT J. BURNETT, ESQ., FLA. BAR #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Fort Lauderdale, FL 33301
(954) 763-1200
3
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of January 26, 1999.
FUTURETRAK INTERNATIONAL , INC.
a Florida Corporation
By: /s/ Steve Remondini
---------------------------------
Steve Remondini, President
ROBERT J. BURNETT, ESQ., FLA. BAR #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Fort Lauderdale, FL 33301
(954) 763-1200
4
ARTICLES OF AMENDMENT
---------------------
TO THE ARTICLES OF INCORPORATION OF
-----------------------------------
FUTURETRAK INTERNATIONAL, INC.
------------------------------
Pursuant to Section 607.10025 of the Business Corporation Act of the
State of Florida, the undersigned President of FutureTrak International, Inc.
(the "Corporation"), a corporation organized and existing under and by virtue of
the Business Corporation Act of the State of Florida adopts the following
amendments to its Articles of Incorporation.
1. The Corporation filed its Articles of Incorporation on January 24,
1996 and were assigned document number P96000007235.
2. The following Amendments to the Articles of Incorporation were
adopted by all of the directors of the Corporations by unanimous written of the
Board of Directors on April 26, 1999, in the manner prescribed by the Florida
Business Corporation Act and that at the annual meeting of the shareholders of
the Corporation held on January 11, 1999, a majority of the shareholders of each
outstanding class of the Corporation's stock approved the following amendment to
the Corporation's Articles of Incorporation (said votes cast by the shareholders
being sufficient for approval).
Article IV of the Corporation's Articles of Incorporation shall be
and hereby is amended and restated to read in its entirety as follows:
ARTICLE IV. CAPITAL STOCK
-------------------------
The aggregate number of shares which the Corporation shall have
authority to issue is as follows:
1. Authorized Stock. This Corporation is authorized to issue the
following shares of Capital Stock:
(a) Common Stock. The aggregate number of shares of Common
Stock which the Corporation shall have authority to issue is 100,000,000 with a
par value of $.001 per share.
(b) Preferred Stock. The aggregate number of shares of
Preferred Stock which the Corporation shall have authority to issue is 5,000,000
with a par value of $.001 per share.
Prepared by:
Robert J. Burnett, Esq., FL Bar #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Ft. Lauderdale, FL 33301
(954) 763-1200
<PAGE>
2. Description of Common Stock. Holders of Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders and may not cumulate their votes for the election of
directors. Shares of Common Stock are not redeemable, do not have any conversion
or preemptive rights, and are not subject to further calls or assessments once
fully paid.
Holders of Common Stock will be entitled to share pro rata in such dividends and
other distributions as may be declared from time to time by the Board of
Directors out of funds legally available therefor, subject to any prior rights
accruing to any holders of Preferred Stock of the Corporation. Upon liquidation
or dissolution of the Corporation, holders of shares of Common Stock will be
entitled to share proportionally in all assets available for distribution to
such holders.
3. Description of Preferred Stock. The terms, preferences,
limitations and relative rights of the Preferred Stock are as follows:
(a) The Board of Directors is expressly authorized at any time
and from time to time to provide for the issuance of shares of Preferred Stock
in one or more series, with such voting powers, full or limited, but not to
exceed one vote per share, or without voting powers, and with such designations,
preferences and relative participating, optional or other special rights,
qualifications, limitations or restrictions, as shall be fixed and determined in
the resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors, and as are not stated and expressed in these Articles of
Incorporation or any amendment hereto, including (but without limiting the
generality of the foregoing) the following:
(i) the distinctive designation of such series and the
number of shares which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors in creating
such series) or decreased (but not below the number of shares thereof then
outstanding) from time to time by resolution by the Board of Directors;
(ii) the rate of dividends payable on shares of such
series, the times of payment, whether dividends shall be cumulative, the
conditions upon which and the date from which such dividends shall be
cumulative;
(iii) whether shares of such series can be redeemed, the
time or times when, and the price or prices at which shares of such series shall
be redeemable, the redemption price, terms and conditions of redemption, and the
sinking fund provisions, if any, for the purchase or redemption of such shares;
Prepared by:
Robert J. Burnett, Esq., FL Bar #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Ft. Lauderdale, FL 33301
(954) 763-1200
2
<PAGE>
(iv) the amount payable on shares of such series and the
rights of holders of such shares in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation;
(v) the rights, if any, of the holders of shares of such
series to convert such shares into, or exchange such shares for, shares of
Common Stock or shares of any other class or series of Preferred Stock and the
terms and conditions of such conversion or exchange; and
(vi) the rights, if any, of the holders of shares of
such series to vote.
(b) Except in respect of the relative rights and preferences
that may be provided by the Board of Directors as hereinbefore provided, all
shares of Preferred Stock shall be of equal rank and shall be identical, and
each share of a series shall be identical in all respects with the other shares
of the same series.
4. Stock Split. On the Effective Date, every four (4) issued and
outstanding shares of the Corporation's previously authorized common stock, par
value $.001 per share (the "Old Common Stock") shall thereby and thereupon be
reclassified and converted into one (1) validly issued, fully paid and
nonassessable share of Common Stock (the "New Common Stock"). Each certificate
that theretofore represented shares of Old Common Stock shall thereafter
represent the number of shares of New Common Stock into which the shares of Old
Common Stock represented by such certificate were reclassified and converted
hereby; provided, however, that each person holding of record a stock
certificate or certificates that represented shares of Old Common Stock shall
receive, upon surrender of stock certificate or certificates, a new certificate
or certificates evidencing and representing the number of shares of New Common
Stock to which such person is entitled, except that no fractional shares
resulting from the combination shall be issued, any such fractional share to be
converted to the right of the holder thereof to receive one share of New Common
Stock.
5. The herein amended Articles of Incorporation of the Corporation do
not adversely affect the rights or preferences of the holders of outstanding
shares of any class or series and does not result in the percentage of
authorized shares that remain unissued after the combination exceeding the
percentage of authorized shares that were unissued before the combination.
6. This Amendment to the Corporation's Articles of Incorporation shall
be effective as of 7:00 a.m., Miami, Florida, time, on May 13, 1999 (the
"Effective Date").
Prepared by:
Robert J. Burnett, Esq., FL Bar #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 E. Las Olas Blvd., #1900
Ft. Lauderdale, FL 33301
(954) 763-1200
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IN WITNESS WHEREOF, the undersigned, being the President of the
Corporation, has executed these Articles of Amendment to the Articles of
Incorporation of FutureTrak International, Inc. of the 26th day of April, 1999.
FUTURETRAK INTERNATIONAL, INC.,
a Florida Corporation
By: /s/ Steve Remondini
-------------------------------
Steve Remondini, President
4
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
FUTURETRAK INTERNATIONAL, INC.
Pursuant to Sections 607.1006 and 607.0602 of the Business Corporation
Act of the State of Florida, the undersigned President of FutureTrak
International, Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the Business Corporation Act of the State of Florida
adopts the following amendments to its Articles of Incorporation.
1. The Corporation filed its Articles of Incorporation on January
24, 1996, which were assigned document number P96000007235.
2. The following Amendments to the Articles of Incorporation were
adopted by all of the directors of the Corporations by unanimous
written of the Board of Directors on October 8, 1999, in the
manner prescribed by the Florida Business Corporation Act.
3. The Articles of Incorporation of the Corporation, as amended,
authorizes 5,000,000 shares of preferred stock, par value $.001
per share, none of which shares are issued and outstanding.
4. The Board of Directors is authorized at any time to provide for
the issuance of shares of preferred stock in one or more series,
with such voting powers, full or limited, or without voting
powers, and with such designations, preferences and relations,
participating, optional or other special rights, qualifications,
limitations or restrictions thereof.
5. The Board of Directors desires, pursuant to its authority as
aforesaid, to designate a new series of preferred stock, set the
number of shares constituting such series, and fix the rights,
preferences, privileges and restrictions of such series.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
designates a new series of preferred stock and, in accordance therewith, Article
IV entitled, "Capital Stock" of the Articles of Incorporation of this
Corporation is revised to include the number of shares constituting such series
and the rights, preferences, privileges and restrictions relating to such series
as follows:
BRIAN PEARLMAN, ESQ. FLORIDA BAR #0157023
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Blvd., Ste. 1900
Ft. Lauderdale, FL 33301 (954) 763-1200
<PAGE>
1. Designation and Amount. The shares of such series shall be
designated as the Series A 10% Convertible Preferred Shares (the "Series A
Preferred Shares") and shall have a stated value of $10.00 (the "Stated Value")
per share, and the number of shares constituting such series shall be 4,000,000.
2. Dividends and Distributions. None.
----------------------------
3. Voting Rights. Except as otherwise provided by law, the holders of
Series A Preferred Shares shall have no voting rights and their consent shall
not be required (except to the extent required by law) for taking any corporate
action.
4. Reacquired Shares. Any Series A Preferred Shares purchased or
otherwise acquired by the Corporation in any manner whatsoever shall constitute
authorized but unissued preferred shares and may be reissued as part of a new
series of preferred shares by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Articles of Incorporation, or in any other Certificate of
Designation creating a series of preferred shares or as otherwise required by
law.
5. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (upon liquidation, dissolution or
winding up) to the Series A Preferred Shares unless, prior thereto, the holders
of Series A Preferred Shares shall have received $10.00 per share, plus an
amount equal to accrued and unpaid dividends thereon to the date of such
payment.
6. Consolidation, Merger, Exchange, etc. In case the Corporation shall
enter into any consolidation, merger, combination, statutory share exchange or
other transaction in which the Common Shares are exchanged for or changed into
other stock or securities, money and/or any other property, then in any such
case the Series A Preferred Shares shall at the same time be similarly exchanged
or changed into preferred shares of the surviving entity providing the holders
of such preferred shares with (to the extent possible) the same relative rights
and preferences as the Series A Preferred Shares.
7. Conversion.
-----------
(a) The Series A Preferred Shares will be convertible into
shares of Common Stock, $.01 par value, of the Corporation (the "Common Shares")
only upon an event of default as defined pursuant to that certain Loan Agreement
by and between the Company and Diamond Point Partners, LLC by delivering a
notice of conversion to the Company. Such conversion shall be effected by
dividing the Stated Value of the Series A Preferred Shares to be converted by
the conversion price of $10.00 per share. All notices of conversion and other
notices given by the Holder or the Corporation pursuant to this Certificate may
be given by facsimile
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transmission, shall be effective only when received, and must be received by
5:00 p.m. (based on the recipient's local time) on the applicable business day
when such notice is due to be effective on such day.
(b) In connection with any conversion of the Series A
Preferred Shares by a Holder the Corporation shall issue and deliver to the
Holder a legended certificate or certificates for the number of Common Shares to
which the Holder shall be entitled within three (3) business days (the
"Deadline") after receipt by the Corporation of the duly executed notice of
conversion and the original Series A Preferred Shares being converted, with an
executed stock power.
(c) If, prior to the date on which all shares of Series A
Preferred Shares are converted, the Corporation shall (1) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock, (2)
subdivide its outstanding Common Stock, (3) combine its outstanding Common Stock
into a smaller number of shares of Common Shares or (4) issue by
reclassification of its Common Stock other securities of the Corporation, the
Conversion Price in effect on the opening of business on the record date for
determining stockholders entitled to participate in such transaction shall
thereupon be adjusted, or, if necessary, the right to convert shall be amended,
such that the number of shares of Common Stock receivable upon conversion of the
shares of Series A Preferred Shares immediately prior thereto shall be adjusted
so that the Series A Holder shall be entitled to receive, upon the conversion of
such shares of Series A Preferred Shares, the kind and number of shares of
Common Stock or other securities of the Corporation which it would have owned or
would have been entitled to receive after the happening of any of the events
described above had the Series A Preferred Shares been converted immediately
prior to the happening of such event or any record date with respect thereto.
Any adjustment made pursuant to this subparagraph 7(c) shall become effective
immediately after the effective date of such event and such adjustment shall be
retroactive to the record date, if any, for such event. No adjustment with
respect to any ordinary cash dividends on shares of Common Stock shall be made.
8. Vote to Change the Terms of Series A Preferred Shares.
------------------------------------------------------
The Approval of the Board of Directors and the affirmative vote at a
meeting duly called by the Board of Directors for such purpose (or the written
consent without a meeting) of the holders of not less than two-thirds (2/3) of
the then outstanding Series A Preferred Shares shall be required to amend,
alter, change or repeal any of the powers, designations, preferences and rights
of the Series A Preferred Shares.
The foregoing amendment was duly adopted by the Board of Directors of
the Corporation, dated as of October 8, 1999, pursuant to Sections 607.0821 and
607.0602 of the Florida Business Corporation Act which does not require
shareholder approval.
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<PAGE>
IN WITNESS WHEREOF, I have executed this Amendment this 8th day of
October, 1999.
--------------------------------
Steve Remondini
President and Director
4
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
FUTURETRAK INTERNATIONAL, INC.
The following provision of the Articles of Incorporation of FutureTrak
International, Inc., a Florida corporation (the "Corporation"), filed with the
Department of State on January 24, 1996, Charter Number P96000007235, be, and it
hereby is amended pursuant to Section 607.1006 of the Business Corporation Act
of the State of Florida as follows:
Article I of the Articles of Incorporation of this Corporation is
amended to read in its entirety as follows:
ARTICLE I
CORPORATE NAME
The name of this Corporation shall be: WORLDCAST INTERACTIVE, INC.
The foregoing amendment was duly adopted by the Board of Directors and
Majority Shareholders of the Corporation, dated as of November 9, 1999, pursuant
to Sections 607.0704 and 607.0821 of the Florida Business Corporation Act.
Therefore, the number of votes cast for the amendment to the Corporation's
Articles of Incorporation was sufficient for approval.
IN WITNESS WHEREOF, I have executed this Amendment this 9th day of
November, 1999.
FUTURETRAK INTERNATIONAL, INC.
--------------------------------
Steve Remondini
President and Director
BRIAN PEARLMAN, ESQ. FLORIDA BAR #0157023
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Blvd., Ste. 1900
Ft. Lauderdale, FL 33301 (954) 763-1200
AMENDED AND RESTATED BYLAWS
OF
FUTURETRAK INTERNATIONAL INC.
ARTICLE I. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of
the corporation for the election of directors and the transaction of other
business shall be held on the date and at the time and place that the board of
directors determines. If any annual meeting is not held, by oversight or
otherwise, a special meeting shall be held as soon as practical, and any
business transacted or election held at that meeting shall be as valid as if
transacted or held at the annual meeting.
Section 2. Special Meetings. Special meetings of the shareholders for
any purpose shall be held when called by the president or the board of
directors, or when requested in writing by the holders of not less than ten
percent (10%) of all the shares entitled to vote at the meeting. A meeting
requested by shareholders shall be called for a date not less than ten (10) nor
more than sixty (60) days after the request is made, unless the shareholders
requesting the meeting designate a later date. The secretary shall issue the
call for the meeting, unless the president, the board of directors, or
shareholders requesting the meeting designate another person to do so. The
shareholders at a special meeting may transact only business that is related to
the purposes stated in the notice of the special meeting.
Section 3. Place. Meetings of shareholders may be held either within or
outside the State of Florida.
Section 4. Notice. A written notice of each meeting of shareholders,
stating the place, day, and time of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered to each shareholder of record entitled to vote at the meeting, not
less than ten (10) nor more than sixty (60) days before the date set for the
meeting, either personally or by first-class mail, by or at the direction of the
president, the secretary, or the officer or other persons calling the meeting.
If mailed, the notice shall be considered delivered when it is deposited in the
United States mail, postage prepaid, addressed to the shareholder at his address
as it appears on the records of the corporation.
Section 5. Waivers of Notice. Whenever any notice is required to be
given to any shareholder of the corporation under these bylaws, the articles of
incorporation, or the Florida Business Corporations Act, a written waiver of
notice signed anytime by the person entitled to notice shall be equivalent to
giving notice. Attendance by a shareholder entitled to vote at a meeting, in
person or by proxy, shall constitute a waiver of notice of the meeting, except
when the shareholder attends a meeting solely for the purpose, expressed at the
beginning of the, meeting, of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
<PAGE>
Section 6. Closing Transfer Books or Fixing Record Date. For the
purpose of determining the shareholders for any purpose, the board of directors
may either require the stock transfer books to be closed for up to sixty (60)
days or fix a record date, which shall be not more than sixty (60) days before
the date on which the action requiring the determination is to be taken. If the
purpose is to determine shareholders entitled to vote at a meeting, the books
shall be closed, or the record date shall be fixed, at least ten (10) days
before the date on which the action is to be taken. If the transfer books are
not closed and no record date is fixed for the determination of shareholders,
the date on which notice of the meeting is mailed or the date on which the board
of directors adopts a resolution declaring the dividend or authorizing the
action that would require a determination of shareholders shall be the record
date. When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, that determination shall
apply to any adjournment of the meeting, unless the board of directors fixes a
new record date.
Section 7. Voting Record. At least ten (10) days before each meeting of
shareholders, the officer or agent having charge of the stock transfer books for
shares of the corporation shall make a complete list of the shareholders
entitled to vote at the meeting, listing each shareholder's address and the
number, class, and series of shares that he holds. For ten (10) days before the
meeting, the list shall be kept on file at the corporation's registered office
or principal place of business, and any shareholder may inspect the list any
time during usual business hours. The list shall also be produced and kept open
at the time and place of the meeting, at which time any shareholder may inspect
the list.
If the requirements of this section have not been substantially
complied with, the meeting, on the demand of any shareholder in person or by
proxy, shall be adjourned until the requirements are complied with. If no demand
for adjournment is made, failure to comply with the requirements of this section
does not affect the validity of any action taken at the meeting.
Section 8. Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, constitutes a quorum at a
meeting of shareholders. If a quorum is present, the affirmative vote of a
majority of the shares entitled to vote on the matter is the act of the
shareholders unless otherwise provided by law. A Shareholder may vote either in
person or by proxy executed in writing by the shareholder or his duly authorized
attorney-in-fact. After a quorum has been established at a shareholders'
meeting, a withdrawal of shareholders that reduces the number required for a
quorum does not affect the validity of an adjournment of the meeting or an
action taken at the meeting prior to the shareholders' withdrawal.
Treasury shares, shares of stock of this corporation owned by another
corporation the majority of the voting stock of which is owned or controlled by
this corporation, and shares of stock of this corporation that it holds in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any time. The chairman of the board, the president, any vice-president, the
secretary, and the treasurer of a corporate shareholder are presumed to possess,
in that order, authority to vote shares standing in the name of a corporate
shareholder, absent a bylaw or other instrument of the
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corporate shareholder designating some other officer, agent, or proxy to vote
the shares. Shares held by an administrator, executor, guardian, or conservator
may be voted by him without a transfer of the shares into his name. A trustee
may vote shares standing in his name, but no trustee may vote shares that are
not transferred into his name. If he is authorized to do so by an appropriate
order of the court by which he was appointed, a receiver may vote shares
standing in his name or held by or under his control, without transferring the
shares into his name. A shareholder whose shares are pledged may vote the shares
until the shares have been transferred into the name of the pledgee, and,
thereafter, the pledgee or his nominee shall be entitled to vote the shares
unless the instrument creating the pledge provides otherwise.
Section 9. Shareholders' Agreements. The shareholders may enter into
written agreements between and among themselves for the voting of their shares
and other mailers which shall govern the shareholders, directors, and the
corporation to the extent inconsistent with these bylaws.
ARTICLE II. DIRECTORS
Section 1. Function. The business of this corporation shall be managed
and its corporate powers exercised by the board of directors.
Section 2. Number. The corporation shall have three (3) directors
initially. The number of directors may be either increased or diminished from
time to time; as provided by the bylaws but shall never be less than one (1) No
decrease shall have the effect of shortening the term of any incumbent director,
unless the director is removed pursuant to these bylaws.
Section 3. Qualification. Each member of the board of directors must be
an adult. A director need not be a resident of Florida or a shareholder of the
corporation.
Section 4. Election and Term. The persons named in the articles of
incorporation as members of the initial board of directors shall hold office
until the first annual meeting of shareholders and until their successors have
been elected and qualified or until their earlier resignation, removal from
office, or death. At the first annual meeting of shareholders and at each annual
meeting thereafter the shareholders shall elect directors to hold office until
the next succeeding annual meeting. Each director shall hold office for the term
for which he is elected and until his successor is elected and qualifies or
until his earlier resignation, removal from office, or death.
Section 5. Compensation. The board of directors has authority to fix
the compensation of the directors and officers.
Section 6. Duties of Directors. A director shall perform his duties as
a director, including his duties as a member of any committee of the board upon
which he serves, in good faith, in a manner he reasonably believes to be in the
best interests of the corporation, and with the care that an ordinarily prudent
person in a similar position would use under similar circumstances.
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Section 7. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
mailer is taken is presumed to have assented to the action unless he votes
against it or expressly abstains from voting on it.
Section 8. Vacancies. Unless filled by the shareholders, any vacancy
occurring in the board of directors, including any vacancy created because of an
increase in the number of directors, may be filled by the affirmative vote of a
majority of the remaining directors, even if the number of remaining directors
does not constitute a quorum of the board of directors. A director elected to
fill a vacancy shall hold office only until the next election of directors by
the shareholders.
Section 9. Removal of Directors. At a meeting of shareholders called
for that purpose, the shareholders, by a vote of the holders of a majority of
the shares entitled to vote at an election of directors, may remove any
director, or the entire board of directors, with or without cause, and fill any
vacancy or vacancies created by the removal.
Section 10. Quorum and Voting. A majority of the board of directors
constitutes a quorum for the transaction of business. The act of the majority of
the directors at a meeting at which a quorum is present is the act of the board
of directors.
Section 11. Place of Meetings. Regular and special meetings by the
board of directors may be held within or outside the State of Florida.
Section 12. Annual and Regular Meetings. An annual meeting of the board
of directors shall be held without notice, other than this bylaw, immediately
after and at the same place as the annual meeting of shareholders. The board of
directors may provide, by resolution, the time and place for the holding of
regular meetings without notice other than the resolution.
Section 13. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president or any director.
Section 14. Notice of Meetings. Written notice of the time and place of
special meetings of the board of directors shall be given to each director by
either personal delivery or by first-class, United States mail, telegram, or
cablegram at least two (2) days before the meeting. Notice of a meeting of the
board of directors need not be given to any director who signs a waiver of
notice either before or after the meeting. Attendance of a director at a meeting
constitutes a waiver of notice of the meeting and all objections to the time and
place of the meeting, or the manner in which it has been called or convened,
except when the director states, at the beginning of the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of the meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the board of directors to another time and place.
Notice of any
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adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place of the adjourned meeting
are announced at the time of the adjournment, to the other directors.
Section 15. Method of Meetings Members of the board of directors may
participate in a meeting of the board by means of a conference telephone or
similar communications equipment by which all persons participating in the
meeting can hear each other at the same time. Participation by such means
constitutes presence in person at a meeting.
Section 16. Action Without a Meeting. Any action required to be taken
at a meeting of the directors, or any action that may be taken at a meeting of
the directors or a committee of the directors, may be taken without a meeting
if a written consent, setting forth the action to be taken and signed by all the
directors or committee members, is filed in the minutes of the proceedings of
the board or the committee before. The action is taken. All directors need not
sign the same document. A unanimous written consent has the same effect as a
unanimous vote.
Section 17. Facsimile Signatures. Any director may file with the
secretary of the corporation a written example of his signature. A facsimile of
that signature on a document of the corporation shall have the same legal effect
as if the director had actually signed the original document.
ARTICLE III. OFFICERS
Section 1. Officers. The officers of the corporation shall consist of a
president, a secretary, and a treasurer, and may include one or more vice
presidents, one or more assistant secretaries, and one or more assistant
treasurers. The officers shall be elected initially by the board of directors at
the organization meeting of board of directors and thereafter at the first
meeting of the board following the annual meeting of the shareholders in each
year. The board from time to time may elect or appoint other officers, assistant
officers, and agents, who shall have the authority and perform the duties
prescribed by the board. All officers shall hold office until their successors
have been appointed and have qualified or until their earlier resignation,
removal from office, or death. One person may hold any two or more offices. The
failure to elect a president, secretary, or treasurer shall not affect the
existence of the corporation.
Section 2. President. The president, subject to the directions of the
board of directors, is responsible for the general and active management of the
business and affairs of the corporation, has the power to sign certificates of
stock, bonds, deeds, and contracts for the corporation, and shall preside at all
meetings of the shareholders.
Section 3. Vice Presidents. Each vice president has the power to sign
bonds, deeds, and contracts for the corporation and shall have the other powers
and perform the other duties prescribed by the board of directors or the
president. Unless the board otherwise provides, if the president is absent or
unable to act, the vice president who has served in that capacity for the
longest time and who is present and able to act shall perform all the duties and
may exercise any of the powers of the president.
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Section 4. Secretary. The secretary, and, in his absence, an assistant
secretary, shall have the power to sign contracts and other instruments for the
corporation and shall (a) keep the minutes of the proceedings of the
shareholders and the board of directors in one or more books provided for that
purpose, (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law, (c) maintain custody of the
corporate records and the corporate seal, attest the signatures of officers who
execute documents on behalf of the corporation, and assure that the seal is
affixed to all documents of which execution on behalf of the corporation under
its seal is duly authorized, (d) keep a register of the post office address of
each shareholder that shall be furnished to the secretary by the shareholder,
(e) sign with the president, or a vice president, certificates for shares of the
corporation, the issuance of which have been authorized by resolution of the
board of directors, (f) have general charge of the stock transfer books of the
corporation, and (g) in general perform all o duties incident to the office of
secretary and other duties as from time to time may be prescribed by the
president or the board of directors.
Section 5. Treasurer. The treasurer, and, in his absence, an assistant
treasurer shall (a) have charge and custody of and be responsible for all funds
and securities of the corporation, (b) receive and give receipts for monies due
and payable to the corporation from any source whatsoever, and deposit monies in
the name of the corporation in the banks, trust companies, or other depositories
as shall be selected by the board of directors, and (c) in general perform all
the duties incident to the office of treasurer and other duties as from time to
time may be assigned to him by the president or the board of directors If
required by the board of directors, the treasurer shall give a bond for the
faithful discharge of his duties in the sum and with the surety or sureties that
the board of directors determines.
Section 6. Removal of Officers. An officer or agent elected or
appointed by the board of directors may be removed by the board whenever, in its
judgment, the removal of the officer or agent will serve the best interests of
the corporation. Removal shall be without prejudice to any contract rights. The
appointment of any person as an officer, agent, or employee of the corporation
does not create any contract rights. The board of directors may fill a vacancy,
however occurring, in any office.
Section 7. Salaries. The board of directors from time to time shall fix
the salaries of the officers, and no officer shall be prevented from receiving
his salary merely because he is also a director of the corporation.
ARTICLE IV. INDEMNIFICATION.
Any person, his heirs, or personal representative, made or threatened
to be made a party to any threatened, pending, or completed action or
proceeding, whether civil, criminal, administrative, or investigative, because
he, his testator, or intestate is or was a director, officer, employee, or
agent of this corporation or serves or served any other corporation or other
enterprise in any capacity at the request of this corporation, shall be
indemnified by this corporation, and this corporation may advance his related
expenses to the full extent permitted by law. In discharging his duty, any
director, officer, employee, or agent, when acting in good faith, may rely upon
information,
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opinions, reports, or statements, including financial statements and other
financial data, in each case prepared or presented by (1) one or more officers
or employees of the corporation whom the director, officer, employee, or agent
reasonably believes to be reliable and competent in the matters presented, (2)
counsel, public accountants, or other persons as to matters that the director,
officer, employee, or agent believes to be within that person's professional or
expert competence, or (3) in the case of a director, a committee of the board of
directors upon which he does not serve, duly designated according to law, as to
matters within its designated authority, if the director reasonably believes
that the committee is competent The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which the person, his
heirs, or personal representatives may be entitled. The corporation may, upon
the affirmative vote of a majority of its board of directors, purchase insurance
for the purpose of indemnifying these persons. The insurance may be for the
benefit of all directors, officers, or employees.
ARTICLE V. STOCK CERTIFICATES
Section 1. Issuance. Every shareholder in this corporation is entitled
to have a certificate evidencing all shares to which he is entitled. No
certificate shall be issued for any share until the share is fully paid.
Section 2. Form. Certificates evidencing shares in this corporation
shall be signed by the president or a vice president and the secretary or an
assistant secretary and may be sealed with the seat of this corporation or a
facsimile of the seal. Unless the corporation's stock is registered pursuant to
every applicable securities law, each certificate shall bear an appropriate
legend restricting the transfer of the shares evidenced by that certificate.
Section 3. Lost, Stolen, or Destroyed Certificates. The corporation may
issue a new certificate in the place of any certificate previously issued if the
shareholder of record (a) makes proof in affidavit form that the certificate has
been lost, destroyed, or wrongfully taken, (b) requests the issue of a new
certificate before the corporation has notice that the certificate has been
acquired by a purchaser for value in good faith and without notice of any
adverse claim, (c) if requested by the corporation, gives a bond in the form
that the corporation directs, to indemnify the corporation, the transfer agent,
and the registrar against any claim that may be made concerning the alleged
loss, destruction, or theft of a certificate, and (d) satisfies any other
reasonable requirements imposed by the corporation.
Section 4. Restrictive Legend. Every certificate evidencing shares that
are restricted as to sale, disposition, or other transfer shall bear a legend
summarizing the restriction or stating that the corporation will furnish to any
shareholder, upon request and without charge, a full statement of the
restriction.
ARTICLE VI. DIVIDENDS
The board of directors from time to time may declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law.
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ARTICLE VII. SEAL
The corporate seal shall have the name of the corporation and the word
"seal" inscribed on it, and may be a facsimile, engraved, printed, or an
impression seal.
ARTICLE VIII. FISCAL YEAR
The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.
ARTICLE IX. AMENDMENT
These bylaws may be repealed or amended, and additional bylaws may be o
adopted, by either a vote of a majority of the full board of directors or by a
vote of the o holders of a majority of the issued and outstanding shares
entitled to vote, but the board of directors may not amend or repeal any bylaw
if the shareholders specifically provide by agreement among the shareholders
that the bylaw is not subject to amendment or repeal by the directors.
I, the undersigned secretary of the corporation, hereby certify that
these bylaws were adopted by Consent in Lieu of Meeting of the Directors as of
the 1st day of August, 1997.
/s/ Stephen Froelicher
---------------------------------
Stephen Froelicher, Secretary
8
WARRANT TO PURCHASE COMMON STOCK
Date of Issuance: November 3, 1999 Right to Purchase 100,000 shares
of Common Stock
FOR VALUE RECEIVED, FUTURETRAK INTERNATIONAL, INC., a Florida
corporation (the "Company"), promises to issue in the name of, and sell and
deliver to M. Holdings Inc. (the "Holder") a certificate or certificates for an
aggregate of 100,000 shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), upon payment by the Holder of the exercise price of
$0.50 per share (the "Exercise Price") in lawful funds of the United States of
America, with the Exercise Price being subject to adjustment in the
circumstances set forth below This Warrant is one of a series of warrants being
issued pursuant to the Placement Agent Agreement dated as of June 30,1999
between the Company and the Holder.
Section.
Exercise of Warrant
-------------------
Exercise Period. The Holder may exercise this Warrant, in
whole or in part (but not as to fractional shares), at any
time and time to time commencing upon the date of issuance and
ending at 5:00 p.m., Eastern Time, on November 3, 2001, being
two (2) years from the date of issuance (the "Exercise
Period").
Exercise Procedure.
-------------------
o This Warrant will be deemed to have been exercised at
such time as the Company has received all of the
following items (the "Exercise Date"):
o A completed Exercise Agreement, in the form
attached hereto as Exhibit 1 hereto,
executed by the Holder (the "Purchaser");
and
o A cashier's or official bank check or other
immediately available funds payable to the
Company in an amount equal to the sum of the
product of the Exercise Price multiplied by
the number of shares of Common Stock being
purchased upon such exercise.
o Certificates for the shares of Common Stock
purchased upon exercise of this Warrant will
be delivered by the Company to the Purchaser
within five (5) business days after
<PAGE>
the Exercise Date. Unless this Warrant has
expired or all of the purchase rights
represented hereby have been exercised, the
Company will prepare a new Warrant
representing the rights formerly represented
by this Warrant that have not expired or
been exercised. The Company will, within
such five- (5) day period, deliver such new
Warrant to the Holder at the address set
forth in this Warrant.
o The shares of Common Stock issuable upon the
exercise of this Warrant will be deemed to
have been transferred to the Purchaser on
the Exercise Date, and the Purchaser will be
deemed for all purposes to have become the
record holder of such Common Stock on the
Exercise Date.
o The issuance of certificates for shares of
Common Stock upon the exercise of this
Warrant will be made without charge to the
Purchaser for any issuance tax in respect
thereof or any other cost incurred by the
Company in connection with such exercise and
related transfer of the shares; provided,
however, that the Company shall not be
required to pay any tax that may be payable
in respect of any transfer involved in the
issuance and delivery of any certificate or
instrument in a name other than that of the
Holder of this Warrant, and that the Company
shall not be required to issue or deliver
any such certificate or instrument unless
and until the person or persons requiring
the issue thereof shall have paid to the
Company the amount of such tax or shall have
established to the satisfaction of the
Company that such tax has been paid.
Fractional Shares. If a fractional share of Common Stock
would, but for the provisions of Subsection 1.1, be issuable
upon exercise of the rights represented by this Warrant, the
Company will, within 30 days after the Exercise Date, deliver
to the Purchaser a check payable to the Purchaser, in lieu of
such fractional share, in an amount equal to the value of such
fractional share as determined by the closing bid price of the
Company's Common Stock as reported on The Nasdaq Stock Market,
or the principal exchange on which the Company's Common Stock
is then traded, as of the close of business on the Exercise
Date.
<PAGE>
Section.
--------
Effect of Reorganization, Reclassification, Consolidation, Merger or
Sale
Recapitalization or Reclassification of Common Stock. In case
the Company shall at any time prior to the exercise or
termination of this Warrant effect a recapitalization or
reclassification of such character that its Common Stock shall
be changed into or become exchangeable for a larger or smaller
number of shares, then, upon the effective date thereof, the
number of shares of Common Stock that the Holder of this
Warrant shall be entitled to purchase upon exercise hereof
shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in such number of
shares of Common Stock by reason of such recapitalization or
reclassification, and the Exercise Price of such recapitalized
or reclassified Common Stock shall, in the case of an increase
in the number of shares, be proportionately decreased and, in
the case of a decrease in the number of shares, be
proportionately increased.
Consolidation, Merger or Sale. In case the Company shall at
any time prior to the exercise of this Warrant, or the
expiration of the Exercise Period, whichever first occurs,
consolidate or merge with any other corporation (unless the
Company shall be the surviving entity) or transfer all or
substantially all of its assets to any other corporation
preparatory to a dissolution, then the Company shall, as a
condition precedent to such transaction, cause effective
provision to be made so that the Holder of this Warrant, upon
the exercise thereof after the effective date of such
transaction, shall be entitled to receive the kind and amount
of shares, evidences of indebtedness, and/or other property
receivable on such transaction by a holder of the number of
shares of Common Stock as to which the Warrant was exercisable
immediately prior to such transaction (without giving effect
to any restriction upon such exercise); and, in any such case,
appropriate provision shall be made with respect to the rights
and interests of the Holder hereof to the effect that the
provisions of this Warrant shall thereafter be applicable (as
nearly as may be practicable) with respect to any shares,
evidences of indebtedness, or other securities or assets
thereafter deliverable upon exercise of this Warrant.
Section.
Reservation of Common Stock
---------------------------
The Company will at all time reserve and keep available such
number of shares of Common Stock as will be sufficient to
permit the exercise in full of this Warrant. Upon exercise of
this Warrant pursuant to its terms, the
<PAGE>
Holder will acquire fully paid and nonassessable ownership
rights of the Common Stock, free and clear of any liens,
claims or encumbrances.
Section.
No Shareholder Rights or Obligations
------------------------------------
This Warrant will not entitle the Holder hereof to any voting
rights or other rights as a shareholder of the Company. Until
the shares of Common Stock issuable upon the exercise of this
Warrant are recorded as issued on the books and records of the
Company's transfer agent, the Holder shall not be entitled to
any voting rights or other rights as a shareholder; provided,
however, the Company uses its best efforts to ensure that,
upon receipt of the Exercise Agreement and payment of the
Exercise Price, the appropriate documentation necessary to
effectuate the exercise of the Warrant and the issuance of the
Common Stock is accomplished as expeditiously as possible. No
provision of this Warrant, in the absence of affirmative
action by the Holder to purchase Common Stock, and no
enumeration in this Warrant of the rights or privileges of the
Holder, will give rise to any obligation of such Holder for
the Exercise Price or as a stockholder of the Company.
Section.
Transferability
---------------
Subject to the terms hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, upon
surrender of this Warrant with a properly executed Assignment
in the form of Exhibit 2 hereto at the principal offices of
the Company. This Warrant and the underlying shares of Common
Stock may not be offered, sold or transferred except in
compliance with the Securities Act of 1933, as amended (the
"Act"), and any applicable state securities laws, and then
only against receipt of an agreement of the person to whom
such offer or sale or transfer is made to comply with the
provisions of this Warrant with respect to any resale or other
disposition of such securities; provided that no such
agreement shall be required from any person purchasing this
Warrant or the underlying shares of Common Stock pursuant to a
registration statement effective under the Act. The Holder of
this Warrant agrees that, prior to the disposition of any
security purchased on the exercise hereof other than pursuant
to an registration statement then effective under the Act, or
any similar statute then in effect, the Holder shall give
written notice to the Company, expressing his intention as to
such disposition. Upon receiving such notice, the Company
shall present a copy thereof to its securities counsel. If, in
the sole opinion of such counsel, which such opinion shall not
be unreasonably withheld, the proposed disposition does not
require
<PAGE>
registration of such security under the Act, or any similar
statute then in effect, the Company shall, as promptly as
practicable, notify the Holder of such opinion, whereupon the
Holder shall be entitled to dispose of such security in
accordance with the terms of the notice delivered by the
Holder to the Company.
Section.
Piggy Back Registration Rights.
-------------------------------
If at any time during the Exercise Period, the Company shall
prepare and file one or more registration statements under the
Act with respect to a public offering of equity or debt
securities of the Company, or of any such securities of the
Company held by its security holders, other than a
registration statement on Forms S-4, S-8, or similar form, the
Company will include in any such registration statement such
information as is required, and such number of shares of
Common Stock held by, or shares of Common Stock underlying
outstanding Warrants held by, the Holder to permit a public
offering of such shares of Common Stock as required; provided,
however, that if, in the written opinion of the Company's
managing underwriter, if any, for such offering, the inclusion
of the shares requested to be registered, when added to the
securities being registered by the Company or the selling
security holders), would exceed the maximum amount of the
Company's securities that can be marketed without otherwise
materially and adversely affecting the entire offering, then
the Company may exclude from such offering that portion of the
shares required to be so registered so that the total number
of securities to be registered is within the maximum number of
shares that, In the opinion of the managing underwriter, may
be marketed without otherwise materially and adversely
affecting the entire offering; provided that the Company shall
be required to include in the offering and in the following
order: first, the pro rata number of securities requested by
the Holder of this Warrant along with all other holders of
warrants issued in this series; and, second, the pro rata
number of securities requested by all other holders of
securities requesting registration pursuant to other
registration rights. The Company shall use its best efforts to
obtain promptly the effectiveness of such registration
statement and maintain the effectiveness thereof for at least
180 days and to register or qualify the subject shares of
Common Stock underlying this Warrant for sale in up to five
(5) states identified by such Holder. The Company shall bear
all fees and expenses other than the fees and expenses of
Holder's counsel incurred in the preparation and filing of
such registration statement and related state registrations,
to the extent permitted by applicable law, and the furnishing
of copies of the preliminary and final prospectus thereof to
such Holder.
<PAGE>
Section.
Miscellaneous
-------------
Notices. Any notices, requests or consents hereunder shall be
deemed given, and any instruments delivered, two days after
they have been mailed by first class mail, postage prepaid, or
upon receipt if delivered personally or by facsimile
transmission, as follows:
If to the Company: FutureTrak International, Inc.
3635 Park Central Blvd. North
Pompano Beach, FL 33065
Attention: Bob Kelner
With a copy to:
------------------------------------------
------------------------------------------
------------------------------------------
Attention:
--------------------------------
If to the Holder: M. Holdings, Inc.
1081 Creatwood Circle
Smyrna, GA 30080
Attention: Ron Beaton
except that any of the foregoing may from time to time by
written notice to the other designate another address which
shall thereupon become its effective address for the purposes
of this paragraph.
Entire Agreement. This Warrant, including the exhibits and
documents referred to herein which are a part hereof, contain
the entire understanding of the parties hereto with respect to
the subject matter and may be amended only by a written
instrument executed by the parties hereto or their successors
or assigns. Any paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Warrant.
Governing Law. This Warrant is governed by, interpreted under
and construed in all respects in accordance with the
substantive laws of the State of Florida, without regard to
the conflicts of law provision thereof, and irrespective of
the place of domicile or resident of the party. In the event
of a controversy arising out of the interpretation,
construction, performance or breach of this Warrant, the
parties hereby agree and consent to the jurisdiction and venue
of the Courts of the State of Florida, or the United States
District Court for the Southern District of Florida; and
further agree and consent that personal service of process in
any such
<PAGE>
action or preceding outside the State of Florida shall be
tantamount to service in person in Florida.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day
and year first above written.
FUTURETRAK INTERNATIONAL, INC.
By: Robert S. Kelner, C.O.O.
----------------------------
November 3, 1999
ATTEST:
- ----------------------
<PAGE>
EXHIBIT 1
---------
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned record Holder, pursuant to the provisions set forth in
the within Warrant, hereby subscribed for and purchases _______ shares of Common
Stock covered by such Warrant and hereby makes full cash payment of
$_____________ for such shares at the Exercise Price provided by such Warrant.
--------------------
(Signature)
--------------------
(Print or type name)
--------------------
(Address)
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Warrant, or upon the
Assignment thereof, if applicable, in every particular, without alteration,
enlargement or any change whatsoever.
<PAGE>
EXHIBIT 2
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned Holder hereby sell, assigns, and
transfer all of the rights of the undersigned under the within Warrant with
respect to the number of shares of Common Stock issuable upon the exercise of
such Warrant set forth below, unto the Assignee identified below, and does
hereby irrevocable constituted and appoint ________________ to effect such
transfer of rights on the books of the Company, with full power of substitution:
Number of Shares
Name of Assignee Address of Assignee of Common Stock
- ---------------- ------------------- ---------------
Dated:
---------------------------------------- --------------------
(Signature of Holder)
(Print or type name)
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Warrant, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement of
any change whatsoever.
CONSENT OF ASSIGNEE
-------------------
I HEREBY CONSENT to abide by the terms and conditions of the within
Warrant.
Dated:
--------------------
(Signature of Holder)
--------------------
(Print or type name)
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT (this "Agreement") is entered into as of the day set
forth below, by and between FutureTrak International, a Florida corporation
(COMPANY), and Ahmad F. Moradi, Ph.D. C.D.P. or his corporate assignee(s)
jointly, (hereinafter referred to as "EMPLOYEE").
RECITALS
--------
WHEREAS, COMPANY has the exclusive right to market and make use of
certain Antennae for satellite transmission and its related accessories commonly
known as the "Antennae" Solution, which is a trade secret and owned by the
company of which EMPLOYEE is a principal shareholder and,
WHEREAS, COMPANY desires to employ EMPLOYEE and EMPLOYEE desires to
serve the COMPANY as the COMPANY's Chief Executive Officer (CEO); and.
WHEREAS, EMPLOYEE's services for and on behalf of the COMPANY are of
material importance to the enhancement of the value of the COMPANY's business.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the COMPANY and EMPLOYEE do hereby
agree as follows:
I. EMPLOYMENT
----------
COMPANY hereby employs EMPLOYEE in its business as CEO and
EMPLOYEE hereby accepts such employment, all upon the terms
and conditions hereinafter set forth.
II. TERM
----
Unless sooner terminated pursuant to the provisions of this
Agreement the term of employment under this Agreement shall be
for a five (5) years commencing September 1st, 1998
("Employment Period"). The Employment Period shall be
automatically renewed for succeeding terms of one (1) year
("Successive Employment Period") unless either party gives
written notice of his intention not to renew said Agreement to
the other party, at least one-hundred-eighty (180) days prior
to the end of the initial five-year term, or any extended
term.
III. DUTIES
------
1 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
III.1 During the Employment Period EMPLOYEE shall serve in
the Office of CEO and perform appropriate executive
services for the COMPANY in accordance with the
historical nature and scope of duties performed by
EMPLOYEE as CEO of FutureTrak International, Inc.
III.2 EMPLOYEE shall be entitled to make ALL normal
executive level management decisions of the COMPANY,
that involve matters within the COMPANY's usual
course of business and are duties customary for the
employee in his or her capacity of CEO. EMPLOYEE's
authority to manage the COMPANY shall be subject to
review and direction from his or her immediate
manager, if any, or by the Board of Directors of the
Company. Compensation paid to employees of the
COMPANY shall be at industry standards. Bonuses, if
any, for said employees shall be based on the
individual employee's performance and tied to a
formula adopted by the COMPANY's Board of Directors.
III.3 During the term of this Agreement, Although EMPLOYEE
is involved in managing other businesses, EMPLOYEE
shall devote primarily majority of his time, energy,
and skill to the service of the COMPANY and the
promotion of COMPANY'S interests, and shall use his
best efforts in the performance of his services
hereunder. EMPLOYEE agrees to abide by all rules and
regulations established from time to time by the
Board; and all commissions, fees or other income
earned and received by EMPLOYEE, if any, in
furtherance of the business of Company shall be
accepted by EMPLOYEE for the account of Company, and
shall be remitted to Company within three (3) days of
EMPLOYEE's receipt thereof.
III.4 EMPLOYEE may, if elected, without additional
compensation, unless expressly approved by the Board
of Directors of the COMPANY, serve as a director of
the COMPANY.
III.5 The services of EMPLOYEE shall be rendered in such
places and localities as the COMPANY may require from
time to time, and he shall do such traveling on
behalf of the COMPANY as may reasonably be required
consistent with the historical requirements of the
office of CEO of the COMPANY.
III.6 EMPLOYEE shall comply with all COMPANY policies for
the employees as such policies may exist from time to
time.
2 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
IV. COMPENSATION
------------
IV.1 The COMPANY will compensate and pay EMPLOYEE for his
services during the term of this Agreement a base
salary of $250,000 per year ("Base Salary"). The Base
Salary shall be paid to EMPLOYEE at no less than
monthly intervals in accordance with the current
normal payroll policies of which policies may be
changed by COMPANY from time to time with inclusion
of cost of living adjustment on a mutually acceptable
terms. All compensation paid to EMPLOYEE shall be
subject to all appropriate withholding taxes.
IV.2 EMPLOYEE shall be entitled to a bonus annually equal
to no less than one and a half(1.5%) percent of the
net profits of the COMPANY calculated without taking
into account any kind of distribution to the
subsidiaries of the COMPANY. Net Profits shall be
defined according to Generally Accepted Accounting
Principles. EMPLOYEE may elect to take this bonus in
any combination of cash and stock. Computation of
stock is based on .15(cent) per share exercise price.
IV.3 Compensation for each Successive Employment Period
shall be determined, within thirty (30) days of the
expiration of the Employment Period or each
Successive Employment Period, through good faith
negotiations between COMPANY and EMPLOYEE. Should the
parties hereto fail to agree upon a mutually
acceptable compensation package, the compensation in
effect for the immediately proceeding period shall
continue until the parties hereto agree on its
modification.
V. DEATH
-----
V.1 In the event of the death of EMPLOYEE during the term
of this Agreement, COMPANY shall pay to the Estate of
EMPLOYEE the amount to which EMPLOYEE would have been
entitled to receive for the lesser of (a) salary for
the remaining of five (5) year period, or (b) salary
for the remaining period of this Agreement; in
regular monthly payments for the term that remains on
this Agreement to commence three (3) months after the
death of EMPLOYEE.
V.2 There shall be deducted from the amounts paid to
EMPLOYEE pursuant to Section 4.1, above, the amount
actually paid to EMPLOYEE's designated beneficiary,
as proceeds of life insurance, if any, which the
COMPANY may have instituted on behalf of EMPLOYEE, as
set forth under Section 7.1.2 (the "Term of The
Insurance").
VI. DISABILITY
----------
3 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
VI.1 In the event of disability of EMPLOYEE (whether
temporary or permanent) to render services hereunder
during the term hereof, and so long as such
disability continues, EMPLOYEE shall continue to
receive his full compensation during the period of
such disability for a remaining unpaid period of this
Agreement, or until the termination of this Agreement
as defined in Section 9.1.4 herein, whichever first
occurs.
VI.2 There shall be deducted, from the amounts paid to
EMPLOYEE hereunder during any period of disability,
any amounts actually paid to EMPLOYEE pursuant to any
disability insurance or other similar program which
the COMPANY has instituted or may institute on behalf
of its employees.
VII. PARTICIPATION IN PLANS AND BENEFITS
-----------------------------------
VII.1 During the term of this Agreement, EMPLOYEE will be
entitled to participate in and receive the benefits
of all plans, benefits and privileges given to
employees and executives of the COMPANY, whether now
established or granted or which may come into
existence hereafter, including, without limitation,
the following:
VII1.1 COMPANY agrees to provide medical and dental
services or reimbursement for such expenses
to EMPLOYEE and or members of his immediate
family. Such medical plan shall be
comparable to the benefits provided under a
comprehensive medical plan approved by the
Board of Directors.
VII1.2 Upon the Board of Directors approval,
COMPANY agrees to secure term life insurance
on the life of EMPLOYEE, which is in effect
at the time of execution of this Agreement.
COMPANY agrees to pay all premiums on the
policy during the term of employment
provided herein. The term of life insurance
should equate no less than three (3) times
the EMPLOYEE's annual salary.
VII1.3 Upon the Board of Directors approval, the
COMPANY shall continue disability insurance
for EMPLOYEE, which is in effect at the time
of execution of this Agreement, and which
shall remain in effect during the term of
this Agreement.
VII1.4 EMPLOYEE shall be entitled to a two (2) week
of annual vacation without reduction of
EMPLOYEE's compensation. EMPLOYEE shall be
entitled to such additional time of not less
than seven (7) non-consecutive days per
annum without loss of compensation for
4 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
attendance at meetings, conventions, and
postgraduate courses as the Board of
Directors of COMPANY shall, from time to
time determine. Vacation days must be used
during the calendar year and may not be
accumulated. Each year of employment shall
add an additional week of paid vacation
which shall not exceed six (6) weeks.
VII1.5 EMPLOYEE shall be entitled to twelve (12)
non-consecutive days per annum absence due
to sickness without reduction of EMPLOYEE's
compensation. Sick days must be used during
the calendar year and may not be
accumulated.
VII1.6 EMPLOYEE shall also receive such other
benefits, fringe benefits and entitlements
as is usual and customary for COMPANY to
supply an EMPLOYEE of like status and
position according to COMPANY's established
policies on employment, as can be reasonably
provided, consistent with the term of
employment contemplated under this
Agreement.
VII1.7 In the event that the parties do not reach
agreement on a successor employment
agreement on such terms that are mutually
agreeable, and as a result of the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VII1.8 In the event that EMPLOYEE is terminated
without cause and as a result the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VIII. EXPENSES
--------
The COMPANY shall reimburse EMPLOYEE or otherwise provide for
or pay for all reasonable expenses incurred by EMPLOYEE in
furtherance or in connection with the business of the COMPANY
and its subsidiaries, including, without limitation,
automobile and traveling expenses, and all reasonable
entertainment expenses. EMPLOYEE agrees that he will furnish
the COMPANY'S adequate records and other documents bearing
evidence required by state and federal statutes and
regulations issued by the appropriate taxing authorities for
the substantiation of
5 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
each such business expense as a deduction on the federal and
state income tax returns of the COMPANY. If such expenses are
paid for in the first instance by EMPLOYEE, the COMPANY will
reimburse him. The Company shall issue to the Employee a
corporate American Express card for use in connection with
expenses incurred in connection with the performance of this
Agreement.
IX. TERMINATION
-----------
IX.1 COMPANY SHALL HAVE THE ABSOLUTE RIGHT TO TERMINATE
THIS AGREEMENT ON THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:
IX1.1 Whenever COMPANY and EMPLOYEE shall MUTUALLY
agree to terminate in writing.
IX1.2 Whenever the Board of Directors of COMPANY
determines that cause (as defined in Section
11.4 herein) exists for the termination of
EMPLOYEE or COMPANY allows EMPLOYEE to
resign in lieu of termination.
IX1.3 Upon the death of EMPLOYEE.
IX1.4 If EMPLOYEE shall suffer temporary or
permanent disability. For purposes of this
Agreement, "Disability" shall be defined as
EMPLOYEE's inability, through physical or
mental illness or other cause, to perform
the majority of his usual duties for a
period of six (6) months, or as may be
defined in a valid disability insurance
policy, whichever definition is less
restrictive.
IX1.5 Upon the retirement of EMPLOYEE at age of
Seventy (70) or at any age thereafter.
IX.2 EMPLOYEE shall have the absolute right to terminate
this Agreement upon thirty (30) days prior written
notice by EMPLOYEE to the COMPANY.
IX.3 Upon termination for any of the foregoing causes,
EMPLOYEE shall be entitled to receive only the
compensation accrued, but unpaid, as of the date of
termination and shall not be entitled to additional
compensation except as expressly provided in this
Agreement under Sections IV.V,VI,VII and XII.
IX.4 The Company may immediately terminate this Agreement
for just cause by written notice to the Employee for
any of the following reasons: theft, fraud,
6 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
embezzlement, dishonesty, or any material breach of
this Agreement. In the event that the Company
terminates the Employee for just cause the Company
shall not be liable to make any further payments
under this Agreement except for amounts due at the
time of such termination.
IX.5 The Company may terminate this Agreement without
cause upon thirty (30) day written notice to the
EMPLOYEE. In the event of a without cause termination
by the Company, the EMPLOYEE shall receive his salary
and all other benefits provided herein for the
duration of the Agreement. In addition, the EMPLOYEE
shall thereafter receive severance benefits in
accordance with Section 7.1.8.
X. BUSINESS RECORDS; SURRENDER
---------------------------
X.1 All business and financial records pertaining to
customers of the COMPANY, including but not limited
to books, software, chips, compression, algorithms,
records, memoranda, orders, invoices, list of
customers, billings and payment of billings and all
records pertaining to compensation and expenses of
EMPLOYEE within the scope of employment shall at all
times be the property of the COMPANY.
X.2 Upon the termination of the EMPLOYEE's employment
hereunder, for any reason whatsoever, and in addition
to such other actions as may be reasonably required
by Employer, the EMPLOYEE agrees to surrender to the
Employer, in good condition, any record or records
kept by him containing the names, addresses, and
other information with regard to customers or
potential customers of Employer which have been
served or solicited by the Employee.
XI. MERGER, TRANSFER, DISSOLUTION OR CHANGE OF CONTROL
--------------------------------------------------
XI.1 Except as provided in Section XII, this Agreement
shall not be terminated by:
XI.1.1 merger or consolidation where COMPANY is not
the consolidated or surviving corporation;
XI.1.2 transfer of all or substantially all of the
assets of COMPANY;
XI.1.3 change of control of COMPANY as described in
Section 12.1;
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XI.1.4 in the event, EMPLOYEE may elect at his/her
own option to terminate this agreement
within thirty (30) days written advanced
notice.
In the event of any such merger, consolidation,
transfer of assets or change of control of COMPANY,
the surviving or resulting corporation or the
transferee of COMPANY's assets shall be bound by, and
shall have the benefit of, the provisions of this
Agreement.
XII. CHANGE IN CONTROL
-----------------
XII.1 Notwithstanding anything contained in this Agreement
to the contrary, for the purposes of this Agreement,
a "change in control of COMPANY" shall mean the
occurrence of any of the following events:
XII.1.1 any "person" (as that term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange
Act")), who holds less than 20% of the
combined voting power of the securities of
the COMPANY, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities
of COMPANY representing twenty-five percent
or more of the combined voting power of the
securities of COMPANY then outstanding; or
XII.1.2 during any period of twenty-four (24)
consecutive months, individuals who at the
beginning of such period constitute all
members of the Board of Directors of COMPANY
shall cease, for any reason, to constitute
at least a majority of the Directors, unless
the election of each Director who was not a
Director at the beginning of the period was
approved by a vote of at least two-thirds of
the Directors then still in office who were
Directors at the beginning of the period; or
XII.1.3 COMPANY shall consolidate or merge with
another company and COMPANY is the
continuing or surviving corporation, or
shares of COMPANY's common stock are
converted into cash, securities, or other
property, other than a merger of COMPANY in
which the holders of the COMPANY's common
stock immediately prior to the merger have
the same proportionate ownership of common
stock of the surviving corporation
immediately after the merger as they had in
COMPANY immediately prior to the merger; or
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FUTURETRAK INTERNATIONAL:______
XII.1.4 COMPANY shall sell, lease, exchange, or
otherwise transfer all or substantially all
of its assets (in one transaction or in a
series of related transactions); or
XII.1.5 the stockholders of COMPANY shall approve a
plan or proposal for the liquidated or
dissolution of COMPANY.
XII.2 EMPLOYEE shall have the right to resign from the
employ of COMPANY at any time after a change in
control of COMPANY. If EMPLOYEE resigns within two
years of such a change in control, he shall be
entitled to the payment provided in Section 12.3.
XII.3 If EMPLOYEE resigns from the employ of COMPANY within
two years of a change in control of COMPANY, or if
COMPANY terminates this Agreement after a change in
control of COMPANY for any reason other than
substantial cause, then the following provisions of
this Section X shall apply:
XII.3.1 in lieu of any further salary payments to
EMPLOYEE for periods subsequent to the date of
the termination of his employment, COMPANY
shall pay to EMPLOYEE, in a lump sum and in
cash, as liquidated damages, an amount equal
to the sum of:
(i) the greater of (I) three years' base
salary, or (II) the base salary due
to EMPLOYEE for the remaining term of
this Agreement, in either case at the
greater of the rate in effect at the
date of the change in control of
COMPANY or at the date of
termination; plus
(ii) an amount equal to a multiple of two
(2) times the largest total of the
bonuses previously paid in any one
year by COMPANY to EMPLOYEE pursuant
to the provisions of Section 4.2
hereof.
XII.3.2 COMPANY shall maintain in full force and
effect until the expiration of the term of
this Agreement, at its expense, all group
insurance and other employee benefit plans
(including, without limitation, qualified
profit-sharing and retirement type plans) in
which EMPLOYEE was entitled to participate
prior to the date of his termination,
provided that EMPLOYEE's continued
participation is possible under the terms of
such plans. If EMPLOYEE's continued
participation under such plans is not
possible, COMPANY shall arrange to provide
EMPLOYEE with alternative benefits
substantially similar to those provided
under the
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group insurance and employee benefit plans
of COMPANY in which EMPLOYEE was
participating prior to the date of his
termination.
Any payment due to EMPLOYEE pursuant to the
provisions of this Section 12.3 shall be
paid to him by COMPANY on the fifth day
following the date of EMPLOYEE's
termination.
XII.4 For purposes of the remaining provisions of this
Section XII the following terms shall have the
following meanings:
XII.4.1 The term "Code" shall mean the Internal
Revenue Code of 1986, as amended; and any
references to sections thereof shall include
any successor provisions of the Code or of
any future income tax laws enacted as
successors to the Code;
XII.4.2 The term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Code;
XII.4.3 The term "Gross-Up Payment" shall mean the
payment referred to in subsection (5) of
this Section XII.
XII.4.4 The term "Section XII Payments" shall mean
all payments to which EMPLOYEE shall become
entitled under the provisions of this
Section XII.
XII.4.5 The term "Other Payments" shall mean any
payments or benefits, other than the Section
XII Payments, received or to be received by
EMPLOYEE in connection with a change in
control of COMPANY, or in connection with
EMPLOYEE's termination of employment, and
which are payable pursuant to the terms of
any plan, arrangement, or agreement (other
than this Agreement) with COMPANY, with
COMPANY's successors, with any person whose
actions result in a change in control of
COMPANY, or with any person affiliated
either with COMPANY or with any person whose
actions result in a change in control of
COMPANY.
XII.5 If EMPLOYEE becomes entitled to any payments under
this Section XII and if the Section XIV Payments or
any Other Payments will be subject to the Excise Tax,
then COMPANY shall pay to EMPLOYEE an additional sum
(the "Gross-Up Payment") sufficient to provide
EMPLOYEE with a net amount equal to the sum of the
Section XII and the Other Payments, after deduction
of any Excise Tax on such Payments and after
deduction of any federal,
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state, or local income taxes, and of any Excise Tax,
upon the Gross-Up Payment. The amount due from
COMPANY under this Section 12.5 shall be paid to
EMPLOYEE within five days of the date of EMPLOYEE's
termination.
XII.6 The following rules shall apply for the purpose of
determining whether any of the Section XII Payments
or any of the Other Payments will be subject to the
Excise Tax and for the purpose of computing the
amount of any such Excise Tax:
XII.6.1 The value of any benefits payable to
EMPLOYEE in any form other than cash, and
the value of any deferred payments or
benefits due to EMPLOYEE from COMPANY, shall
be determined by COMPANY's independent
auditors in accordance with the provisions
of Section 280G(d)(3) of the Code.
XII.7 For purpose of determining the amount of the Gross-Up
Payment:
XII.7.1 EMPLOYEE shall be deemed to be subject to
state and local income taxes at the highest
marginal rate of taxation in the state and
locality of EMPLOYEE's principal residence
on the date of his termination; and
XII.7.2 EMPLOYEE shall be deemed to be subject to
federal income taxes at the highest marginal
rate of federal income taxation in the
calendar year in which the Gross-Up Payment
is due (net of the maximum reduction in
federal income taxes which EMPLOYEE can
obtain from deduction of the state and local
taxes described in the preceding clause).
XII.8 If the Excise Tax is determined to exceed the amount
taken into account under the provisions of this Section
XII at the time of the termination of EMPLOYEE
(including by reason of any payment, the existence or
the amount of which could not be determined at the time
of the Gross-Up Payment), COMPANY shall make an
additional Gross-Up Payment in respect of such excess
and in respect of any interest payable with respect to
such excess, at the time that the amount of such excess
is finally determined.
XII.8.1 EMPLOYEE shall not be required to mitigate the amount
of any payment provided for in this Section XII by
seeking other employment or otherwise; and the amount
of any payment provided for in this Section XII shall
not be reduced by any compensation earned by
EMPLOYEE, either as the result of employment by any
other
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employer after the date of his termination of
employment with COMPANY or otherwise.
XIII. COMPANY'S AUTHORITY
-------------------
EMPLOYEE agrees to observe and comply with the rules and
regulations of COMPANY as adopted by COMPANY's Board of
Directors, which are not inconsistent with his sole discretion
to manage the operations of the COMPANY, communicated in
writing, respecting performance of his duties, and to carry
out and perform orders, directions, and policies stated by
COMPANY to him, from time to time, communicated in writing.
XIV. INDEMNIFICATION OF LOSSES OF EMPLOYEE
-------------------------------------
COMPANY shall, to the maximum extent permitted by law,
indemnify EMPLOYEE against expenses (including reasonable
attorney's fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with
any proceedings arising by reason of the fact that EMPLOYEE
is, or was, an employee, officer or agent of COMPANY. COMPANY
shall advance to EMPLOYEE expenses incurred in defending any
such proceedings to the maximum extent permitted by law.
COMPANY's obligations under this Section shall not cease upon
termination of this Agreement. EMPLOYEE may select legal
counsel, at his sole discretion, to represent him in any such
proceedings.
XV. MISCELLANEOUS
-------------
XV.1 Any and all notices, demands, requests or other
communication required or permitted by this Agreement
or by law to be served on, given to, or delivered to
any party hereto by any other party to this Agreement
shall be in writing and shall be deemed duly served,
given, or delivered when personally delivered to the
COMPANY or to an officer of the COMPANY, or in lieu
of such personal delivery, when deposited, in the
United States mail, registered or certified mail,
addressed to the COMPANY, at the address of its
principal office located at 3635 Park Central Blvd.
North, Pompano Beach, FL 33064 or to the EMPLOYEE at
the address then appearing for him on the books and
records of the COMPANY. The COMPANY may change the
address of its principal office in the manner
required by law for purposes of this paragraph by
giving notice to the change, in the manner required
by this paragraph, to the respective parties.
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XV.2 Notwithstanding anything to the contrary contained
herein , the payment or obligation to pay any money,
or granting of any rights or privileges, to the
EMPLOYEE as provided in this Agreement shall not be
in lieu or in derogation of the rights and privileges
that the EMPLOYEE now has under any plan or benefit
presently outstanding.
XV.3 This Agreement may not be modified, changed, amended,
or altered except in writing signed by the EMPLOYEE
or his duly authorized representative, and by a duly
authorized officer of the COMPANY.
XV.4 This Agreement shall be interpreted in accordance
with the laws of the State of Florida without
application of its conflict of law provisions. It
shall inure to the benefit of and be binding upon the
COMPANY, and its successors and assigns.
XV.5 EMPLOYEE shall not assign his rights and/or
obligations hereunder.
XV.6 Should any litigation be commenced between the
parties to this Agreement concerning any provision of
this Agreement, the party prevailing in such
litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum
as and for his attorney's fees in such litigation
which shall be determined by the Court in such
litigation or in a separate action brought for that
purpose.
XV.7 An original copy of this Agreement duly executed by
the COMPANY and by the EMPLOYEE shall be delivered to
the governing body of the COMPANY and be maintained
by it at the principal office of COMPANY available
for inspection only by consent of the EMPLOYEE.
XV.8 Should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the
remaining provisions and portions of this Agreement
shall be unaffected by such holding, subject to such
invalidity not rendering the balance of the Agreement
to be inconsistent with the original intent of the
parties as evidenced by the terms of this Agreement.
XV.9 This instrument constitutes the entire understanding
and Agreement of the parties hereto respecting the
subject of this Agreement and supersedes all prior
agreements, promises, negotiations, or
representations (if any) concerning its subject
matter not expressly set forth in this Agreement are
of no force and effect.
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XV.10 This Agreement and any certificates made pursuant
hereto, may be executed in any number of counterparts
and when so executed all of such counterparts shall
constitute a single instrument binding upon all
parties hereto notwithstanding the fact that all
parties are not signatory to the original or to the
same counterpart.
XV.11 This Article and Section headings used in this
Agreement are for reference purposes only, and should
not be used in construing this Agreement.
XV.12 As used in this Agreement, the masculine gender shall
include the feminine and neuter, and singular number
shall include the plural, and vice versa.
XV.13 Time is of the essence of this Agreement.
XV.14 The Effective Date of this Agreement commences on
September 1st, 1998.
XV.15 The failure or delay of Company at any time to
require performance by EMPLOYEE of any provision of
this Agreement, even if known, shall not affect the
right of COMPANY to require performance of that
provision or to exercise any right, power or remedy
hereunder, and any waiver by COMPANY of any breach of
any provision of this Agreement should not be
construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy
under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle such
party to any other or further notice or demand in
similar or other circumstances.
XV.16 EMPLOYEE acknowledges that the services to be
rendered by EMPLOYEE hereunder are extraordinary and
unique and are vital to the success of the COMPANY,
and that damages at law would be an inadequate remedy
for any breach of threatened breach of this Agreement
by Employee. Therefore, in the event of a breach or
threatened breach by EMPLOYEE of any provision of
this Agreement, then COMPANY shall be entitled, in
addition to all rights or remedies, to injunctions
restraining such breach, without being required to
show any actual damage or to post any bond or other
security.
XV.17 The parties acknowledge that a substantial portion of
negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Broward
County, Florida, and that, therefore, without
limiting the jurisdiction or venue or any other
federal or state courts, each of the parties
irrevocably and unconditionally (a) agrees that any
suit, action or legal proceeding arising out of or
relating to this Agreement may be brought in the
courts or records
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of the State of Florida in Broward County or the
court of the United States, Southern District of
Florida; (b) consents to the jurisdiction of each
such court in any such suit, action or proceeding;
(c) waives any objection which it may have to the
laying of venue of any such suit, action or
proceeding in any such courts; and (d) agrees that
service of any court paper may be effected on such
party by mail, as provided in this Agreement, or in
such other manner as may be provided under applicable
laws or court rules in said state.
XV.18 Notwithstanding anything to the contrary herein, the
provisions of Sections IV, V, VI, XII and XIV shall
survive and remain in effect in accordance with their
respective terms in the event employment is
terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year as set forth below.
Employee Name: ___________________________ Date: __/__/__
Employee Signature:_________________________
Company Authorized Officer name: _____________ Date: __/__/__
Signature:_________________________________
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EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT (this "Agreement") is entered into as of the day set
forth below, by and between FutureTrak International, a Florida corporation
(COMPANY), Steve Remondini or his corporate assignee(s) jointly, (hereinafter
referred to as "EMPLOYEE").
RECITALS
--------
WHEREAS, COMPANY has the exclusive right to market and make use of
certain Antennae for satellite transmission and its related accessories commonly
known as the "Antennae" Solution, which is a trade secret and owned by the
company of which EMPLOYEE is a principal shareholder and,
WHEREAS, COMPANY desires to employ EMPLOYEE and EMPLOYEE desires to
serve the COMPANY as the COMPANY's President, Chairman of the Board; and.
WHEREAS, EMPLOYEE's services for and on behalf of the COMPANY are of
material importance to the enhancement of the value of the COMPANY's business.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the COMPANY and EMPLOYEE do hereby
agree as follows:
I. EMPLOYMENT
----------
COMPANY hereby employs EMPLOYEE in its business as PRESIDENT,
CHAIRMAN OF THE BOARD and EMPLOYEE hereby accepts such
employment, all upon the terms and conditions hereinafter set
forth.
II. TERM
----
Unless sooner terminated pursuant to the provisions of this
Agreement the term of employment under this Agreement shall be
for a five (5) years commencing September 1st, 1998
("Employment Period"). The Employment Period shall be
automatically renewed for succeeding terms of one (1) year
("Successive Employment Period") unless either party gives
written notice of his intention not to renew said Agreement to
the other party, at least one-hundred-eighty (180) days prior
to the end of the initial five-year term, or any extended
term.
III. DUTIES
------
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III.1 During the Employment Period EMPLOYEE shall serve in
the Office of PRESIDENT, CHAIRMAN OF THE BOARD and
perform appropriate executive services for the
COMPANY in accordance with the historical nature and
scope of duties performed by EMPLOYEE as PRESIDENT,
CHAIRMAN OF THE BOARD of FutureTrak International,
Inc.
III.2 EMPLOYEE shall be entitled to make ALL normal
executive level management decisions of the COMPANY,
that involve matters within the COMPANY's usual
course of business and are duties customary for the
employee in his or her capacity of PRESIDENT,
CHAIRMAN OF THE BOARD. EMPLOYEE's authority to manage
the COMPANY shall be subject to review and direction
from his or her immediate manager, if any, or by the
Board of Directors of the Company. Compensation paid
to employees of the COMPANY shall be at industry
standards. Bonuses, if any, for said employees shall
be based on the individual employee's performance and
tied to a formula adopted by the COMPANY's Board of
Directors.
III.3 During the term of this Agreement, Although EMPLOYEE
is involved in managing other businesses, EMPLOYEE
shall devote primarily majority of his time, energy,
and skill to the service of the COMPANY and the
promotion of COMPANY'S interests, and shall use his
best efforts in the performance of his services
hereunder. EMPLOYEE agrees to abide by all rules and
regulations established from time to time by the
Board; and all commissions, fees or other income
earned and received by EMPLOYEE, if any, in
furtherance of the business of Company shall be
accepted by EMPLOYEE for the account of Company, and
shall be remitted to Company within three (3) days of
EMPLOYEE's receipt thereof.
III.4 EMPLOYEE may, if elected, without additional
compensation, unless expressly approved by the Board
of Directors of the COMPANY, serve as a director of
the COMPANY.
III.5 The services of EMPLOYEE shall be rendered in such
places and localities as the COMPANY may require from
time to time, and he shall do such traveling on
behalf of the COMPANY as may reasonably be required
consistent with the historical requirements of the
office of PRESIDENT, CHAIRMAN OF THE BOARD of the
COMPANY.
III.6 EMPLOYEE shall comply with all COMPANY policies for
the employees as such policies may exist from time to
time.
IV. COMPENSATION
------------
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IV.1 The COMPANY will compensate and pay EMPLOYEE for his
services during the term of this Agreement a base
salary of $250,000 per year ("Base Salary"). The Base
Salary shall be paid to EMPLOYEE at no less than
monthly intervals in accordance with the current
normal payroll policies of which policies may be
changed by COMPANY from time to time with inclusion
of cost of living adjustment on a mutually acceptable
terms. All compensation paid to EMPLOYEE shall be
subject to all appropriate withholding taxes.
IV.2 EMPLOYEE shall be entitled to a bonus annually equal
to no less than one and a half(1.5%) percent of the
net profits of the COMPANY calculated without taking
into account any kind of distribution to the
subsidiaries of the COMPANY. Net Profits shall be
defined according to Generally Accepted Accounting
Principles. EMPLOYEE may elect to take this bonus in
any combination of cash and stock. Computation of
stock is based on .15(cent) per share exercise price.
IV.3 Compensation for each Successive Employment Period
shall be determined, within thirty (30) days of the
expiration of the Employment Period or each
Successive Employment Period, through good faith
negotiations between COMPANY and EMPLOYEE. Should the
parties hereto fail to agree upon a mutually
acceptable compensation package, the compensation in
effect for the immediately proceeding period shall
continue until the parties hereto agree on its
modification.
V. DEATH
-----
V.1 In the event of the death of EMPLOYEE during the term
of this Agreement, COMPANY shall pay to the Estate of
EMPLOYEE the amount to which EMPLOYEE would have been
entitled to receive for the lesser of (a) salary for
the remaining of five (5) year period, or (b) salary
for the remaining period of this Agreement; in
regular monthly payments for the term that remains on
this Agreement to commence three (3) months after the
death of EMPLOYEE.
V.2 There shall be deducted from the amounts paid to
EMPLOYEE pursuant to Section 4.1, above, the amount
actually paid to EMPLOYEE's designated beneficiary,
as proceeds of life insurance, if any, which the
COMPANY may have instituted on behalf of EMPLOYEE, as
set forth under Section 7.1.2 (the "Term of The
Insurance").
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VI. DISABILITY
----------
VI.1 In the event of disability of EMPLOYEE (whether
temporary or permanent) to render services hereunder
during the term hereof, and so long as such
disability continues, EMPLOYEE shall continue to
receive his full compensation during the period of
such disability for a remaining unpaid period of this
Agreement, or until the termination of this Agreement
as defined in Section 9.1.4 herein, whichever first
occurs.
VI.2 There shall be deducted, from the amounts paid to
EMPLOYEE hereunder during any period of disability,
any amounts actually paid to EMPLOYEE pursuant to any
disability insurance or other similar program which
the COMPANY has instituted or may institute on behalf
of its employees.
VII. PARTICIPATION IN PLANS AND BENEFITS
-----------------------------------
VII.1 During the term of this Agreement, EMPLOYEE will be
entitled to participate in and receive the benefits
of all plans, benefits and privileges given to
employees and executives of the COMPANY, whether now
established or granted or which may come into
existence hereafter, including, without limitation,
the following:
VII1.1 COMPANY agrees to provide medical and dental
services or reimbursement for such expenses
to EMPLOYEE and or members of his immediate
family. Such medical plan shall be
comparable to the benefits provided under a
comprehensive medical plan approved by the
Board of Directors.
VII1.2 Upon the Board of Directors approval,
COMPANY agrees to secure term life insurance
on the life of EMPLOYEE, which is in effect
at the time of execution of this Agreement.
COMPANY agrees to pay all premiums on the
policy during the term of employment
provided herein. The term of life insurance
should equate no less than three (3) times
the EMPLOYEE's annual salary.
VII1.3 Upon the Board of Directors approval, the
COMPANY shall continue disability insurance
for EMPLOYEE, which is in effect at the time
of execution of this Agreement, and which
shall remain in effect during the term of
this Agreement.
VII1.4 EMPLOYEE shall be entitled to a two (2) week
of annual vacation without reduction of
EMPLOYEE's compensation. EMPLOYEE shall be
entitled to such additional time of not less
than seven (7) non-
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consecutive days per annum without loss of
compensation for attendance at meetings,
conventions, and postgraduate courses as the
Board of Directors of COMPANY shall, from
time to time determine. Vacation days must
be used during the calendar year and may not
be accumulated. Each year of employment
shall add an additional week of paid
vacation which shall not exceed six (6)
weeks.
VII1.5 EMPLOYEE shall be entitled to twelve (12)
non-consecutive days per annum absence due
to sickness without reduction of EMPLOYEE's
compensation. Sick days must be used during
the calendar year and may not be
accumulated.
VII1.6 EMPLOYEE shall also receive such other
benefits, fringe benefits and entitlements
as is usual and customary for COMPANY to
supply an EMPLOYEE of like status and
position according to COMPANY's established
policies on employment, as can be reasonably
provided, consistent with the term of
employment contemplated under this
Agreement.
VII1.7 In the event that the parties do not reach
agreement on a successor employment
agreement on such terms that are mutually
agreeable, and as a result of the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VII1.8 In the event that EMPLOYEE is terminated
without cause and as a result the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VIII. EXPENSES
--------
The COMPANY shall reimburse EMPLOYEE or otherwise provide for
or pay for all reasonable expenses incurred by EMPLOYEE in
furtherance or in connection with the business of the COMPANY
and its subsidiaries, including, without limitation,
automobile and traveling expenses, and all reasonable
entertainment expenses. EMPLOYEE agrees that he will furnish
the COMPANY'S adequate records and other documents bearing
evidence required by state and
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federal statutes and regulations issued by the appropriate
taxing authorities for the substantiation of each such
business expense as a deduction on the federal and state
income tax returns of the COMPANY. If such expenses are paid
for in the first instance by EMPLOYEE, the COMPANY will
reimburse him. The Company shall issue to the Employee a
corporate American Express card for use in connection with
expenses incurred in connection with the performance of this
Agreement.
IX. TERMINATION
-----------
IX.1 COMPANY SHALL HAVE THE ABSOLUTE RIGHT TO TERMINATE
THIS AGREEMENT ON THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:
IX1.1 Whenever COMPANY and EMPLOYEE shall MUTUALLY
agree to terminate in writing.
IX1.2 Whenever the Board of Directors of COMPANY
determines that cause (as defined in Section
11.4 herein) exists for the termination of
EMPLOYEE or COMPANY allows EMPLOYEE to
resign in lieu of termination.
IX1.3 Upon the death of EMPLOYEE.
IX1.4 If EMPLOYEE shall suffer temporary or
permanent disability. For purposes of this
Agreement, "Disability" shall be defined as
EMPLOYEE's inability, through physical or
mental illness or other cause, to perform
the majority of his usual duties for a
period of six (6) months, or as may be
defined in a valid disability insurance
policy, whichever definition is less
restrictive.
IX1.5 Upon the retirement of EMPLOYEE at age of
Seventy (70) or at any age thereafter.
IX.2 EMPLOYEE shall have the absolute right to terminate
this Agreement upon thirty (30) days prior written
notice by EMPLOYEE to the COMPANY.
IX.3 Upon termination for any of the foregoing causes,
EMPLOYEE shall be entitled to receive only the
compensation accrued, but unpaid, as of the date of
termination and shall not be entitled to additional
compensation except as expressly provided in this
Agreement under Sections IV.V,VI,VII and XII.
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IX.4 The Company may immediately terminate this Agreement
for just cause by written notice to the Employee for
any of the following reasons: theft, fraud,
embezzlement, dishonesty, or any material breach of
this Agreement. In the event that the Company
terminates the Employee for just cause the Company
shall not be liable to make any further payments
under this Agreement except for amounts due at the
time of such termination.
IX.5 The Company may terminate this Agreement without
cause upon thirty (30) day written notice to the
EMPLOYEE. In the event of a without cause termination
by the Company, the EMPLOYEE shall receive his salary
and all other benefits provided herein for the
duration of the Agreement. In addition, the EMPLOYEE
shall thereafter receive severance benefits in
accordance with Section 7.1.8.
X. BUSINESS RECORDS; SURRENDER
---------------------------
X.1 All business and financial records pertaining to
customers of the COMPANY, including but not limited
to books, software, chips, compression, algorithms,
records, memoranda, orders, invoices, list of
customers, billings and payment of billings and all
records pertaining to compensation and expenses of
EMPLOYEE within the scope of employment shall at all
times be the property of the COMPANY.
X.2 Upon the termination of the EMPLOYEE's employment
hereunder, for any reason whatsoever, and in addition
to such other actions as may be reasonably required
by Employer, the EMPLOYEE agrees to surrender to the
Employer, in good condition, any record or records
kept by him containing the names, addresses, and
other information with regard to customers or
potential customers of Employer which have been
served or solicited by the Employee.
XI. MERGER, TRANSFER, DISSOLUTION OR CHANGE OF CONTROL
--------------------------------------------------
XI.1 Except as provided in Section XII, this Agreement shall
not be terminated by:
XI.1.1 merger or consolidation where COMPANY is not
the consolidated or surviving corporation;
XI.1.2 transfer of all or substantially all of the
assets of COMPANY;
XI.1.3 change of control of COMPANY as described in
Section 12.1;
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XI.1.4 in the event, EMPLOYEE may elect at his/her
own option to terminate this agreement
within thirty (30) days written advanced
notice.
In the event of any such merger, consolidation,
transfer of assets or change of control of COMPANY,
the surviving or resulting corporation or the
transferee of COMPANY's assets shall be bound by, and
shall have the benefit of, the provisions of this
Agreement.
XII. CHANGE IN CONTROL
-----------------
XII.1 Notwithstanding anything contained in this Agreement
to the contrary, for the purposes of this Agreement,
a "change in control of COMPANY" shall mean the
occurrence of any of the following events:
XII.1.1 any "person" (as that term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange
Act")), who holds less than 20% of the
combined voting power of the securities of
the COMPANY, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities
of COMPANY representing twenty-five percent
or more of the combined voting power of the
securities of COMPANY then outstanding; or
XII.1.2 during any period of twenty-four (24)
consecutive months, individuals who at the
beginning of such period constitute all
members of the Board of Directors of COMPANY
shall cease, for any reason, to constitute
at least a majority of the Directors, unless
the election of each Director who was not a
Director at the beginning of the period was
approved by a vote of at least two-thirds of
the Directors then still in office who were
Directors at the beginning of the period; or
XII.1.3 COMPANY shall consolidate or merge with
another company and COMPANY is the
continuing or surviving corporation, or
shares of COMPANY's common stock are
converted into cash, securities, or other
property, other than a merger of COMPANY in
which the holders of the COMPANY's common
stock immediately prior to the merger have
the same proportionate ownership of common
stock of the surviving corporation
immediately after the merger as they had in
COMPANY immediately prior to the merger; or
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XII.1.4 COMPANY shall sell, lease, exchange, or
otherwise transfer all or substantially all
of its assets (in one transaction or in a
series of related transactions); or
XII.1.5 the stockholders of COMPANY shall approve a
plan or proposal for the liquidated or
dissolution of COMPANY.
XII.2 EMPLOYEE shall have the right to resign from the
employ of COMPANY at any time after a change in
control of COMPANY. If EMPLOYEE resigns within two
years of such a change in control, he shall be
entitled to the payment provided in Section 12.3.
XII.3 If EMPLOYEE resigns from the employ of COMPANY within
two years of a change in control of COMPANY, or if
COMPANY terminates this Agreement after a change in
control of COMPANY for any reason other than
substantial cause, then the following provisions of
this Section X shall apply:
XII.3.1 in lieu of any further salary payments to
EMPLOYEE for periods subsequent to the date of
the termination of his employment, COMPANY
shall pay to EMPLOYEE, in a lump sum and in
cash, as liquidated damages, an amount equal
to the sum of:
(i) the greater of (I) three years' base
salary, or (II) the base salary due
to EMPLOYEE for the remaining term of
this Agreement, in either case at the
greater of the rate in effect at the
date of the change in control of
COMPANY or at the date of
termination; plus
(ii) an amount equal to a multiple of two
(2) times the largest total of the
bonuses previously paid in any one
year by COMPANY to EMPLOYEE pursuant
to the provisions of Section 4.2
hereof.
XII.3.2 COMPANY shall maintain in full force and
effect until the expiration of the term of
this Agreement, at its expense, all group
insurance and other employee benefit plans
(including, without limitation, qualified
profit-sharing and retirement type plans) in
which EMPLOYEE was entitled to participate
prior to the date of his termination,
provided that EMPLOYEE's continued
participation is possible under the terms of
such plans. If EMPLOYEE's continued
participation under such plans is not
possible, COMPANY shall arrange to provide
EMPLOYEE with alternative benefits
substantially similar to those provided
under the
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group insurance and employee benefit plans
of COMPANY in which EMPLOYEE was
participating prior to the date of his
termination.
Any payment due to EMPLOYEE pursuant to the
provisions of this Section 12.3 shall be
paid to him by COMPANY on the fifth day
following the date of EMPLOYEE's
termination.
XII.4 For purposes of the remaining provisions of this
Section XII the following terms shall have the
following meanings:
XII.4.1 The term "Code" shall mean the Internal
Revenue Code of 1986, as amended; and any
references to sections thereof shall include
any successor provisions of the Code or of
any future income tax laws enacted as
successors to the Code;
XII.4.2 The term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Code;
XII.4.3 The term "Gross-Up Payment" shall mean the
payment referred to in subsection (5) of
this Section XII.
XII.4.4 The term "Section XII Payments" shall mean
all payments to which EMPLOYEE shall become
entitled under the provisions of this
Section XII.
XII.4.5 The term "Other Payments" shall mean any
payments or benefits, other than the Section
XII Payments, received or to be received by
EMPLOYEE in connection with a change in
control of COMPANY, or in connection with
EMPLOYEE's termination of employment, and
which are payable pursuant to the terms of
any plan, arrangement, or agreement (other
than this Agreement) with COMPANY, with
COMPANY's successors, with any person whose
actions result in a change in control of
COMPANY, or with any person affiliated
either with COMPANY or with any person whose
actions result in a change in control of
COMPANY.
XII.5 If EMPLOYEE becomes entitled to any payments under
this Section XII and if the Section XIV Payments or
any Other Payments will be subject to the Excise Tax,
then COMPANY shall pay to EMPLOYEE an additional sum
(the "Gross-Up Payment") sufficient to provide
EMPLOYEE with a net amount equal to the sum of the
Section XII and the Other Payments, after deduction
of any Excise Tax on such Payments and after
deduction of any federal,
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state, or local income taxes, and of any Excise Tax,
upon the Gross-Up Payment. The amount due from
COMPANY under this Section 12.5 shall be paid to
EMPLOYEE within five days of the date of EMPLOYEE's
termination.
XII.6 The following rules shall apply for the purpose of
determining whether any of the Section XII Payments
or any of the Other Payments will be subject to the
Excise Tax and for the purpose of computing the
amount of any such Excise Tax:
XII.6.1 The value of any benefits payable to
EMPLOYEE in any form other than cash, and
the value of any deferred payments or
benefits due to EMPLOYEE from COMPANY, shall
be determined by COMPANY's independent
auditors in accordance with the provisions
of Section 280G(d)(3) of the Code.
XII.7 For purpose of determining the amount of the Gross-Up
Payment:
XII.7.1 EMPLOYEE shall be deemed to be subject to
state and local income taxes at the highest
marginal rate of taxation in the state and
locality of EMPLOYEE's principal residence
on the date of his termination; and
XII.7.2 EMPLOYEE shall be deemed to be subject to
federal income taxes at the highest marginal
rate of federal income taxation in the
calendar year in which the Gross-Up Payment
is due (net of the maximum reduction in
federal income taxes which EMPLOYEE can
obtain from deduction of the state and local
taxes described in the preceding clause).
XII.8 If the Excise Tax is determined to exceed the amount
taken into account under the provisions of this
Section XII at the time of the termination of
EMPLOYEE (including by reason of any payment, the
existence or the amount of which could not be
determined at the time of the Gross-Up Payment),
COMPANY shall make an additional Gross-Up Payment in
respect of such excess and in respect of any interest
payable with respect to such excess, at the time that
the amount of such excess is finally determined.
XII.8.1 EMPLOYEE shall not be required to mitigate
the amount of any payment provided for in
this Section XII by seeking other employment
or otherwise; and the amount of any payment
provided for in this Section XII shall not
be reduced by any compensation earned by
EMPLOYEE, either as the result of employment
by any other
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employer after the date of his termination
of employment with COMPANY or otherwise.
XIII. COMPANY'S AUTHORITY
-------------------
EMPLOYEE agrees to observe and comply with the rules and
regulations of COMPANY as adopted by COMPANY's Board of
Directors, which are not inconsistent with his sole discretion
to manage the operations of the COMPANY, communicated in
writing, respecting performance of his duties, and to carry
out and perform orders, directions, and policies stated by
COMPANY to him, from time to time, communicated in writing.
XIV. INDEMNIFICATION OF LOSSES OF EMPLOYEE
-------------------------------------
COMPANY shall, to the maximum extent permitted by law,
indemnify EMPLOYEE against expenses (including reasonable
attorney's fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with
any proceedings arising by reason of the fact that EMPLOYEE
is, or was, an employee, officer or agent of COMPANY. COMPANY
shall advance to EMPLOYEE expenses incurred in defending any
such proceedings to the maximum extent permitted by law.
COMPANY's obligations under this Section shall not cease upon
termination of this Agreement. EMPLOYEE may select legal
counsel, at his sole discretion, to represent him in any such
proceedings.
XV. MISCELLANEOUS
-------------
XV.1 Any and all notices, demands, requests or other
communication required or permitted by this Agreement
or by law to be served on, given to, or delivered to
any party hereto by any other party to this Agreement
shall be in writing and shall be deemed duly served,
given, or delivered when personally delivered to the
COMPANY or to an officer of the COMPANY, or in lieu
of such personal delivery, when deposited, in the
United States mail, registered or certified mail,
addressed to the COMPANY, at the address of its
principal office located at 3635 Park Central Blvd.
North, Pompano Beach, FL 33064 or to the EMPLOYEE at
the address then appearing for him on the books and
records of the COMPANY. The COMPANY may change the
address of its principal office in the manner
required by law for purposes of this paragraph by
giving notice to the change, in the manner required
by this paragraph, to the respective parties.
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XV.2 Notwithstanding anything to the contrary contained
herein , the payment or obligation to pay any money,
or granting of any rights or privileges, to the
EMPLOYEE as provided in this Agreement shall not be
in lieu or in derogation of the rights and privileges
that the EMPLOYEE now has under any plan or benefit
presently outstanding.
XV.3 This Agreement may not be modified, changed, amended,
or altered except in writing signed by the EMPLOYEE
or his duly authorized representative, and by a duly
authorized officer of the COMPANY.
XV.4 This Agreement shall be interpreted in accordance
with the laws of the State of Florida without
application of its conflict of law provisions. It
shall inure to the benefit of and be binding upon the
COMPANY, and its successors and assigns.
XV.5 EMPLOYEE shall not assign his rights and/or
obligations hereunder.
XV.6 Should any litigation be commenced between the
parties to this Agreement concerning any provision of
this Agreement, the party prevailing in such
litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum
as and for his attorney's fees in such litigation
which shall be determined by the Court in such
litigation or in a separate action brought for that
purpose.
XV.7 An original copy of this Agreement duly executed by
the COMPANY and by the EMPLOYEE shall be delivered to
the governing body of the COMPANY and be maintained
by it at the principal office of COMPANY available
for inspection only by consent of the EMPLOYEE.
XV.8 Should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the
remaining provisions and portions of this Agreement
shall be unaffected by such holding, subject to such
invalidity not rendering the balance of the Agreement
to be inconsistent with the original intent of the
parties as evidenced by the terms of this Agreement.
XV.9 This instrument constitutes the entire understanding
and Agreement of the parties hereto respecting the
subject of this Agreement and supersedes all prior
agreements, promises, negotiations, or
representations (if any) concerning its subject
matter not expressly set forth in this Agreement are
of no force and effect.
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XV.10 This Agreement and any certificates made pursuant
hereto, may be executed in any number of counterparts
and when so executed all of such counterparts shall
constitute a single instrument binding upon all
parties hereto notwithstanding the fact that all
parties are not signatory to the original or to the
same counterpart.
XV.11 This Article and Section headings used in this
Agreement are for reference purposes only, and should
not be used in construing this Agreement.
XV.12 As used in this Agreement, the masculine gender shall
include the feminine and neuter, and singular number
shall include the plural, and vice versa.
XV.13 Time is of the essence of this Agreement.
XV.14 The Effective Date of this Agreement commences on
September 1st, 1998.
XV.15 The failure or delay of Company at any time to
require performance by EMPLOYEE of any provision of
this Agreement, even if known, shall not affect the
right of COMPANY to require performance of that
provision or to exercise any right, power or remedy
hereunder, and any waiver by COMPANY of any breach of
any provision of this Agreement should not be
construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy
under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle such
party to any other or further notice or demand in
similar or other circumstances.
XV.16 EMPLOYEE acknowledges that the services to be
rendered by EMPLOYEE hereunder are extraordinary and
unique and are vital to the success of the COMPANY,
and that damages at law would be an inadequate remedy
for any breach of threatened breach of this Agreement
by Employee. Therefore, in the event of a breach or
threatened breach by EMPLOYEE of any provision of
this Agreement, then COMPANY shall be entitled, in
addition to all rights or remedies, to injunctions
restraining such breach, without being required to
show any actual damage or to post any bond or other
security.
XV.17 The parties acknowledge that a substantial portion of
negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Broward
County, Florida, and that, therefore, without
limiting the jurisdiction or venue or any other
federal or state courts, each of the parties
irrevocably and unconditionally (a) agrees that any
suit, action or legal proceeding arising out of or
relating to this Agreement may be brought in the
courts or records
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of the State of Florida in Broward County or the
court of the United States, Southern District of
Florida; (b) consents to the jurisdiction of each
such court in any such suit, action or proceeding;
(c) waives any objection which it may have to the
laying of venue of any such suit, action or
proceeding in any such courts; and (d) agrees that
service of any court paper may be effected on such
party by mail, as provided in this Agreement, or in
such other manner as may be provided under applicable
laws or court rules in said state.
XV.18 Notwithstanding anything to the contrary herein, the
provisions of Sections IV, V, VI, XII and XIV shall
survive and remain in effect in accordance with their
respective terms in the event employment is
terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year as set forth below.
Employee Name: ___________________________ Date: __/__/__
Employee Signature:_________________________
Company Authorized Officer name: _____________ Date: __/__/__
Signature:_________________________________
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EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT (this "Agreement") is entered into as of the day set
forth below, by and between FutureTrak International, a Florida corporation
(COMPANY), Robert S. Kelner or his corporate assignee(s) jointly, (hereinafter
referred to as "EMPLOYEE").
RECITALS
--------
WHEREAS, COMPANY has the exclusive right to market and make use of
certain Antennae for satellite transmission and its related accessories commonly
known as the "Antennae" Solution, which is a trade secret and owned by the
company of which EMPLOYEE is a principal shareholder and,
WHEREAS, COMPANY desires to employ EMPLOYEE and EMPLOYEE desires to
serve the COMPANY as the COMPANY's Chief Operating Officer (COO); and.
WHEREAS, EMPLOYEE's services for and on behalf of the COMPANY are of
material importance to the enhancement of the value of the COMPANY's business.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the COMPANY and EMPLOYEE do hereby
agree as follows:
I. EMPLOYMENT
----------
COMPANY hereby employs EMPLOYEE in its business as COO and
EMPLOYEE hereby accepts such employment, all upon the terms
and conditions hereinafter set forth.
II. TERM
----
Unless sooner terminated pursuant to the provisions of this
Agreement the term of employment under this Agreement shall be
for a five (5) years commencing September 1st, 1998
("Employment Period"). The Employment Period shall be
automatically renewed for succeeding terms of one (1) year
("Successive Employment Period") unless either party gives
written notice of his intention not to renew said Agreement to
the other party, at least one-hundred-eighty (180) days prior
to the end of the initial five-year term, or any extended
term.
III. DUTIES
------
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III.1 During the Employment Period EMPLOYEE shall serve in
the Office of COO and perform appropriate executive
services for the COMPANY in accordance with the
historical nature and scope of duties performed by
EMPLOYEE as COO of FutureTrak International, Inc.
III.2 EMPLOYEE shall be entitled to make ALL normal
executive level management decisions of the COMPANY,
that involve matters within the COMPANY's usual
course of business and are duties customary for the
employee in his or her capacity of COO. EMPLOYEE's
authority to manage the COMPANY shall be subject to
review and direction from his or her immediate
manager, if any, or by the Board of Directors of the
Company. Compensation paid to employees of the
COMPANY shall be at industry standards. Bonuses, if
any, for said employees shall be based on the
individual employee's performance and tied to a
formula adopted by the COMPANY's Board of Directors.
III.3 During the term of this Agreement, Although EMPLOYEE
is involved in managing other businesses, EMPLOYEE
shall devote primarily majority of his time, energy,
and skill to the service of the COMPANY and the
promotion of COMPANY'S interests, and shall use his
best efforts in the performance of his services
hereunder. EMPLOYEE agrees to abide by all rules and
regulations established from time to time by the
Board; and all commissions, fees or other income
earned and received by EMPLOYEE, if any, in
furtherance of the business of Company shall be
accepted by EMPLOYEE for the account of Company, and
shall be remitted to Company within three (3) days of
EMPLOYEE's receipt thereof.
III.4 EMPLOYEE may, if elected, without additional
compensation, unless expressly approved by the Board
of Directors of the COMPANY, serve as a director of
the COMPANY.
III.5 The services of EMPLOYEE shall be rendered in such
places and localities as the COMPANY may require from
time to time, and he shall do such traveling on
behalf of the COMPANY as may reasonably be required
consistent with the historical requirements of the
office of COO of the COMPANY.
III.6 EMPLOYEE shall comply with all COMPANY policies for
the employees as such policies may exist from time to
time.
IV. COMPENSATION
------------
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IV.1 The COMPANY will compensate and pay EMPLOYEE for his
services during the term of this Agreement a base
salary of $250,000 per year ("Base Salary"). The Base
Salary shall be paid to EMPLOYEE at no less than
monthly intervals in accordance with the current
normal payroll policies of which policies may be
changed by COMPANY from time to time with inclusion
of cost of living adjustment on a mutually acceptable
terms. All compensation paid to EMPLOYEE shall be
subject to all appropriate withholding taxes.
IV.2 EMPLOYEE shall be entitled to a bonus annually equal
to no less than one and a half(1.5%) percent of the
net profits of the COMPANY calculated without taking
into account any kind of distribution to the
subsidiaries of the COMPANY. Net Profits shall be
defined according to Generally Accepted Accounting
Principles. EMPLOYEE may elect to take this bonus in
any combination of cash and stock. Computation of
stock is based on .15(cent) per share exercise price.
IV.3 Compensation for each Successive Employment Period
shall be determined, within thirty (30) days of the
expiration of the Employment Period or each
Successive Employment Period, through good faith
negotiations between COMPANY and EMPLOYEE. Should the
parties hereto fail to agree upon a mutually
acceptable compensation package, the compensation in
effect for the immediately proceeding period shall
continue until the parties hereto agree on its
modification.
V. DEATH
-----
V.1 In the event of the death of EMPLOYEE during the term
of this Agreement, COMPANY shall pay to the Estate of
EMPLOYEE the amount to which EMPLOYEE would have been
entitled to receive for the lesser of (a) salary for
the remaining of five (5) year period, or (b) salary
for the remaining period of this Agreement; in
regular monthly payments for the term that remains on
this Agreement to commence three (3) months after the
death of EMPLOYEE.
V.2 There shall be deducted from the amounts paid to
EMPLOYEE pursuant to Section 4.1, above, the amount
actually paid to EMPLOYEE's designated beneficiary,
as proceeds of life insurance, if any, which the
COMPANY may have instituted on behalf of EMPLOYEE, as
set forth under Section 7.1.2 (the "Term of The
Insurance").
VI. DISABILITY
----------
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VI.1 In the event of disability of EMPLOYEE (whether
temporary or permanent) to render services hereunder
during the term hereof, and so long as such
disability continues, EMPLOYEE shall continue to
receive his full compensation during the period of
such disability for a remaining unpaid period of this
Agreement, or until the termination of this Agreement
as defined in Section 9.1.4 herein, whichever first
occurs.
VI.2 There shall be deducted, from the amounts paid to
EMPLOYEE hereunder during any period of disability,
any amounts actually paid to EMPLOYEE pursuant to any
disability insurance or other similar program which
the COMPANY has instituted or may institute on behalf
of its employees.
VII. PARTICIPATION IN PLANS AND BENEFITS
-----------------------------------
VII.1 During the term of this Agreement, EMPLOYEE will be
entitled to participate in and receive the benefits
of all plans, benefits and privileges given to
employees and executives of the COMPANY, whether now
established or granted or which may come into
existence hereafter, including, without limitation,
the following:
VII1.1 COMPANY agrees to provide medical and dental
services or reimbursement for such expenses
to EMPLOYEE and or members of his immediate
family. Such medical plan shall be
comparable to the benefits provided under a
comprehensive medical plan approved by the
Board of Directors.
VII1.2 Upon the Board of Directors approval,
COMPANY agrees to secure term life insurance
on the life of EMPLOYEE, which is in effect
at the time of execution of this Agreement.
COMPANY agrees to pay all premiums on the
policy during the term of employment
provided herein. The term of life insurance
should equate no less than three (3) times
the EMPLOYEE's annual salary.
VII1.3 Upon the Board of Directors approval, the
COMPANY shall continue disability insurance
for EMPLOYEE, which is in effect at the time
of execution of this Agreement, and which
shall remain in effect during the term of
this Agreement.
VII1.4 EMPLOYEE shall be entitled to a two (2) week
of annual vacation without reduction of
EMPLOYEE's compensation. EMPLOYEE shall be
entitled to such additional time of not less
than seven (7) non-consecutive days per
annum without loss of compensation for
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attendance at meetings, conventions, and
postgraduate courses as the Board of
Directors of COMPANY shall, from time to
time determine. Vacation days must be used
during the calendar year and may not be
accumulated. Each year of employment shall
add an additional week of paid vacation
which shall not exceed six (6) weeks.
VII1.5 EMPLOYEE shall be entitled to twelve (12)
non-consecutive days per annum absence due
to sickness without reduction of EMPLOYEE's
compensation. Sick days must be used during
the calendar year and may not be
accumulated.
VII1.6 EMPLOYEE shall also receive such other
benefits, fringe benefits and entitlements
as is usual and customary for COMPANY to
supply an EMPLOYEE of like status and
position according to COMPANY's established
policies on employment, as can be reasonably
provided, consistent with the term of
employment contemplated under this
Agreement.
VII1.7 In the event that the parties do not reach
agreement on a successor employment
agreement on such terms that are mutually
agreeable, and as a result of the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VII1.8 In the event that EMPLOYEE is terminated
without cause and as a result the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VIII. EXPENSES
--------
The COMPANY shall reimburse EMPLOYEE or otherwise provide for
or pay for all reasonable expenses incurred by EMPLOYEE in
furtherance or in connection with the business of the COMPANY
and its subsidiaries, including, without limitation,
automobile and traveling expenses, and all reasonable
entertainment expenses. EMPLOYEE agrees that he will furnish
the COMPANY'S adequate records and other documents bearing
evidence required by state and federal statutes and
regulations issued by the appropriate taxing authorities for
the substantiation of
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each such business expense as a deduction on the federal and
state income tax returns of the COMPANY. If such expenses are
paid for in the first instance by EMPLOYEE, the COMPANY will
reimburse him. The Company shall issue to the Employee a
corporate American Express card for use in connection with
expenses incurred in connection with the performance of this
Agreement.
IX. TERMINATION
-----------
IX.1 COMPANY SHALL HAVE THE ABSOLUTE RIGHT TO TERMINATE
THIS AGREEMENT ON THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:
IX1.1 Whenever COMPANY and EMPLOYEE shall MUTUALLY
agree to terminate in writing.
IX1.2 Whenever the Board of Directors of COMPANY
determines that cause (as defined in Section
11.4 herein) exists for the termination of
EMPLOYEE or COMPANY allows EMPLOYEE to
resign in lieu of termination.
IX1.3 Upon the death of EMPLOYEE.
IX1.4 If EMPLOYEE shall suffer temporary or
permanent disability. For purposes of this
Agreement, "Disability" shall be defined as
EMPLOYEE's inability, through physical or
mental illness or other cause, to perform
the majority of his usual duties for a
period of six (6) months, or as may be
defined in a valid disability insurance
policy, whichever definition is less
restrictive.
IX1.5 Upon the retirement of EMPLOYEE at age of
Seventy (70) or at any age thereafter.
IX.2 EMPLOYEE shall have the absolute right to terminate
this Agreement upon thirty (30) days prior written
notice by EMPLOYEE to the COMPANY.
IX.3 Upon termination for any of the foregoing causes,
EMPLOYEE shall be entitled to receive only the
compensation accrued, but unpaid, as of the date of
termination and shall not be entitled to additional
compensation except as expressly provided in this
Agreement under Sections IV.V,VI,VII and XII.
IX.4 The Company may immediately terminate this Agreement
for just cause by written notice to the Employee for
any of the following reasons: theft, fraud,
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embezzlement, dishonesty, or any material breach of
this Agreement. In the event that the Company
terminates the Employee for just cause the Company
shall not be liable to make any further payments
under this Agreement except for amounts due at the
time of such termination.
IX.5 The Company may terminate this Agreement without
cause upon thirty (30) day written notice to the
EMPLOYEE. In the event of a without cause termination
by the Company, the EMPLOYEE shall receive his salary
and all other benefits provided herein for the
duration of the Agreement. In addition, the EMPLOYEE
shall thereafter receive severance benefits in
accordance with Section 7.1.8.
X. BUSINESS RECORDS; SURRENDER
---------------------------
X.1 All business and financial records pertaining to
customers of the COMPANY, including but not limited
to books, software, chips, compression, algorithms,
records, memoranda, orders, invoices, list of
customers, billings and payment of billings and all
records pertaining to compensation and expenses of
EMPLOYEE within the scope of employment shall at all
times be the property of the COMPANY.
X.2 Upon the termination of the EMPLOYEE's employment
hereunder, for any reason whatsoever, and in addition
to such other actions as may be reasonably required
by Employer, the EMPLOYEE agrees to surrender to the
Employer, in good condition, any record or records
kept by him containing the names, addresses, and
other information with regard to customers or
potential customers of Employer which have been
served or solicited by the Employee.
XI. MERGER, TRANSFER, DISSOLUTION OR CHANGE OF CONTROL
--------------------------------------------------
XI.1 Except as provided in Section XII, this Agreement
shall not be terminated by:
XI.1.1 merger or consolidation where COMPANY is not
the consolidated or surviving corporation;
XI.1.2 transfer of all or substantially all of the
assets of COMPANY;
XI.1.3 change of control of COMPANY as described in
Section 12.1;
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XI.1.4 in the event, EMPLOYEE may elect at his/her
own option to terminate this agreement
within thirty (30) days written advanced
notice.
In the event of any such merger, consolidation,
transfer of assets or change of control of COMPANY,
the surviving or resulting corporation or the
transferee of COMPANY's assets shall be bound by, and
shall have the benefit of, the provisions of this
Agreement.
XII. CHANGE IN CONTROL
-----------------
XII.1 Notwithstanding anything contained in this Agreement
to the contrary, for the purposes of this Agreement,
a "change in control of COMPANY" shall mean the
occurrence of any of the following events:
XII.1.1 any "person" (as that term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange
Act")), who holds less than 20% of the
combined voting power of the securities of
the COMPANY, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities
of COMPANY representing twenty-five percent
or more of the combined voting power of the
securities of COMPANY then outstanding; or
XII.1.2 during any period of twenty-four (24)
consecutive months, individuals who at the
beginning of such period constitute all
members of the Board of Directors of COMPANY
shall cease, for any reason, to constitute
at least a majority of the Directors, unless
the election of each Director who was not a
Director at the beginning of the period was
approved by a vote of at least two-thirds of
the Directors then still in office who were
Directors at the beginning of the period; or
XII.1.3 COMPANY shall consolidate or merge with
another company and COMPANY is the
continuing or surviving corporation, or
shares of COMPANY's common stock are
converted into cash, securities, or other
property, other than a merger of COMPANY in
which the holders of the COMPANY's common
stock immediately prior to the merger have
the same proportionate ownership of common
stock of the surviving corporation
immediately after the merger as they had in
COMPANY immediately prior to the merger; or
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XII.1.4 COMPANY shall sell, lease, exchange, or
otherwise transfer all or substantially all
of its assets (in one transaction or in a
series of related transactions); or
XII.1.5 the stockholders of COMPANY shall approve a
plan or proposal for the liquidated or
dissolution of COMPANY.
XII.2 EMPLOYEE shall have the right to resign from the
employ of COMPANY at any time after a change in
control of COMPANY. If EMPLOYEE resigns within two
years of such a change in control, he shall be
entitled to the payment provided in Section 12.3.
XII.3 If EMPLOYEE resigns from the employ of COMPANY within
two years of a change in control of COMPANY, or if
COMPANY terminates this Agreement after a change in
control of COMPANY for any reason other than
substantial cause, then the following provisions of
this Section X shall apply:
XII.3.1 in lieu of any further salary payments to
EMPLOYEE for periods subsequent to the date
of the termination of his employment,
COMPANY shall pay to EMPLOYEE, in a lump sum
and in cash, as liquidated damages, an
amount equal to the sum of:
(i) the greater of (I) three years'
base salary, or (II) the base
salary due to EMPLOYEE for the
remaining term of this Agreement,
in either case at the greater of
the rate in effect at the date of
the change in control of COMPANY or
at the date of termination; plus
(ii) an amount equal to a multiple of
two (2) times the largest total of
the bonuses previously paid in any
one year by COMPANY to EMPLOYEE
pursuant to the provisions of
Section 4.2 hereof.
XII.3.2 COMPANY shall maintain in full force and
effect until the expiration of the term of
this Agreement, at its expense, all group
insurance and other employee benefit plans
(including, without limitation, qualified
profit-sharing and retirement type plans) in
which EMPLOYEE was entitled to participate
prior to the date of his termination,
provided that EMPLOYEE's continued
participation is possible under the terms of
such plans. If EMPLOYEE's continued
participation under such plans is not
possible, COMPANY shall arrange to provide
EMPLOYEE with alternative benefits
substantially similar to those provided
under the
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group insurance and employee benefit plans
of COMPANY in which EMPLOYEE was
participating prior to the date of his
termination.
Any payment due to EMPLOYEE pursuant to the
provisions of this Section 12.3 shall be
paid to him by COMPANY on the fifth day
following the date of EMPLOYEE's
termination.
XII.4 For purposes of the remaining provisions of this
Section XII the following terms shall have the
following meanings:
XII.4.1 The term "Code" shall mean the Internal
Revenue Code of 1986, as amended; and any
references to sections thereof shall include
any successor provisions of the Code or of
any future income tax laws enacted as
successors to the Code;
XII.4.2 The term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Code;
XII.4.3 The term "Gross-Up Payment" shall mean the
payment referred to in subsection (5) of
this Section XII.
XII.4.4 The term "Section XII Payments" shall mean
all payments to which EMPLOYEE shall become
entitled under the provisions of this
Section XII.
XII.4.5 The term "Other Payments" shall mean any
payments or benefits, other than the Section
XII Payments, received or to be received by
EMPLOYEE in connection with a change in
control of COMPANY, or in connection with
EMPLOYEE's termination of employment, and
which are payable pursuant to the terms of
any plan, arrangement, or agreement (other
than this Agreement) with COMPANY, with
COMPANY's successors, with any person whose
actions result in a change in control of
COMPANY, or with any person affiliated
either with COMPANY or with any person whose
actions result in a change in control of
COMPANY.
XII.5 If EMPLOYEE becomes entitled to any payments
under this Section XII and if the Section
XIV Payments or any Other Payments will be
subject to the Excise Tax, then COMPANY
shall pay to EMPLOYEE an additional sum (the
"Gross-Up Payment") sufficient to provide
EMPLOYEE with a net amount equal to the sum
of the Section XII and the Other Payments,
after deduction of any Excise Tax on such
Payments and after deduction of any federal,
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state, or local income taxes, and of any
Excise Tax, upon the Gross-Up Payment. The
amount due from COMPANY under this Section
12.5 shall be paid to EMPLOYEE within five
days of the date of EMPLOYEE's termination.
XII.6 The following rules shall apply for the
purpose of determining whether any of the
Section XII Payments or any of the Other
Payments will be subject to the Excise Tax
and for the purpose of computing the amount
of any such Excise Tax:
XII.6.1 The value of any benefits payable
to EMPLOYEE in any form other than
cash, and the value of any deferred
payments or benefits due to
EMPLOYEE from COMPANY, shall be
determined by COMPANY's independent
auditors in accordance with the
provisions of Section 280G(d)(3) of
the Code.
XII.7 For purpose of determining the amount of the
Gross-Up Payment:
XII.7.1 EMPLOYEE shall be deemed to be
subject to state and local income
taxes at the highest marginal rate
of taxation in the state and
locality of EMPLOYEE's principal
residence on the date of his
termination; and
XII.7.2 EMPLOYEE shall be deemed to be
subject to federal income taxes at
the highest marginal rate of
federal income taxation in the
calendar year in which the Gross-Up
Payment is due (net of the maximum
reduction in federal income taxes
which EMPLOYEE can obtain from
deduction of the state and local
taxes described in the preceding
clause).
XII.8 If the Excise Tax is determined to exceed
the amount taken into account under the
provisions of this Section XII at the time
of the termination of EMPLOYEE (including by
reason of any payment, the existence or the
amount of which could not be determined at
the time of the Gross-Up Payment), COMPANY
shall make an additional Gross-Up Payment in
respect of such excess and in respect of any
interest payable with respect to such
excess, at the time that the amount of such
excess is finally determined.
XII.8.1 EMPLOYEE shall not be required to
mitigate the amount of any payment
provided for in this Section XII by
seeking other employment or
otherwise; and the amount of any
payment provided for in this
Section XII shall not be reduced by
any compensation earned by
EMPLOYEE, either as the result of
employment by any other
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employer after the date of his
termination of employment with
COMPANY or otherwise.
XIII. COMPANY'S AUTHORITY
-------------------
EMPLOYEE agrees to observe and comply with the rules and
regulations of COMPANY as adopted by COMPANY's Board of
Directors, which are not inconsistent with his sole discretion
to manage the operations of the COMPANY, communicated in
writing, respecting performance of his duties, and to carry
out and perform orders, directions, and policies stated by
COMPANY to him, from time to time, communicated in writing.
XIV. INDEMNIFICATION OF LOSSES OF EMPLOYEE
-------------------------------------
COMPANY shall, to the maximum extent permitted by law,
indemnify EMPLOYEE against expenses (including reasonable
attorney's fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with
any proceedings arising by reason of the fact that EMPLOYEE
is, or was, an employee, officer or agent of COMPANY. COMPANY
shall advance to EMPLOYEE expenses incurred in defending any
such proceedings to the maximum extent permitted by law.
COMPANY's obligations under this Section shall not cease upon
termination of this Agreement. EMPLOYEE may select legal
counsel, at his sole discretion, to represent him in any such
proceedings.
XV. MISCELLANEOUS
-------------
XV.1 Any and all notices, demands, requests or other
communication required or permitted by this Agreement
or by law to be served on, given to, or delivered to
any party hereto by any other party to this Agreement
shall be in writing and shall be deemed duly served,
given, or delivered when personally delivered to the
COMPANY or to an officer of the COMPANY, or in lieu
of such personal delivery, when deposited, in the
United States mail, registered or certified mail,
addressed to the COMPANY, at the address of its
principal office located at 3635 Park Central Blvd.
North, Pompano Beach, FL 33064 or to the EMPLOYEE at
the address then appearing for him on the books and
records of the COMPANY. The COMPANY may change the
address of its principal office in the manner
required by law for purposes of this paragraph by
giving notice to the change, in the manner required
by this paragraph, to the respective parties.
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XV.2 Notwithstanding anything to the contrary contained
herein , the payment or obligation to pay any money,
or granting of any rights or privileges, to the
EMPLOYEE as provided in this Agreement shall not be
in lieu or in derogation of the rights and privileges
that the EMPLOYEE now has under any plan or benefit
presently outstanding.
XV.3 This Agreement may not be modified, changed, amended,
or altered except in writing signed by the EMPLOYEE
or his duly authorized representative, and by a duly
authorized officer of the COMPANY.
XV.4 This Agreement shall be interpreted in accordance
with the laws of the State of Florida without
application of its conflict of law provisions. It
shall inure to the benefit of and be binding upon the
COMPANY, and its successors and assigns.
XV.5 EMPLOYEE shall not assign his rights and/or
obligations hereunder.
XV.6 Should any litigation be commenced between the
parties to this Agreement concerning any provision of
this Agreement, the party prevailing in such
litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum
as and for his attorney's fees in such litigation
which shall be determined by the Court in such
litigation or in a separate action brought for that
purpose.
XV.7 An original copy of this Agreement duly executed by
the COMPANY and by the EMPLOYEE shall be delivered to
the governing body of the COMPANY and be maintained
by it at the principal office of COMPANY available
for inspection only by consent of the EMPLOYEE.
XV.8 Should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the
remaining provisions and portions of this Agreement
shall be unaffected by such holding, subject to such
invalidity not rendering the balance of the Agreement
to be inconsistent with the original intent of the
parties as evidenced by the terms of this Agreement.
XV.9 This instrument constitutes the entire understanding
and Agreement of the parties hereto respecting the
subject of this Agreement and supersedes all prior
agreements, promises, negotiations, or
representations (if any) concerning its subject
matter not expressly set forth in this Agreement are
of no force and effect.
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XV.10 This Agreement and any certificates made pursuant
hereto, may be executed in any number of counterparts
and when so executed all of such counterparts shall
constitute a single instrument binding upon all
parties hereto notwithstanding the fact that all
parties are not signatory to the original or to the
same counterpart.
XV.11 This Article and Section headings used in this
Agreement are for reference purposes only, and should
not be used in construing this Agreement.
XV.12 As used in this Agreement, the masculine gender shall
include the feminine and neuter, and singular number
shall include the plural, and vice versa.
XV.13 Time is of the essence of this Agreement.
XV.14 The Effective Date of this Agreement commences on
September 1st, 1998.
XV.15 The failure or delay of Company at any time to
require performance by EMPLOYEE of any provision of
this Agreement, even if known, shall not affect the
right of COMPANY to require performance of that
provision or to exercise any right, power or remedy
hereunder, and any waiver by COMPANY of any breach of
any provision of this Agreement should not be
construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy
under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle such
party to any other or further notice or demand in
similar or other circumstances.
XV.16 EMPLOYEE acknowledges that the services to be
rendered by EMPLOYEE hereunder are extraordinary and
unique and are vital to the success of the COMPANY,
and that damages at law would be an inadequate remedy
for any breach of threatened breach of this Agreement
by Employee. Therefore, in the event of a breach or
threatened breach by EMPLOYEE of any provision of
this Agreement, then COMPANY shall be entitled, in
addition to all rights or remedies, to injunctions
restraining such breach, without being required to
show any actual damage or to post any bond or other
security.
XV.17 The parties acknowledge that a substantial portion of
negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Broward
County, Florida, and that, therefore, without
limiting the jurisdiction or venue or any other
federal or state courts, each of the parties
irrevocably and unconditionally (a) agrees that any
suit, action or legal proceeding arising out of or
relating to this Agreement may be brought in the
courts or records
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of the State of Florida in Broward County or the
court of the United States, Southern District of
Florida; (b) consents to the jurisdiction of each
such court in any such suit, action or proceeding;
(c) waives any objection which it may have to the
laying of venue of any such suit, action or
proceeding in any such courts; and (d) agrees that
service of any court paper may be effected on such
party by mail, as provided in this Agreement, or in
such other manner as may be provided under applicable
laws or court rules in said state.
XV.18 Notwithstanding anything to the contrary herein, the
provisions of Sections IV, V, VI, XII and XIV shall
survive and remain in effect in accordance with their
respective terms in the event employment is
terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year as set forth below.
Employee Name: ___________________________ Date: __/__/__
Employee Signature:_________________________
Company Authorized Officer name: _____________ Date: __/__/__
Signature:_________________________________
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EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT (this "Agreement") is entered into as of the day set
forth below, by and between FutureTrak International, a Florida corporation
(COMPANY), William E. Tessaro or his corporate assignee(s) jointly, (hereinafter
referred to as "EMPLOYEE").
RECITALS
--------
WHEREAS, COMPANY has the exclusive right to market and make use of
certain Antennae for satellite transmission and its related accessories commonly
known as the "Antennae" Solution, which is a trade secret and owned by the
company of which EMPLOYEE is a principal shareholder and,
WHEREAS, COMPANY desires to employ EMPLOYEE and EMPLOYEE desires to
serve the COMPANY as the COMPANY's Chief Technical Officer; and.
WHEREAS, EMPLOYEE's services for and on behalf of the COMPANY are of
material importance to the enhancement of the value of the COMPANY's business.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the COMPANY and EMPLOYEE do hereby
agree as follows:
I. EMPLOYMENT
----------
COMPANY hereby employs EMPLOYEE in its business as CHIEF
TECHNICAL OFFICER and EMPLOYEE hereby accepts such employment,
all upon the terms and conditions hereinafter set forth.
II. TERM
----
Unless sooner terminated pursuant to the provisions of this
Agreement the term of employment under this Agreement shall be
for a five (5) years commencing September 1st, 1998
("Employment Period"). The Employment Period shall be
automatically renewed for succeeding terms of one (1) year
("Successive Employment Period") unless either party gives
written notice of his intention not to renew said Agreement to
the other party, at least one-hundred-eighty (180) days prior
to the end of the initial five-year term, or any extended
term.
III. DUTIES
------
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III.1 During the Employment Period EMPLOYEE shall serve in
the Office of CHIEF TECHNICAL OFFICER and perform
appropriate executive services for the COMPANY in
accordance with the historical nature and scope of
duties performed by EMPLOYEE as CHIEF TECHNICAL
OFFICER of FutureTrak International, Inc.
III.2 EMPLOYEE shall be entitled to make ALL normal
executive level management decisions of the COMPANY,
that involve matters within the COMPANY's usual
course of business and are duties customary for the
employee in his or her capacity of CHIEF TECHNICAL
OFFICER. EMPLOYEE's authority to manage the COMPANY
shall be subject to review and direction from his or
her immediate manager, if any, or by the Board of
Directors of the Company. Compensation paid to
employees of the COMPANY shall be at industry
standards. Bonuses, if any, for said employees shall
be based on the individual employee's performance and
tied to a formula adopted by the COMPANY's Board of
Directors.
III.3 During the term of this Agreement, Although EMPLOYEE
is involved in managing other businesses, EMPLOYEE
shall devote primarily majority of his time, energy,
and skill to the service of the COMPANY and the
promotion of COMPANY'S interests, and shall use his
best efforts in the performance of his services
hereunder. EMPLOYEE agrees to abide by all rules and
regulations established from time to time by the
Board; and all commissions, fees or other income
earned and received by EMPLOYEE, if any, in
furtherance of the business of Company shall be
accepted by EMPLOYEE for the account of Company, and
shall be remitted to Company within three (3) days of
EMPLOYEE's receipt thereof.
III.4 EMPLOYEE may, if elected, without additional
compensation, unless expressly approved by the Board
of Directors of the COMPANY, serve as a director of
the COMPANY.
III.5 The services of EMPLOYEE shall be rendered in such
places and localities as the COMPANY may require from
time to time, and he shall do such traveling on
behalf of the COMPANY as may reasonably be required
consistent with the historical requirements of the
office of CHIEF TECHNICAL OFFICER of the COMPANY.
III.6 EMPLOYEE shall comply with all COMPANY policies for
the employees as such policies may exist from time to
time.
IV. COMPENSATION
------------
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IV.1 The COMPANY will compensate and pay EMPLOYEE for his
services during the term of this Agreement a base
salary of $250,000 per year ("Base Salary"). The Base
Salary shall be paid to EMPLOYEE at no less than
monthly intervals in accordance with the current
normal payroll policies of which policies may be
changed by COMPANY from time to time with inclusion
of cost of living adjustment on a mutually acceptable
terms. All compensation paid to EMPLOYEE shall be
subject to all appropriate withholding taxes.
IV.2 EMPLOYEE shall be entitled to a bonus annually equal
to no less than one and a half(1.5%) percent of the
net profits of the COMPANY calculated without taking
into account any kind of distribution to the
subsidiaries of the COMPANY. Net Profits shall be
defined according to Generally Accepted Accounting
Principles. EMPLOYEE may elect to take this bonus in
any combination of cash and stock. Computation of
stock is based on .15(cent) per share exercise price.
IV.3 Compensation for each Successive Employment Period
shall be determined, within thirty (30) days of the
expiration of the Employment Period or each
Successive Employment Period, through good faith
negotiations between COMPANY and EMPLOYEE. Should the
parties hereto fail to agree upon a mutually
acceptable compensation package, the compensation in
effect for the immediately proceeding period shall
continue until the parties hereto agree on its
modification.
V. DEATH
-----
V.1 In the event of the death of EMPLOYEE during the term
of this Agreement, COMPANY shall pay to the Estate of
EMPLOYEE the amount to which EMPLOYEE would have been
entitled to receive for the lesser of (a) salary for
the remaining of five (5) year period, or (b) salary
for the remaining period of this Agreement; in
regular monthly payments for the term that remains on
this Agreement to commence three (3) months after the
death of EMPLOYEE.
V.2 There shall be deducted from the amounts paid to
EMPLOYEE pursuant to Section 4.1, above, the amount
actually paid to EMPLOYEE's designated beneficiary,
as proceeds of life insurance, if any, which the
COMPANY may have instituted on behalf of EMPLOYEE, as
set forth under Section 7.1.2 (the "Term of The
Insurance").
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VI. DISABILITY
----------
VI.1 In the event of disability of EMPLOYEE (whether
temporary or permanent) to render services hereunder
during the term hereof, and so long as such
disability continues, EMPLOYEE shall continue to
receive his full compensation during the period of
such disability for a remaining unpaid period of this
Agreement, or until the termination of this Agreement
as defined in Section 9.1.4 herein, whichever first
occurs.
VI.2 There shall be deducted, from the amounts paid to
EMPLOYEE hereunder during any period of disability,
any amounts actually paid to EMPLOYEE pursuant to any
disability insurance or other similar program which
the COMPANY has instituted or may institute on behalf
of its employees.
VII. PARTICIPATION IN PLANS AND BENEFITS
-----------------------------------
VII.1 During the term of this Agreement, EMPLOYEE will be
entitled to participate in and receive the benefits
of all plans, benefits and privileges given to
employees and executives of the COMPANY, whether now
established or granted or which may come into
existence hereafter, including, without limitation,
the following:
VII1.1 COMPANY agrees to provide medical and dental
services or reimbursement for such expenses
to EMPLOYEE and or members of his immediate
family. Such medical plan shall be
comparable to the benefits provided under a
comprehensive medical plan approved by the
Board of Directors.
VII1.2 Upon the Board of Directors approval,
COMPANY agrees to secure term life insurance
on the life of EMPLOYEE, which is in effect
at the time of execution of this Agreement.
COMPANY agrees to pay all premiums on the
policy during the term of employment
provided herein. The term of life insurance
should equate no less than three (3) times
the EMPLOYEE's annual salary.
VII1.3 Upon the Board of Directors approval, the
COMPANY shall continue disability insurance
for EMPLOYEE, which is in effect at the time
of execution of this Agreement, and which
shall remain in effect during the term of
this Agreement.
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VII1.4 EMPLOYEE shall be entitled to a two (2) week
of annual vacation without reduction of
EMPLOYEE's compensation. EMPLOYEE shall be
entitled to such additional time of not less
than seven (7) non-consecutive days per
annum without loss of compensation for
attendance at meetings, conventions, and
postgraduate courses as the Board of
Directors of COMPANY shall, from time to
time determine. Vacation days must be used
during the calendar year and may not be
accumulated. Each year of employment shall
add an additional week of paid vacation
which shall not exceed six (6) weeks.
VII1.5 EMPLOYEE shall be entitled to twelve (12)
non-consecutive days per annum absence due
to sickness without reduction of EMPLOYEE's
compensation. Sick days must be used during
the calendar year and may not be
accumulated.
VII1.6 EMPLOYEE shall also receive such other
benefits, fringe benefits and entitlements
as is usual and customary for COMPANY to
supply an EMPLOYEE of like status and
position according to COMPANY's established
policies on employment, as can be reasonably
provided, consistent with the term of
employment contemplated under this
Agreement.
VII1.7 In the event that the parties do not reach
agreement on a successor employment
agreement on such terms that are mutually
agreeable, and as a result of the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VII1.8 In the event that EMPLOYEE is terminated
without cause and as a result the Employee
ceases to be employed by the company, the
Company shall pay the Employee severance pay
equal to the Employee's base salary and
company performance adjustment due pursuant
to this Agreement for a period of 36 months
after the employee leaves the Company's
employ.
VIII. EXPENSES
--------
The COMPANY shall reimburse EMPLOYEE or otherwise provide for
or pay for all reasonable expenses incurred by EMPLOYEE in
furtherance or in connection with the business of the COMPANY
and its subsidiaries, including, without limitation,
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<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
automobile and traveling expenses, and all reasonable
entertainment expenses. EMPLOYEE agrees that he will furnish
the COMPANY'S adequate records and other documents bearing
evidence required by state and federal statutes and
regulations issued by the appropriate taxing authorities for
the substantiation of each such business expense as a
deduction on the federal and state income tax returns of the
COMPANY. If such expenses are paid for in the first instance
by EMPLOYEE, the COMPANY will reimburse him. The Company shall
issue to the Employee a corporate American Express card for
use in connection with expenses incurred in connection with
the performance of this Agreement.
IX. TERMINATION
-----------
IX.1 COMPANY SHALL HAVE THE ABSOLUTE RIGHT TO TERMINATE
THIS AGREEMENT ON THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:
IX1.1 Whenever COMPANY and EMPLOYEE shall MUTUALLY
agree to terminate in writing.
IX1.2 Whenever the Board of Directors of COMPANY
determines that cause (as defined in Section
9.1.4 herein) exists for the termination of
EMPLOYEE or COMPANY allows EMPLOYEE to
resign in lieu of termination.
IX1.3 Upon the death of EMPLOYEE.
IX1.4 If EMPLOYEE shall suffer temporary or
permanent disability. For purposes of this
Agreement, "Disability" shall be defined as
EMPLOYEE's inability, through physical or
mental illness or other cause, to perform
the majority of his usual duties for a
period of six (6) months, or as may be
defined in a valid disability insurance
policy, whichever definition is less
restrictive.
IX1.5 Upon the retirement of EMPLOYEE at age of
Seventy (70) or at any age thereafter.
IX.2 EMPLOYEE shall have the absolute right to terminate
this Agreement upon thirty (30) days prior written
notice by EMPLOYEE to the COMPANY.
IX.3 Upon termination for any of the foregoing causes,
EMPLOYEE shall be entitled to receive only the
compensation accrued, but unpaid, as of the date
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Employee Initial:________
FUTURETRAK INTERNATIONAL:______
of termination and shall not be entitled to
additional compensation except as expressly provided
in this Agreement under Sections IV,V,VI,VII and XII.
IX.4 The Company may immediately terminate this Agreement
for just cause by written notice to the Employee for
any of the following reasons: theft, fraud,
embezzlement, dishonesty, or any material breach of
this Agreement. In the event that the Company
terminates the Employee for just cause the Company
shall not be liable to make any further payments
under this Agreement except for amounts due at the
time of such termination.
IX.5 The Company may terminate this Agreement without
cause upon thirty (30) day written notice to the
EMPLOYEE. In the event of a without cause termination
by the Company, the EMPLOYEE shall receive his salary
and all other benefits provided herein for the
duration of the Agreement. In addition, the EMPLOYEE
shall thereafter receive severance benefits in
accordance with Section 7.1.8.
X. BUSINESS RECORDS; SURRENDER
---------------------------
X.1 All business and financial records pertaining to
customers of the COMPANY, including but not limited
to books, software, chips, compression, algorithms,
records, memoranda, orders, invoices, list of
customers, billings and payment of billings and all
records pertaining to compensation and expenses of
EMPLOYEE within the scope of employment shall at all
times be the property of the COMPANY.
X.2 Upon the termination of the EMPLOYEE's employment
hereunder, for any reason whatsoever, and in addition
to such other actions as may be reasonably required
by Employer, the EMPLOYEE agrees to surrender to the
Employer, in good condition, any record or records
kept by him containing the names, addresses, and
other information with regard to customers or
potential customers of Employer which have been
served or solicited by the Employee.
XI. MERGER, TRANSFER, DISSOLUTION OR CHANGE OF CONTROL
--------------------------------------------------
XI.1 Except as provided in Section XII, this Agreement
shall not be terminated by:
XI.1.1 merger or consolidation where COMPANY is not
the consolidated or surviving corporation;
7 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
XI.1.2 transfer of all or substantially all of the
assets of COMPANY;
XI.1.3 change of control of COMPANY as described in
Section 12.1;
XI.1.4 in the event, EMPLOYEE may elect at his/her
own option to terminate this agreement
within thirty (30) days written advanced
notice.
In the event of any such merger, consolidation,
transfer of assets or change of control of COMPANY,
the surviving or resulting corporation or the
transferee of COMPANY's assets shall be bound by, and
shall have the benefit of, the provisions of this
Agreement.
XII. CHANGE IN CONTROL
-----------------
XII.1 Notwithstanding anything contained in this Agreement
to the contrary, for the purposes of this Agreement,
a "change in control of COMPANY" shall mean the
occurrence of any of the following events:
XII.1.1 any "person" (as that term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange
Act")), who holds less than 20% of the
combined voting power of the securities of
the COMPANY, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities
of COMPANY representing twenty-five percent
or more of the combined voting power of the
securities of COMPANY then outstanding; or
XII.1.2 during any period of twenty-four (24)
consecutive months, individuals who at the
beginning of such period constitute all
members of the Board of Directors of COMPANY
shall cease, for any reason, to constitute
at least a majority of the Directors, unless
the election of each Director who was not a
Director at the beginning of the period was
approved by a vote of at least two-thirds of
the Directors then still in office who were
Directors at the beginning of the period; or
XII.1.3 COMPANY shall consolidate or merge with
another company and COMPANY is the
continuing or surviving corporation, or
shares of COMPANY's common stock are
converted into cash, securities, or other
property, other than a merger of COMPANY in
which the holders of the COMPANY's common
stock immediately prior to the merger have
the same proportionate ownership of common
stock of
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<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
the surviving corporation immediately after
the merger as they had in COMPANY
immediately prior to the merger; or
XII.1.4 COMPANY shall sell, lease, exchange, or
otherwise transfer all or substantially all
of its assets (in one transaction or in a
series of related transactions); or
XII.1.5 the stockholders of COMPANY shall approve a
plan or proposal for the liquidated or
dissolution of COMPANY.
XII.2 EMPLOYEE shall have the right to resign from the
employ of COMPANY at any time after a change in
control of COMPANY. If EMPLOYEE resigns within two
years of such a change in control, he shall be
entitled to the payment provided in Section 12.3.
XII.3 If EMPLOYEE resigns from the employ of COMPANY within
two years of a change in control of COMPANY, or if
COMPANY terminates this Agreement after a change in
control of COMPANY for any reason other than
substantial cause, then the following provisions of
this Section 10 shall apply:
XII.3.1 in lieu of any further salary payments to
EMPLOYEE for periods subsequent to the date
of the termination of his employment,
COMPANY shall pay to EMPLOYEE, in a lump sum
and in cash, as liquidated damages, an
amount equal to the sum of:
(i) the greater of (I) three years'
base salary, or (II) the base
salary due to EMPLOYEE for the
remaining term of this Agreement,
in either case at the greater of
the rate in effect at the date of
the change in control of COMPANY or
at the date of termination; plus
(ii) an amount equal to a multiple of
two (2) times the largest total of
the bonuses previously paid in any
one year by COMPANY to EMPLOYEE
pursuant to the provisions of
Section 4.2 hereof.
XII.3.2 COMPANY shall maintain in full force and
effect until the expiration of the term of
this Agreement, at its expense, all group
insurance and other employee benefit plans
(including, without limitation, qualified
profit-sharing and retirement type plans) in
which EMPLOYEE was entitled to participate
prior to the date of his termination,
provided that EMPLOYEE's continued
participation is possible under the terms of
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<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
such plans. If EMPLOYEE's continued
participation under such plans is not
possible, COMPANY shall arrange to provide
EMPLOYEE with alternative benefits
substantially similar to those provided
under the group insurance and employee
benefit plans of COMPANY in which EMPLOYEE
was participating prior to the date of his
termination.
Any payment due to EMPLOYEE pursuant to the
provisions of this Section 12.3 shall be
paid to him by COMPANY on the fifth day
following the date of EMPLOYEE's
termination.
XII.4 For purposes of the remaining provisions of this
Section XII the following terms shall have the
following meanings:
XII.4.1 The term "Code" shall mean the Internal
Revenue Code of 1986, as amended; and any
references to sections thereof shall include
any successor provisions of the Code or of
any future income tax laws enacted as
successors to the Code;
XII.4.2 The term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Code;
XII.4.3 The term "Gross-Up Payment" shall mean the
payment referred to in subsection (5) of
this Section XII.
XII.4.4 The term "Section XII Payments" shall mean
all payments to which EMPLOYEE shall become
entitled under the provisions of this
Section XII.
XII.4.5 The term "Other Payments" shall mean any
payments or benefits, other than the Section
XII Payments, received or to be received by
EMPLOYEE in connection with a change in
control of COMPANY, or in connection with
EMPLOYEE's termination of employment, and
which are payable pursuant to the terms of
any plan, arrangement, or agreement (other
than this Agreement) with COMPANY, with
COMPANY's successors, with any person whose
actions result in a change in control of
COMPANY, or with any person affiliated
either with COMPANY or with any person whose
actions result in a change in control of
COMPANY.
XII.5 If EMPLOYEE becomes entitled to any payments under
this Section XII and if the Section XIV Payments or
any Other Payments will be subject to the Excise Tax,
then COMPANY shall pay to EMPLOYEE an additional sum
10 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
(the "Gross-Up Payment") sufficient to provide
EMPLOYEE with a net amount equal to the sum of the
Section XII and the Other Payments, after deduction
of any Excise Tax on such Payments and after
deduction of any federal, state, or local income
taxes, and of any Excise Tax, upon the Gross-Up
Payment. The amount due from COMPANY under this
Section 12.5 shall be paid to EMPLOYEE within five
days of the date of EMPLOYEE's termination.
XII.6 The following rules shall apply for the purpose of
determining whether any of the Section XII Payments
or any of the Other Payments will be subject to the
Excise Tax and for the purpose of computing the
amount of any such Excise Tax:
XII.6.1 The value of any benefits payable to
EMPLOYEE in any form other than cash, and
the value of any deferred payments or
benefits due to EMPLOYEE from COMPANY, shall
be determined by COMPANY's independent
auditors in accordance with the provisions
of Section 280G(d)(3) of the Code.
XII.7 For purpose of determining the amount of the Gross-Up
Payment:
XII.7.1 EMPLOYEE shall be deemed to be subject to
state and local income taxes at the highest
marginal rate of taxation in the state and
locality of EMPLOYEE's principal residence
on the date of his termination; and
XII.7.2 EMPLOYEE shall be deemed to be subject to
federal income taxes at the highest marginal
rate of federal income taxation in the
calendar year in which the Gross-Up Payment
is due (net of the maximum reduction in
federal income taxes which EMPLOYEE can
obtain from deduction of the state and local
taxes described in the preceding clause).
XII.8 If the Excise Tax is determined to exceed the amount
taken into account under the provisions of this Section
XII at the time of the termination of EMPLOYEE
(including by reason of any payment, the existence or
the amount of which could not be determined at the time
of the Gross-Up Payment), COMPANY shall make an
additional Gross-Up Payment in respect of such excess
and in respect of any interest payable with respect to
such excess, at the time that the amount of such excess
is finally determined.
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<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
XII.8.1 EMPLOYEE shall not be required to mitigate
the amount of any payment provided for in
this Section XII by seeking other employment
or otherwise; and the amount of any payment
provided for in this Section XII shall not
be reduced by any compensation earned by
EMPLOYEE, either as the result of employment
by any other employer after the date of his
termination of employment with COMPANY or
otherwise.
XIII. COMPANY'S AUTHORITY
-------------------
EMPLOYEE agrees to observe and comply with the rules and
regulations of COMPANY as adopted by COMPANY's Board of
Directors, which are not inconsistent with his sole discretion
to manage the operations of the COMPANY, communicated in
writing, respecting performance of his duties, and to carry
out and perform orders, directions, and policies stated by
COMPANY to him, from time to time, communicated in writing.
XIV. INDEMNIFICATION OF LOSSES OF EMPLOYEE
-------------------------------------
COMPANY shall, to the maximum extent permitted by law,
indemnify EMPLOYEE against expenses (including reasonable
attorney's fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with
any proceedings arising by reason of the fact that EMPLOYEE
is, or was, an employee, officer or agent of COMPANY. COMPANY
shall advance to EMPLOYEE expenses incurred in defending any
such proceedings to the maximum extent permitted by law.
COMPANY's obligations under this Section shall not cease upon
termination of this Agreement. EMPLOYEE may select legal
counsel, at his sole discretion, to represent him in any such
proceedings.
XV. MISCELLANEOUS
-------------
XV.1 Any and all notices, demands, requests or other
communication required or permitted by this Agreement
or by law to be served on, given to, or delivered to
any party hereto by any other party to this Agreement
shall be in writing and shall be deemed duly served,
given, or delivered when personally delivered to the
COMPANY or to an officer of the COMPANY, or in lieu
of such personal delivery, when deposited, in the
United States mail, registered or certified mail,
addressed to the COMPANY, at the address of its
principal office located at 3635 Park Central Blvd.
North, Pompano Beach, FL 33064 or to the EMPLOYEE at
the address then appearing for him on the books and
records of the COMPANY. The COMPANY may change the
address of its principal office in the manner
required by law for purposes of this paragraph by
giving notice to the change, in the manner required
by this paragraph, to the respective parties.
12 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
XV.2 Notwithstanding anything to the contrary contained
herein , the payment or obligation to pay any money,
or granting of any rights or privileges, to the
EMPLOYEE as provided in this Agreement shall not be
in lieu or in derogation of the rights and privileges
that the EMPLOYEE now has under any plan or benefit
presently outstanding.
XV.3 This Agreement may not be modified, changed, amended,
or altered except in writing signed by the EMPLOYEE
or his duly authorized representative, and by a duly
authorized officer of the COMPANY.
XV.4 This Agreement shall be interpreted in accordance
with the laws of the State of Florida without
application of its conflict of law provisions. It
shall inure to the benefit of and be binding upon the
COMPANY, and its successors and assigns.
XV.5 EMPLOYEE shall not assign his rights and/or
obligations hereunder.
XV.6 Should any litigation be commenced between the
parties to this Agreement concerning any provision of
this Agreement, the party prevailing in such
litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum
as and for his attorney's fees in such litigation
which shall be determined by the Court in such
litigation or in a separate action brought for that
purpose.
XV.7 An original copy of this Agreement duly executed by
the COMPANY and by the EMPLOYEE shall be delivered to
the governing body of the COMPANY and be maintained
by it at the principal office of COMPANY available
for inspection only by consent of the EMPLOYEE.
XV.8 Should any provision or portion of this Agreement be
held unenforceable or invalid for any reason, the
remaining provisions and portions of this Agreement
shall be unaffected by such holding, subject to such
invalidity not rendering the balance of the Agreement
to be inconsistent with the original intent of the
parties as evidenced by the terms of this Agreement.
XV.9 This instrument constitutes the entire understanding
and Agreement of the parties hereto respecting the
subject of this Agreement and supersedes all prior
agreements, promises, negotiations, or
representations (if any)
13 of 15
<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
concerning its subject matter not expressly set forth
in this Agreement are of no force and effect.
XV.10 This Agreement and any certificates made pursuant
hereto, may be executed in any number of counterparts
and when so executed all of such counterparts shall
constitute a single instrument binding upon all
parties hereto notwithstanding the fact that all
parties are not signatory to the original or to the
same counterpart.
XV.11 This Article and Section headings used in this
Agreement are for reference purposes only, and should
not be used in construing this Agreement.
XV.12 As used in this Agreement, the masculine gender shall
include the feminine and neuter, and singular number
shall include the plural, and vice versa.
XV.13 Time is of the essence of this Agreement.
XV.14 The Effective Date of this Agreement commences on
September 1st, 1998.
XV.15 The failure or delay of Company at any time to
require performance by EMPLOYEE of any provision of
this Agreement, even if known, shall not affect the
right of COMPANY to require performance of that
provision or to exercise any right, power or remedy
hereunder, and any waiver by COMPANY of any breach of
any provision of this Agreement should not be
construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy
under this Agreement. No notice to or demand on
Employee in any case shall, of itself, entitle such
party to any other or further notice or demand in
similar or other circumstances.
XV.16 EMPLOYEE acknowledges that the services to be
rendered by EMPLOYEE hereunder are extraordinary and
unique and are vital to the success of the COMPANY,
and that damages at law would be an inadequate remedy
for any breach of threatened breach of this Agreement
by Employee. Therefore, in the event of a breach or
threatened breach by EMPLOYEE of any provision of
this Agreement, then COMPANY shall be entitled, in
addition to all rights or remedies, to injunctions
restraining such breach, without being required to
show any actual damage or to post any bond or other
security.
XV.17 The parties acknowledge that a substantial portion of
negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Broward
County, Florida, and that, therefore, without
limiting the jurisdiction
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<PAGE>
Employee Initial:________
FUTURETRAK INTERNATIONAL:______
or venue or any other federal or state courts, each
of the parties irrevocably and unconditionally (a)
agrees that any suit, action or legal proceeding
arising out of or relating to this Agreement may be
brought in the courts or records of the State of
Florida in Broward County or the court of the United
States, Southern District of Florida; (b) consents to
the jurisdiction of each such court in any such suit,
action or proceeding; (c) waives any objection which
it may have to the laying of venue of any such suit,
action or proceeding in any such courts; and (d)
agrees that service of any court paper may be
effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided
under applicable laws or court rules in said state.
XV.18 Notwithstanding anything to the contrary herein, the
provisions of Sections IV, V, VI, XII and XIV shall
survive and remain in effect in accordance with their
respective terms in the event employment is
terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year as set forth below.
Employee Name: ___________________________ Date: __/__/__
Employee Signature:_________________________
Company Authorized Officer name: _____________ Date: __/__/__
Signature:_________________________________
15 of 15
NEGOTIABLE PROMISSORY NOTE
$395,000.00 _______________ Florida
Effective: January 1, 1999
Dated: March 1, 1999
FOR VALUE RECEIVED, the undersigned, jointly and severally, promise to
pay to the order of FIRST CAPITAL SERVICES, INC., a Virginia corporation at 407
Church Street, Suite L, Vienna, Virginia 22187 or such other place as the Holder
may from time to time in writing designated the principal sum of Three Hundred
and Ninety Five Thousand Dollars ($395,000.00), together with interest at the
rate of one percent (1.00%) per month simple interest, all payable in lawful
money of the United States of America, payable as follows:
Monthly payments of principal and interest in the amount of $10,401.86
(which amount is based upon a forty-eight month amortization) commencing
February 1, 1999 and continuing on the first day of each month thereafter until
January 1, 2003 at which time all remaining unpaid principal and accrued and
unpaid interest shall be due and payable in full. Payments shall be applied
first to interest and then to principal. In the event of a default, payments
will be applied first to attorney fees and costs and then interest and then
principal.
MAKER HERESY REPRESENTS AND WARRANTS THAT THE INDEBTEDNESS EVIDENCED
HERESY WAS MADE AND TRANSACTED SOLELY FOR THE PURPOSE OF CARRYING ON OR
ACQUIRING A BUSINESS OR COMMERCIAL INVESTMENT.
The unpaid principal balance, shall become Immediately due and payable,
at the option of the Holder, seven (7) days after (I) the failure of the Maker
to pay an installment due hereunder or (ii) the due date established in this
Note.
Not amending the grace period recited herein, in the event than any
payment Is not made within fifteen (15) days from its due date, there shall be
assessed a late fee equal to five (5%) percent of the monthly payment
It Is agreed that time is of the essence In the performance of all
obligations hereunder.
1
<PAGE>
Maker and all endorsers waive demand, protest and notice of maturity,
non-payment or protest, diligence in collection or bringing suit and all
requirements necessary to hold it liable as maker. Maker further agrees, to pay
all costs of collection, including all reasonable attorneys' fees in case the
principal of this Note or any payment on the principal or any Interest thereon
is not paid at the respective maturity thereof; or in case it becomes necessary
to protect the security hereof, whether suit be brought or not
The right to plead any and all statutes of limitation as a defense to
any demand on this Note or any agreement to pay the same, or any demand secured
by the documents securing this Note, is expressly waived by each and every of
the undersigned, endorsers or guarantors to the fullest extent permitted by law.
All makers, endorsers, guarantors, and sureties hereof agree jointly
and severally to pay all costs of collection and of suit and foreclosure, and to
the extent permitted by law, reasonable attorneys' fees.
Any forbearance of Holder in exercising any right or remedy hereunder
or otherwise afforded by applicable law, shall not be a waiver of or preclude
the exercise of any right or remedy. Alter the default by Maker in making
payments under this Note, the acceptance by Holder of payment of any sum payable
hereunder after the due date of such payment shall not be a waiver of Holder's
right to require prompt payment when due of all other sums payable hereunder or
to declare a default for failure to make prompt payment Holder shall at all
times have the right to proceed against any portion of the security held herefor
in such order and in such manner as Holder may deem fit without waiving any
rights with respect to any other security. No delay or omission on the part of
the holder in exercising any right hereunder shall operate as a waiver of such
right or any other right under this Note.
Notwithstanding anything herein to the contrary, no provision contained
herein or therein Which purports to obligate the undersigned to pay any amount
of interest or any fees, costs or expenses which are In excess of the maximum
permitted by the laws of the State of Virginia, shall be effective to the extent
it calls for the payment of any Interest or other amount In excess of such
maximum. Any such excess shall, at the option of the Holder of this Note, either
be paid to the undersigned or be credited to principal.
This Note evidences the sums due to First Capital Services, Inc. as of
January 1, 1999.
This Note has been executed in the State of Florida but is evidence of
an indebtedness arising in the
2
<PAGE>
State of Virginia and is to be governed and construed in accordance with the
laws of the State of Virginia, both substantive and remedial.
FUTURETRAK INTERNATIONAL, INC.
a Florida cc ration
By: /s/ Steve J. Remondini
---------------------------------
Steve J. Remondini, President
(Seal)
STATE OF FLORIDA
COUNTY OF BROWARD COUNTY
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and In the County aforesaid to take
acknowledgement, personally apppeared Steve J. Remondini as President of
Futuretrak International, Inc., on behalf of the corporation X to me known to be
the person described In or [ ] who provide _________as identification, and who
executed the foregoing instrument and he acknowledged before me that he executed
the same.
WITNESS my hand and official seal In the County and State last
aforesaid this day of March, 1999.
Stephanie Lyn Haden
-------------------
Notary Public
My Commission Expires Sept. 23, 2001
----------------------------------------------
Stephanie Lyn Haden
My Commission # CC 683391
Expires September 23, 2001
Bonded Thru Notary Public Underwriters
----------------------------------------------
3
PROMISSORY NOTE
---------------
$160,347.00 Fort Lauderdale, Florida
January 5, 1999
FOR VALUE RECEIVED, FUTURETRAK INTERNATIONAL, INC., a Florida
corporation (the "Maker"), promises to pay to the order of SATELLITE TECHNOLOGY,
INC., a Florida corporation, its successors and assigns (the "Holder"), the
principal sum of ONE HUNDRED SIXTY THOUSAND THREE HUNDRED AND FORTY-SEVEN AND
NO/100 DOLLARS ($160,347.00)(United States Dollars) (the "Principal Amount"),
with interest at the prime rate, as published in the Wall Street Journal on the
date of execution of this Note, plus two percent per annum.
The first payment in the amount of $20,046.75 shall be due and payable
no later than May 5, 1999 (unless additional funding becomes available
sooner to Maker after the contemplated 504D, in which case the first
payment shall be due within fifteen (15) days of the date such funds
become available). The balance on this Note shall be payable in equal
monthly installments and this Note shall mature, and any remaining
principal and accrued but unpaid interest shall be due and payable on
January 5, 2000.
The Principal Amount outstanding (plus any accrued interest) may be
prepaid without premium or penalty at any time. In the event that Maker sells
any of the space scanners acquired pursuant to the Agreement for Purchase and
Sale of Assets between Maker and Holder dated January 5, 1999, 60% of the sales
price shall be paid to Maker, or its assignee to reduce the principal amount of
this Note.
Holder may declare the entire unpaid principal balance of the Note,
together with interest accrued thereon, to be immediately due and payable upon
the occurrence of any of the following events: (a) failure of Maker to pay any
installment of principal of, or interest on, this Note within seven (7) working
days after it shall become due; (b) any petition in bankruptcy being filed by or
against the Maker, or any proceedings in bankruptcy, or under any law relating
to the relief of debtors, being commenced for the relief or readjustment of any
indebtedness of the Maker, either through reorganization, composition, extension
or otherwise; provided, with respect to any such petition filed against maker,
such petition shall continue undismissed for a period of 75 days from the date
of entry thereof (c) the making by Maker of an assignment for the benefit of
creditors; and (d) the appointment of a receiver of all or substantially all of
the property of the Maker.
Maker and all sureties, endorsers and guarantors of this Note hereby
waive demand, presentment for payment, notice of nonpayment, protest, notice of
protest and all other notice, filing of suit and diligence in collecting this
Note.
All parties liable for the payment of this Note agree to pay the
Holder hereof reasonable attorney's fees for the services and expenses of
counsel employed to collect this Note (including any bankruptcy proceedings or
appeals relating to such enforcement proceedings), or to protect or enforce its
rights in the security, whether or not suit be brought
<PAGE>
This Note is made pursuant to that certain Asset Purchase Agreement
between Maker and Holder of even date herewith.
This Note shall be construed and enforced in accordance with the laws
of the State of Florida without regard to its conflicts of laws principals.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
FUTURETRAK INTERNATIONAL, INC.,
a Florida corporation
By: /s/ Robert S. Kelner
--------------------------
Name: Robert S. Kelner
--------------------------
Title: C.O.O.
--------------------------
[LOGO OMITTED]
PROMISSORY NOTE
- ---------------
$683,200.00 Fort Lauderdale, Florida
Dated as of March 22, 1999
THE UNDERSIGNED, William E. Tessaro (hereinafter called the "Maker"), hereby
individually promises to pay to the order of FUTURETRAK INTERNATIONAL, INC.,
whose mailing address is 3635 Park Central Blvd. North, Pompano Beach, Florida
33064 (hereinafter called the "Holder"), at the Holder's address or such other
place as the holder hereof from time to time may designate in writing, the
principal sum six hundred eighty three thousand two hundred Dollars and 00/100
lawful money of the United States of America, with interest at a rate of prime
plus two (2% ) percent, which interest shall accrue from the date hereof.
Accrued interest from the date hereof, together with current interest shall be
paid to the Holder on a monthly basis commencing September 1, 2001 and
continuing over a two-year period ending August 30, 2003. Payments of all unpaid
accrued interest and principle are due August 30, 2003.
Prime rate shall be the prime rate of New York and shall be adjusted quarterly.
The obligation evidenced hereby is made in connection with the terms and
conditions of an Employment Agreement (the "Employment Agreement") by and
between Maker and Holder. Maker hereby pledges as collateral for this Promissory
Note the Employment Agreement, and if for any reason Maker defaults on this
Promissory Note, the Holder may at its option accept cancellation of the
Employment Agreement as satisfaction of the Promissory Note.
If, for any reason, prior to September 1, 2003, the Company ceases operations,
or is otherwise unable to fulfill its obligations pursuant to the Employment
Agreement, Maker, at its option, may satisfy the Promissory note by accepting a
cancellation of Holder's obligations pursuant to the Employment Agreement.
This Note may be prepaid in whole or in part at any time without premium or
penalty. at its option, not effect or vary the duty of the Maker to pay all
obligations when due, nor shall such prepayments effect or impair the right of
the Holder to pursue remedies available to it hereunder.
Payment of principal owing hereunder shall be paid and deemed made when good,
lawful funds in the requisite amount are received actually by the Holder hereof
at the Holders address.
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. USA Voice: (954) 971-2244 Fax:
(954) 971-2228
<PAGE>
[LOGO OMITTED]
The failure of the Maker to make the payments as set forth in this Note within
five (5) days from the dates due hereunder after written notice thereof shall
constitute an event of default hereunder. Upon any such default, the Maker
agrees to pay interest on the principal balance of this Note then outstanding at
the same interest rate contained in this agreement, which shall accrue and be
paid as a condition precedent to the curing of any default.
Neither any failure of the Holder or Maker to exercise nor any delay on the part
of the Holder or Maker in exercising any right, remedy, discretion or power
granted hereunder shall be or constitute a waiver thereof. Although the
obligations herein set forth shall be binding upon the Maker and his/her
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns and any subsequent holder of this Note. Any notice to be
given to the Maker or Holder hereunder shall be given by certified mail, return
receipt requested, addressed to it at its address set forth herein.
This Note is to be governed and interpreted solely in accordance with the laws
of the State of Florida, including without limitation, all issues of validity
and enforceability.
MAKER: :______________________________________________
Name: William E. Tessaro
HOLDER: FUTURETRAK INTERNATIONAL, INC.
Name:______________________________________________
Title:_______________________________________________
STATE OF FLORIDA
SS:
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me this___________day of 1999,
by_______________________I who is personally known to me or who has produced
identification and who did/did not take an oath
Notary Public My Commission Expires:
2
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. USA Voice: (954) 971-2244 Fax:
(954) 971-2228
[LOGO OMITTED]
PROMISSORY NOTE
- ---------------
$300,000.00 Fort Lauderdale, Florida
Dated as of March 22, 1999
THE UNDERSIGNED,Robert S. Kelner (hereinafter called the "Maker"), hereby
individually promises to pay to the order of FUTURETRAK INTERNATIONAL, INC.,
whose mailing address is 3635 Park Central Blvd. North, Pompano Beach, Florida
33064 (hereinafter called the "Holder"), at the Holder's address or such other
place as the holder hereof from time to time may designate in writing, the
principal sum of three hundred thousand Dollars and 00/100 lawful money of the
United States of America, with interest at a rate of prime plus two (2% )
percent, which interest shall accrue from the date hereof. Accrued interest from
the date hereof, together with current interest shall be paid to the Holder on a
monthly basis commencing September 1, 2001 and continuing over a two-year period
ending August 30, 2003. Payments of all unpaid accrued interest and principle
are due August 30, 2003.
Prime rate shall be the prime rate of New York and shall be adjusted quarterly.
The obligation evidenced hereby is made in connection with the terms and
conditions of an Employment Agreement (the "Employment Agreement") by and
between Maker and Holder. Maker hereby pledges as collateral for this Promissory
Note the Employment Agreement, and if for any reason Maker defaults on this
Promissory Note, the Holder may at its option accept cancellation of the
Employment Agreement as satisfaction of the Promissory Note.
If, for any reason, prior to September 1, 2003, the Company ceases operations,
or is otherwise unable to fulfill its obligations pursuant to the Employment
Agreement, Maker, at its option, may satisfy the Promissory note by accepting a
cancellation of Holder's obligations pursuant to the Employment Agreement.
This Note may be prepaid in whole or in part at any time without premium or
penalty. at its option, not effect or vary the duty of the Maker to pay all
obligations when due, nor shall such prepayments effect or impair the right of
the Holder to pursue remedies available to it hereunder.
Payment of principal owing hereunder shall be paid and deemed made when good,
lawful funds in the requisite amount are received actually by the Holder hereof
at the Holders address.
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. USA Voice: (954) 971-2244 Fax:
(954) 971-2228
<PAGE>
[LOGO OMITTED]
The failure of the Maker to make the payments as set forth in this Note within
five (5) days from the dates due hereunder after written notice thereof shall
constitute an event of default hereunder. Upon any such default, the Maker
agrees to pay interest on the principal balance of this Note then outstanding at
the same interest rate contained in this agreement, which shall accrue and be
paid as a condition precedent to the curing of any default.
Neither any failure of the Holder or Maker to exercise nor any delay on the part
of the Holder or Maker in exercising any right, remedy, discretion or power
granted hereunder shall be or constitute a waiver thereof. Although the
obligations herein set forth shall be binding upon the Maker and his/her
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns and any subsequent holder of this Note. Any notice to be
given to the Maker or Holder hereunder shall be given by certified mail, return
receipt requested, addressed to it at its address set forth herein.
This Note is to be governed and interpreted solely in accordance with the laws
of the State of Florida, including without limitation, all issues of validity
and enforceability.
MAKER: :______________________________________________
Name: Robert S. Kelner
HOLDER: FUTURETRAK INTERNATIONAL, INC.
Name:______________________________________________
Title:_______________________________________________
STATE OF FLORIDA
SS:
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me this___________day of 1999,
by_______________________I who is personally known to me or who has produced
identification and who did/did not take an oath
Notary Public My Commission Expires:
2
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. USA Voice: (954) 971-2244 Fax:
(954) 971-2228
[LOGO OMITTED]
PROMISSORY NOTE
- ---------------
$300,000.00 Fort Lauderdale, Florida
Dated as of March 22, 1999
THE UNDERSIGNED,Ahmad Moradi (hereinafter called the "Maker"), hereby
individually promises to pay to the order of FUTURETRAK INTERNATIONAL, INC.,
whose mailing address is 3635 Park Central Blvd. North, Pompano Beach, Florida
33064 (hereinafter called the "Holder"), at the Holder's address or such other
place as the holder hereof from time to time may designate in writing, the
principal sum of three hundred thousand Dollars and 00/100 lawful money of the
United States of America, with interest at a rate of prime plus two (2% )
percent, which interest shall accrue from the date hereof. Accrued interest from
the date hereof, together with current interest shall be paid to the Holder on a
monthly basis commencing September 1, 2001 and continuing over a two-year period
ending August 30, 2003. Payments of all unpaid accrued interest and principle
are due August 30, 2003.
Prime rate shall be the prime rate of New York and shall be adjusted quarterly.
The obligation evidenced hereby is made in connection with the terms and
conditions of an Employment Agreement (the "Employment Agreement") by and
between Maker and Holder. Maker hereby pledges as collateral for this Promissory
Note the Employment Agreement, and if for any reason Maker defaults on this
Promissory Note, the Holder may at its option accept cancellation of the
Employment Agreement as satisfaction of the Promissory Note.
If, for any reason, prior to September 1, 2003, the Company ceases operations,
or is otherwise unable to fulfill its obligations pursuant to the Employment
Agreement, Maker, at its option, may satisfy the Promissory note by accepting a
cancellation of Holder's obligations pursuant to the Employment Agreement.
This Note may be prepaid in whole or in part at any time without premium or
penalty. at its option, not effect or vary the duty of the Maker to pay all
obligations when due, nor shall such prepayments effect or impair the right of
the Holder to pursue remedies available to it hereunder.
Payment of principal owing hereunder shall be paid and deemed made when good,
lawful funds in the requisite amount are received actually by the Holder hereof
at the Holders address.
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. USA Voice: (954) 971-2244 Fax:
(954) 971-2228
<PAGE>
[LOGO OMITTED]
The failure of the Maker to make the payments as set forth in this Note within
five (5) days from the dates due hereunder after written notice thereof shall
constitute an event of default hereunder. Upon any such default, the Maker
agrees to pay interest on the principal balance of this Note then outstanding at
the same interest rate contained in this agreement, which shall accrue and be
paid as a condition precedent to the curing of any default.
Neither any failure of the Holder or Maker to exercise nor any delay on the part
of the Holder or Maker in exercising any right, remedy, discretion or power
granted hereunder shall be or constitute a waiver thereof. Although the
obligations herein set forth shall be binding upon the Maker and his/her
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns and any subsequent holder of this Note. Any notice to be
given to the Maker or Holder hereunder shall be given by certified mail, return
receipt requested, addressed to it at its address set forth herein.
This Note is to be governed and interpreted solely in accordance with the laws
of the State of Florida, including without limitation, all issues of validity
and enforceability.
MAKER: :______________________________________________
Name: Ahmad Moradi
HOLDER: FUTURETRAK INTERNATIONAL, INC.
Name:______________________________________________
Title:_______________________________________________
STATE OF FLORIDA
SS:
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me this___________day of 1999,
by_______________________I who is personally known to me or who has produced
identification and who did/did not take an oath
Notary Public My Commission Expires:
2
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. USA Voice: (954) 971-2244 Fax:
(954) 971-2228
[LOGO OMITTED]
PROMISSORY NOTE
- ---------------
$525,360.00 Fort Lauderdale, Florida
Dated as of March 22, 1999
THE UNDERSIGNED,Steve Remondini (hereinafter called the "Maker"), hereby
individually promises to pay to the order of FUTURETRAK INTERNATIONAL, INC.,
whose mailing address is 3635 Park Central Blvd. North, Pompano Beach, Florida
33064 (hereinafter called the "Holder"), at the Holder's address or such other
place as the holder hereof from time to time may designate in writing, the
principal sum of five hundred twenty five thousand three hundred sixty Dollars
and 00/100 lawful money of the United States of America, with interest at a rate
of prime plus two (2% ) percent, which interest shall accrue from the date
hereof. Accrued interest from the date hereof, together with current interest
shall be paid to the Holder on a monthly basis commencing September 1, 2001 and
continuing over a two-year period ending August 30, 2003. Payments of all unpaid
accrued interest and principle are due August 30, 2003.
Prime rate shall be the prime rate of New York and shall be adjusted quarterly.
The obligation evidenced hereby is made in connection with the terms and
conditions of an Employment Agreement (the "Employment Agreement") by and
between Maker and Holder. Maker hereby pledges as collateral for this Promissory
Note the Employment Agreement, and if for any reason Maker defaults on this
Promissory Note, the Holder may at its option accept cancellation of the
Employment Agreement as satisfaction of the Promissory Note.
If, for any reason, prior to September 1, 2003, the Company ceases operations,
or is otherwise unable to fulfill its obligations pursuant to the Employment
Agreement, Maker, at its option, may satisfy the Promissory note by accepting a
cancellation of Holder's obligations pursuant to the Employment Agreement.
This Note may be prepaid in whole or in part at any time without premium or
penalty. at its option, not effect or vary the duty of the Maker to pay all
obligations when due, nor shall such prepayments effect or impair the right of
the Holder to pursue remedies available to it hereunder.
Payment of principal owing hereunder shall be paid and deemed made when good,
lawful funds in the requisite amount are received actually by the Holder hereof
at the Holders address.
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. 33064 Voice: (954) 971-2244
Fax: (954) 971-2228
<PAGE>
[LOGO OMITTED]
The failure of the Maker to make the payments as set forth in this Note within
five (5) days from the dates due hereunder after written notice thereof shall
constitute an event of default hereunder. Upon any such default, the Maker
agrees to pay interest on the principal balance of this Note then outstanding at
the same interest rate contained in this agreement, which shall accrue and be
paid as a condition precedent to the curing of any default.
Neither any failure of the Holder or Maker to exercise nor any delay on the part
of the Holder or Maker in exercising any right, remedy, discretion or power
granted hereunder shall be or constitute a waiver thereof. Although the
obligations herein set forth shall be binding upon the Maker and his/her
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns and any subsequent holder of this Note. Any notice to be
given to the Maker or Holder hereunder shall be given by certified mail, return
receipt requested, addressed to it at its address set forth herein.
This Note is to be governed and interpreted solely in accordance with the laws
of the State of Florida, including without limitation, all issues of validity
and enforceability.
MAKER: :______________________________________________
Name: Steve Remondini
HOLDER: FUTURETRAK INTERNATIONAL, INC.
Name:______________________________________________
Title:_______________________________________________
STATE OF FLORIDA
SS:
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me this___________day of 1999,
by_______________________I who is personally known to me or who has produced
identification and who did/did not take an oath
Notary Public My Commission Expires:
2
- --------------------------------------------------------------------------------
3635 Park Central Blvd. North Pompano Beach, FL. 33064 Voice: (954) 971-2244
Fax: (954) 971-2228
Exhibit 10.12
GOLDEN SKY SYSTEMS MDU SYSTEM OPERATOR AGREEMENT
This System Operator Agreement ("Agreement") is made and entered into
as of this 9th day of July, 1999 ("Execution Date"), between Golden Sky
Systems, Inc., a Delaware corporation ("GSS"), and FutureTrak, Inc., a
Florida Corp. ("S.O.").
RECITALS
--------
A. DIRECTV, Inc. ("DIRECTV") operates a direct broadcast satellite ("DBS")
service through which subscribers are able to receive video, audio,
data and other commercial programming distributed by DIRECTV via a
direct broadcast satellite system.
B. GSS distributes television programming and services to residential
multiple dwelling units ("MDUs").
C. GSS and DIRECTV entered into that certain DIRECTV Master System
Operator Agreement ("the MSO Agreement"), pursuant to which GSS became
a Master System Operator, and whereby GSS will (i) establish, manage
and maintain a network of System Operators; (ii) establish and
maintain, and cause its System Operators to manage and maintain in
certain MDU properties, Signal Distribution Systems to enable MDU
residents to receive DIRECTV Programming via such Systems, and (iii)
act as a commissioned sales representative for DIRECTV and cause its
System Operators to solicit and take orders for DIRECTV Commissionable
Programming Packages from residents of MDU properties according to this
Agreement and the Terms and Conditions attached hereto as Exhibit A.
ARTICLE I
---------
DEFINITIONS
-----------
1.1 The following capitalized terms shall have the meanings assigned them.
Certain other capitalized terms shall have the meanings given them
elsewhere in this Agreement.
"Commission" shall have the meaning assigned such term in Section 2.4
hereof.
"Commissionable Programming Packages" shall mean the DIRECTV
Programming on Exhibit B hereto, for which System Operators are
authorized to solicit orders on behalf of DIRECTV and S.O. is entitled
to a commission thereon.
"Components" shall mean such equipment, whether pre-existing or newly
installed within the MDU Property which is used to create the Signal
Distribution System including, but not limited to, a satellite
receiving dish, cables, splitters, taps, connectors, filters,
amplifiers, switches, wiring and any other materials or equipment.
"DIRECTV Programming" shall mean those programming services distributed
by DIRECTV, including but not limited to Commissionable Programming
Packages, which services and the prices therefor shall be provided by
DIRECTV, from time to time.
"DSS Receiver" shall mean the integrated receiver and decoder unit
(IRD) necessary to receive DIRECTV Programming which is manufactured by
a DIRECTV authorized manufacturer.
"MDU Property" shall mean a condominium complex, apartment building
(including both rental and cooperative apartments), or townhouse
community, located in the contiguous United States, comprised of
multiple dwelling units, which units in each case are occupied by
single family households and are not generally accessible to the public
or otherwise a common area to which there is unrestricted access by two
or more persons, and which units may receive DIRECTV Programming from a
common receiving dish and separate DSS receivers in each individual
dwelling unit.
"S.O. Property" shall mean any of the MDU Properties for which S.O. has
obtained during the term of this Agreement and continues to maintain
throughout the term of this Agreement a valid Right of Entry and (i) in
1
<PAGE>
which S.O. has installed a Signal Distribution System, (ii) the initial
orders from residents of such property for DIRECTV programming are
submitted by the S.O. and transmitted to GSS by S.O. in accordance with
the terms of this Agreement, (iii) is not located in an NRTC area, and
(iv) all units in such property are capable of receiving DIRECTV
Programming within five (5) business days of ordering such programming.
"S.O. Subscriber" shall mean a DIRECTV subscriber residing in an S.O.
Property, who receives one of the DIRECTV Commissionable Programming
Packages, the initial order for which was submitted by S.O. and/or
DIRECTV, and who was not a DIRECTV subscriber prior to becoming an
S.O. subscriber.
"Net Receipts" shall mean gross receipts actually received by DIRECTV
from the sale of Commissionable Programming Packages during the Term,
net of any discounts, refunds, fees, credits, taxes or applicable
governmental charges (other than income or franchise taxes) related to
the sale or the order or use of such Commissionable Programming
Packages.
"NRTC Area" shall mean those areas in which DIRECTV has granted the
National Rural Telecommunications Cooperative distribution rights and
which, as of the Execution Date, are identified on the map attached
hereto on Exhibit C, which may be amended from time to time by DIRECTV.
"Previous S.O. Subscriber" shall mean a DIRECTV subscriber who was
previously an S.O. Subscriber who no longer resides in an S.O. Properly
and who purchased his or her DSS receiver from S.O., and whose order
for a Commissionable Programming Package at a new residence was
submitted by S.O. during the term of this Agreement.
"Right of Entry" shall mean that certain written agreement between
S.O. and the owner or manager of an MDU Property or, in the ease of a
cooperative apartment complex, the homeowners' association, which
authorizes S.O. to install and maintain the Signal Distribution System
in such MDU Property and solicit orders for Commissionable Programming
Packages therein.
"Signal Distribution System" shall mean the integrated signal delivery
system including the receiving dish and DSS receiver and any necessary
components by which DIRECTV Programming is distributed throughout an
S.O. Property, which may also include off-air and/or cable
distribution systems.
"Technical Specifications" shall mean the requirements in Exhibit D
hereto or any other document(s) supplied by GSS or DIRECTV to S.O.
during the Term, which specify the minimum parameters any and all
Signal Distribution Systems must meet under this Agreement.
"Term" shall have the meaning assigned such term in Section 3.1 hereof.
"USSB Programming" shall mean programming distributed by United States
Satellite Broadcasting Company, Inc., or its successor via the direct
broadcast satellite(s) positioned at a 101 degrees west longitude
orbit.
ARTICLE II
----------
GENERAL RIGHTS AND OBLIGATIONS
------------------------------
2.1 Solicitation of DIRECTV Programming Services
a) Subject to the terms and conditions of this Agreement and all Exhibits
attached hereto and incorporated herein, GSS hereby grants to S.O. the
right to (i) market DIRECTV Programming to S.O. Properties and (ii)
solicit and take orders for DIRECTV Programming from residents of S.O.
Properties.
b) Nothing in this Agreement shall prevent GSS or DIRECTV (or their
agents) from marketing, soliciting and taking orders from residents of
MDU Properties.
c) S.O. understands that it shall not have any right, unless specifically
provided by DIRECTV under separate written agreement, to: (i) solicit
or take orders for DIRECTV Programming from any person or entity that
is not a resident
2
<PAGE>
of an MDU Property, including without limitation, commercial
establishments, as such may be defined by DIRECTV in its reasonable
discretion; or (ii) use any person or entity other than its employees
in soliciting or taking orders for DIRECTV Programming without the
prior written consent of DIRECTV.
d) DIRECTV reserves the right to modify the contents of the DIRECTV
Programming and Commissionable Programming Packages and prices thereof
from time to time, effective upon written notice to S.O. from GSS. All
orders for DIRECTV Programming shall be taken on the terms and
conditions, including pricing, specified to S.O. in advance and in
writing by GSS and DIRECTV. As of the date hereof, the prices for
Commissionable Programming Packages shall be as set forth in Exhibit B
and the prices for other DIRECTV Programming shall be as provided by
GSS to S.O. upon request.
e) S.O. shall not charge any residents or subscribers of an S.O. Property
any commercially unreasonable connection fee for obtaining the DIRECTV
Programming or any fee which is based upon such resident or
subscriber's receipt of any DIRECTV Programming, it being understood
that the Aggregate Commissions set forth in Section 2.4 are the sole
compensation that S.O. is to receive from GSS or an S.O. Property (or
residents thereof) for distribution of DIRECTV Programming.
Notwithstanding the foregoing, nothing in this Agreement is intended to
limit any agreement between S.O. and any owner of an S.O. Property with
respect to the installation and maintenance of the Signal Distribution
System.
f) Only after receiving, approving and accepting an order from S.O. shall
GSS be obligated to establish, through DIRECTV, a customer account for
the subscriber and arrange for activation of DIRECTV Programming.
Neither GSS nor DIRECTV shall be obligated to pay S.O. any Commission
or any other amounts for incomplete order(s), regardless of whether GSS
or DIRECTV ultimately provides any DIRECTV Programming to the
customer(s) to which such order(s) pertained and regardless of whether
GSS or DIRECTV receives any payments as consideration for such DIRECTV
Programming, unless and until GSS receives the Subscriber Information
and, then, only for periods of time following such receipt by GSS. GSS
shall promptly notify S.O. of any deficiencies with respect to
particular subscriber information. "Subscriber Information" shall mean
that customer identification, location and billing information which is
required and described in the DIRECTV System Operator Policy Manual.
2.2 S.O. Properties: Right of Entry. Prior to any solicitation of orders
for DIRECTV Programming by S.O., S.O. shall submit to GSS the complete
address (including county and zip code) of any MDU Property for which
S.O. has or is seeking a Right of Entry, in order to confirm that (i)
such MDU Property is not already being serviced by another system
operator authorized by DIRECTV and (ii) such MDU Property is not
located in an NRTC Area. S.O. shall obtain and continuously maintain a
valid Right of Entry for such property during the Term, granting S.O.
access to the MDU, authorizing S.O. to install and maintain the Signal
Distribution System and Components, and granting S.O. permission to
solicit orders for DIRECTV Programming from MDU residents. S.O. shall
promptly forward to GSS a fully executed Right of Entry for all S.O.
Properties. In no event shall S.O. install a Signal Distribution System
in any MDU for which S.O. has not obtained a valid Right of Entry and
no compensation shall be paid or reimbursed by GSS to S.O. for any
DIRECTV programming sold to subscribers in an MDU Property unless and
until GSS has received a copy of the applicable Right of Entry for such
properly. S.O. shall provide written notice to GSS immediately upon any
loss, suspension or expiration of a Right of Entry.
2.3 Implementation of Signal Distribution System
a) Installation of Signal Distribution System and Components
i) S.O. shall design, develop, install and maintain a Signal
Distribution System for each S.O. Property which must comply with
the DIRECTV Technical Specifications as provided by GSS and DIRECTV
to S.O., the current version of which is set forth in Exhibit D
hereto. DIRECTV and GSS reserve the right, in their sole
discretion, to amend or revise and reissue the Technical
Specifications, which amendments or revisions shall be promptly
communicated by GSS to S.O. Upon any such amendment or revision by
DIRECTV to the Technical Specifications, GSS and S.O. shall discuss
in good faith the extent to which existing Signal Distribution
Systems in S.O. Properties shall comply with such amended or
revised Technical Specifications, it being understood and agreed by
the parties that any and all uncompleted Signal Distribution
Systems in S.O. Properties must comply with such revised or amended
Technical Specifications.
3
<PAGE>
ii) S.O. shall provide to GSS a design for the installation and
integration of each Signal Distribution System ("Design") for each
S.O. Property subject to this Agreement, together with a time
schedule for installation. In creating, installing and maintaining
any Signal Distribution System, S.O. shall comply with all DSS
equipment manufacturers' or Component manufacturers' policies as
may be in effect from time to time. GSS shall provide to S.O.
written notice as soon as commercially practicable after receipt
and review of Design(s) if GSS reasonably believes that any Design
will not produce a Signal Distribution System meeting the Technical
Specifications. S.O. shall provide installation progress reports to
GSS periodically or as GSS may reasonably request, and shall
promptly notify GSS of any material changes to the installation
schedule or design.
iii) Upon completion of installation, S.O. shall promptly forward to
GSS an updated copy of the Design and completed Technical
Registration Form, included in the Technical Specifications
attached hereto as Exhibit D, which shall include, among other
things, various measurements of the signal from the Signal
Distribution System. GSS shall provide to S.O. written notice as
soon as commercially practicable after receipt and review of the
Technical Registration Form if GSS reasonably believes that such
Technical Registration form indicates that the Signal Distribution
System does not meet the Technical Specifications and, where
possible, GSS shall recommend corrective actions. Unless and until
the Signal Distribution System complies with the Technical
Specifications, such MDU property shall not be considered an S.O.
Property.
b) Technical Compliance. S.O. shall, at its own cost and expense, (i)
contract with an authorized DSS manufacturer(s) to obtain DSS equipment
and integrate such DSS equipment with any necessary component(s) to
create the Signal Distribution System, (ii) evaluate and test the
Signal Distribution System to insure compliance with the Technical
Specifications for each unit in the S.O. Property, (iii) select
Components that will ensure that the Signal Distribution System meets
the DIRECTV Technical Specifications in the MDU Property environment
and will allow S.O. to fulfill its obligations under this Agreement,
(iv) develop such additional hardware or other elements as are
necessary for the Signal Distribution System to meet the Technical
Specifications and allow S.O. to fulfill its obligations under this
Agreement, (v) provide such technical demonstrations of the Signal
Distribution System in any S.O. Property as GSS may require in its
reasonable discretion upon advance written notice to S.O., at such
times mutually agreed upon by the parties, to provide assurance that
the Signal Distribution System will meet the DIRECTV Technical
Specifications ("Technical Demonstration") and provide GSS and DIRECTV
the opportunity to participate and provide input in advance of
completion of the Signal Distribution System or distribution of DIRECTV
Programming via the Signal Distribution System, (vi) in connection
with such technical Demonstration, make such changes to the initial
Signal Distribution System as are necessary in order for the system to
meet the DIRECTV Technical Specifications, and (vii) take all
commercially reasonable actions necessary to ensure that the Signal
Distribution System continues to meet the Technical Specifications for
the Term of this Agreement. If at any time during the Term of this
Agreement, GSS determines in good faith that a Signal Distribution
System is not in strict compliance with all or any portion of the
Technical Specifications, and such noncompliance interferes with S.O.'s
Subscribers' ability to receive DIRECTV Programming of a quality
received by other DIRECTV subscribers (i.e., the signal does not meet
measurement standards), S.O. shall cure such noncompliance within
thirty (30) days of GSS's notice of noncompliance (the "Cure Period")
and provide GSS evidence of correction of such noncompliance, which
evidence may, at GSS's request, include a Technical Demonstration. In
the event such evidence is not approved by GSS within the Cure Period,
GSS shall have the right to cease paying Commissions and Marketing Fund
due to S.O. with respect to S.O. Subscribers in the noncomplying S.O.
Property.
c) Throughout the Term of this Agreement, DIRECTV, through GSS, shall
provide receivers to S.O. as provided for in Exhibit E.1.
d) Provision of Signal Distribution System. S.O. shall, at its sole cost:
(i) acquire and supply Signal Distribution Systems to S.O. properties;
(ii) install at a commercially reasonable price and in a timely manner
the Signal Distribution System and any necessary Components which S.O.
supplies to any S.O. Property; (iii) maintain at commercially
reasonable prices the Signal Distribution System for any S.O.
Properties; and (iv) provide, at a commercially reasonable price and in
a manner satisfactory to GSS, customer service to all S.O. Properties,
subscribers and potential subscribers related to the supply,
installation and maintenance of the Signal Distribution System. S.O.
agrees to allow all authorized GSS equipment to be used by the S.O.
Subscribers.
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e) Disclaimer of Warranties. S.O. UNDERSTANDS AND AGREES THAT NEITHER GSS
NOR DIRECTV SHALL HAVE ANY RESPONSIBILITY WHATSOEVER FOR ANY SIGNAL
DISTRIBUTION SYSTEM, INCLUDING THE GSS RECEIVER AND COMPONENTS
CONTAINED THEREIN. GSS HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS AND
IMPLIED, IN CONNECTION WITH ANY SIGNAL DISTRIBUTION SYSTEM, INCLUDING
THE DSS RECEIVER AND COMPONENTS CONTAINED THEREIN, THE INSTALLATION AND
FUNCTIONING OF SUCH SYSTEM IN ANY MDU PROPERTY, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTIES UNDER THE UNIFORM COMMERCIAL CODE OR
OTHERWISE IMPLIED IN LAW.
f) New Technology: End-Use Testing. S.O. understands and acknowledges that
the technology (including some or all of the Components) for providing
DIRECTV Programming to multiple-dwelling units is currently being
developed and has not been tested in an MDU environment by DIRECTV.
Neither GSS nor DIRECTV make any representation or warranty as to how
any commercially available Components will perform with the DSS System
in any particular MDU Property or how the DSS system itself will
perform in certain MDU environments. S.O. shall be responsible for
procuring and testing any and all Components in the end use environment
prior to the design, development and installation of the Signal
Distribution System and for maintenance of any such Components that
fail to perform adequately in the end-use environment in order that the
Signal Distribution System will, at all times during the Term of this
Agreement, meet or exceed the Technical Specifications. Any failure of
the Signal Distribution System to meet the Technical Specifications
shall be the responsibility of S.O. S.O. agrees to indemnify and hold
GSS and DIRECTV harmless from any and all Claims (as such term is
defined in the Indemnification section of the Terms and Conditions
attached hereto as Exhibit A) from S.O. Subscribers arising from the
failure of the Signal Distribution System to deliver the necessary
signal to such subscribers and from failure of the Signal Distribution
System to meet the Technical Specifications.
2.4 Commission and Payment Structure. The following sets forth all payments
and commissions to be made to S.O. as full consideration for its
fulfilling its obligations hereunder.
a) Payment of Residual Commissions. With respect to each S.O. Property
registered with and accepted by GSS and DIRECTV, GSS will pay S.O. a
monthly residual commission (the "Residual Commissions") equal to
nineteen percent (19%) of the average of all Net Receipts received by
DIRECTV from all active S.O. Subscribers per month for Commissionable
Programming Packages (the "Average Net Receipts"), solely with respect
to those Net Receipts received by while this Agreement is in effect.
b) Payment of Prepaid Commissions. Throughout the Term of this Agreement,
GSS will pay S.O. a prepaid commission as set forth in the attached
Exhibit E.2.
b) Commission Exclusion. Notwithstanding anything to the contrary in this
Agreement, GSS shall not be obligated to pay, and S.O. shall not earn,
or be entitled to receive, any Commissions or payment of any other type
from GSS which are: (i) for orders, sales, renewals or continuations of
Commissionable Programming Packages taken, made or received after the
last day of the Term; (ii) based on revenues, and any applicable taxes
or fees of any type, received in connection with any programming other
than the Commissionable Programming Packages set forth on Exhibit B
hereto; (iii) for DIRECTV orders which are not transmitted in
accordance with the requirements of this Agreement unless and until,
and only for periods after, such requirements are fully met; (iv) for
any DIRECTV order from a subscriber or S.O. Property located in an NRTC
area, regardless of whether such order is accepted by GSS and/or
DIRECTV; (v) for any DIRECTV order from a commercial establishment as
such may be defined by DIRECTV, regardless of whether such order is
accepted by GSS and/or DIRECTV; (vi) for any DIRECTV order that is not
accepted for any reason by GSS and/or DIRECTV, provided that GSS or
DIRECTV informs S.O. of the reason for such non-acceptance; (vii) for
any DIRECTV order from an S.O. Subscriber residing an a S.O. Property
for which S.O. does not have a valid Right of Entry; (viii) for any
DIRECTV order from a S.O. subscriber residing in a S.O. Property in
which the Signal Distribution System is not in compliance with DIRECTV
Technical Specifications; and (ix) for any DIRECTV order from a S.O.
Subscriber who does not purchase a Commissionable Programming Package.
S.O. acknowledges and agrees that GSS shall have the right to offset
any money due to S.O. from GSS for any reason (including, without
limitation, to reimburse GSS for any Residual Commissions previously
paid to S.O. by GSS on account of subscription fees paid by a
Subscriber in an S.O. Property that GSS and/or DIRECTV subsequently
refunded or credited to such Subscriber) against any Commission or
other money
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otherwise due to S.O. from GSS, upon reasonable notice of any such
offset. The parties hereto agree, acknowledge and understand that GSS
shall in no way be obligated to make any payments whatsoever of
whatever nature to S.O. in connection with such S.O.'s marketing,
solicitation, sale or any other activities of DIRECTV Programming
Packages to S.O. Property. S.O. shall remain solely responsible and
liable in connection therewith.
2.5 DIRECTV Programming
a) S.O. acknowledges DIRECTV shall have the sole right to edit,
select, schedule, package and price all DIRECTV Programming and all
other DIRECTV services. Any such changes shall be communicated by
GSS to S.O. S.O. agrees that all DIRECTV Programming (including any
commercial insertion) shall be exhibited in its entirety, in
original form, as provided by DIRECTV, without any modifications,
additions or deletions. In no event shall S.O. repackage any other
programming or services with DIRECTV Programming. In addition to
the DIRECTV Programming packages DIRECTV currently offers, DIRECTV
shall use its reasonable efforts to develop DIRECTV programming
packages, dedicated and specially targeted for MDU subscribers,
which shall be less expensive than the Total Choice programming
package currently offered by DIRECTV. Notwithstanding the
foregoing, nothing herein shall obligate DIRECTV to provide and
create such special programming packages for MDU subscribers. S.O.
shall promote DIRECTV favorably and jointly in any and all
communications with MDU residents as S.O. promotes any other
programming services S.O. distributes to such residents.
b) S.O. shall not, and shall ensure that none of its S.O. Subscribers
or residents or agents of an S.O. Property, (i) resell, retransmit
or otherwise redistribute in any manner or form whatsoever any
DIRECTV Programming, or (ii) make any modification, addition or
deletion to any of the DIRECTV Programming (including any
commercial insertions).
2.6 Exclusivity. S.O. hereby agrees that from the Execution Date until
expiration of the Term, neither S.O. nor any affiliate of S.O., shall
directly or indirectly offer, sell or solicit sales of, take orders
for, or provide or install equipment for, any direct-to-home satellite
broadcast services other than DIRECTV services or USSB services for
delivery and receipt at MDU Properties.
2.7 Customer Service. S.O. shall undertake certain customer service
functions as described herein and in the DIRECTV System Operator
Policies and Procedures Manual as defined herein below to all S.O.
Subscribers with respect to the installation and maintenance of the
Signal Distribution System and acceptance and transmission of orders
for DIRECTV Programming.
2.8 Policies and Procedures. Attached hereto in Exhibit F is a copy of
DIRECTV's System Operator Policies and Procedures Manual, which may be
amended, from time to time upon thirty (30) days prior written notice
from GSS or DIRECTV (such Manual, as amended from time to time, the
"DIRECTV/GSS System Operator Policy Manual"). As DIRECTV's commissioned
sales representative, S.O. hereby agrees that it will follow and abide
by the policies and procedures related to soliciting and transmitting
subscription orders for and the promotion of DIRECTV Programming as
specified in the DIRECTV/GSS System Operator Policy Manual. The
DIRECTV/GSS System Operator Policy Manual includes, among other things,
customer authorization procedures, DIRECTV receivables payment, and
various requirements related to taking subscription orders.
ARTICLE III
-----------
TERM AND TERMINATION
--------------------
3.1 Term and Termination. Unless earlier terminated in accordance with the
Agreement, the term shall commence on the Agreement Execution Date and
continue for a period of five (5) years, provided that GSS's MSO
Agreement with DIRECTV remains in full force and effect. After the
initial term, the Agreement shall be automatically renewed for one
additional five (5) year period unless terminated by either party with
written notice delivered to the non-terminating party sixty (60) days
prior to the expiration date. Either party may terminate this
Agreement, effective immediately (i) upon sixty (60) days written
notice to the other party following a breach of this Agreement (and any
cure period) by the other party, and the terminating party may suspend
its performance during such period; provided. however, DIRECTV shall
not cease providing programming or customer service to S.O.
Subscribers; (ii) upon the filing of a petition in bankruptcy or for
reorganization by or against the other party for
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the benefit of its creditors, or the appointment of a receiver,
trustee, liquidator or custodian for all or a substantial part of the
other party's property, if such order of appointment is not vacated
within thirty (30) days; and (iii) upon the assignment by the other
party of this Agreement contrary to the terms hereof.
3.2 Obligations of the Parties Upon Termination or Expiration.
a) S.O.'s Obligation with Respect to Installations and Activations. S.O.
shall cooperate to enable GSS or DIRECTV or a substitute system
operator to promptly perform and complete all DSS receiver
installations and activations ordered by S.O. Subscribers prior to the
termination of this Agreement according to the regular installation and
activation schedule S.O. used during the Term of this Agreement. S.O.
shall direct all customer inquiries it receives after the termination
of this Agreement to GSS (or such other party as specified by GSS).
b) DIRECTV's and S.O.'s Obligations with Respect to S.O. Properties.
Following the termination of this Agreement, (i) DIRECTV may continue
to deliver DIRECTV programming and related services to all S.O.
Properties in accordance with DIRECTV's then-existing customer service
procedures; and (ii) DIRECTV shall notify the owner, manager or
homeowner's association of the MDU, as appropriate, of termination of
S.O. as an agent and recommend a substitute system operator to provide
service to S.O. Property with respect to delivery of DIRECTV
Programming and Services. Subsequent to any termination or expiration
of this Agreement, for a reasonable transition period, not to exceed
sixty (60) days, S.O. shall not impair the ability of any subscribers
and residents of S.O. Properties to continue to receive DIRECTV
programming nor shall S.O. impede in any manner whatsoever DIRECTV's
continued access (via the Signal Distribution System) to deliver
DIRECTV to the subscribers and residents in all units of the S.O.
Property. GSS shall continue to pay commissions during any such
transition period.
ARTICLE IV
----------
MISCELLANEOUS
-------------
4.1 Applicable Law; Entire Agreement; Modification. This Agreement shall be
construed in accordance with and be governed by the laws of the State
of California, applicable to contracts made and to be performed
entirely therein, by residents of the state of California. This
Agreement, together with all Exhibits hereto and the Terms and
Conditions, constitutes the entire agreement between the parties and
supersedes all previous understandings, commitments or representations
concerning the subject matter, including but not limited to the S.O.
Agreement (except for any obligations which shall survive the
expiration or termination of such S.O. Agreement). Each party
acknowledges that the other party has not made any representations
other than those that are contained herein. This Agreement may not be
amended or modified, and none of its provisions may be waived, except
by a writing signed by an authorized officer of the party against whom
the amendment, modification or waiver is sought to be enforced.
4.2 Review of Agreement By Counsel; Interpretation. By executing this
Agreement, each of the parties hereto is warranting and representing to
the other that he/she/it has had the opportunity to review this
Agreement with independent legal, financial and tax counsel with
respect to the effect of each of the terms and conditions contained
herein and has either reviewed this Agreement with such counsel or has
independently elected not to proceed with such a review. Each of the
parties further warrants and covenants that he/she/it is satisfied with
the results of such consultation or opportunity to review and is
signing this Agreement as his/her/its free act and deed and not under
any force or coercion. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY RULE
OF LAW, INCLUDING BUT NOT LIMITED TO SECTION 1654 OF THE CALIFORNIA
*/CIVIL CODE, OR ANY LEGAL DECISION THAT WOULD REQUIRE INTERPRETATION
OF ANY CLAIMED AMBIGUITIES IN THIS AGREEMENT AGAINST THE PARTY THAT
DRAFTED IT, HAS NO APPLICATION AND SUCH RIGHT IS EXPRESSLY WAIVED. The
provisions of this Agreement shall be interpreted in a reasonable
manner to effect the intent of the parties.
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4.3 Counterparts. This Agreement may be executed by the parties in
counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first
written above.
GOLDEN SKY SYSTEMS, INC. FutureTrak, Inc.
-------------------------------
By: /s/ Rodney A. Weary By: /s/ J. Michael Smith
------------------------------- ---------------------------
Name: Rodney A. Weary Name: J. Michael Smith
Title: President Title: President
Federal Tax ID Number: 65-0893586
----------
S.O. Address:
-------------
If By Mail:
3635 Park Central Blvd N.
--------------------------------
Pompano Beach, FL 33064
--------------------------------
Attention: Michael Smith
--------------------
If By Personal Delivery:
same
--------------------------------
--------------------------------
Attention:
--------------------------------
If By Fax: (954) 971-2228
--------------------
Attention: Michael Smith
--------------------
Telephone #: (954) 971-2244
------------------
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EXHIBIT A
<PAGE>
EXHIBIT A
GSS MDU SYSTEM OPERATOR AGREEMENT
TERMS AND CONDITIONS
These Terms and Conditions refer to, and form additional terms of, the GSS MDU
System Operator Agreement. The Agreement, all exhibits thereto, including these
Terms and Conditions, are hereinafter referred to as the "Agreement". All
capitalized terms used herein and not defined herein shall have the meanings
described such terms in the Agreement.
1) DIRECTV Logo and Trademark Usage. SO shall not use any DIRECTV trademark,
service name or logo, including, without limitation, "DIRECTV(Registered)",
"DSS(Registered)", and "Total Choice(Trademark)," as well as those marks
and tradenames in the Advertising Guidelines provided by DIRECTV to SO,
which Guidelines may be changed or substituted throughout the Term of this
Agreement (collectively, the "DIRECTV Trademarks") without receiving
DIRECTV's prior written consent, which may be granted or withheld or
withdrawn in DIRECTV's sole discretion. The Advertising Guidelines include
a trademark and logo usage guidelines manual (which manual may be amended
by DIRECTV from time to time) that specifies the proper use and placement
of the DIRECTV Trademarks (the "Logo Guidelines"). If System Operator
receives DIRECTV's consent to use the DIRECTV Trademarks. SO shall use
DIRECTV Trademarks only in accordance with the provisions of the DIRECTV
Advertising Guidelines, including the Logo Guidelines. SO shall not use any
logo, trademark, service mark or name of any supplier of DIRECTV
(including, without limitation, entities providing programming to DIRECTV
or manufacturers of DSS equipment or Components) for any purpose without
the prior written approval of DIRECTV or such other entities.
2) SO Representations and Warranties. SO hereby represents, warrants and
covenants that it:
(a) Shall, throughout the Term, comply with and abide by (i) any and
all applicable federal, state and local laws, rules, regulations
and ordinances, including, without limitation, those set forth in
Section 6 hereof; and (ii) upon notice thereof, any and all
agreements and/or requirements as may be requested by providers
of programming services to DIRECTV, each as applicable to SO and
its respective employees and agents in connection with the
performance of its obligations pursuant to the Agreement;
(b) Shall, at its sole expense, provide and maintain all facilities,
vehicles, tools and equipment ("SO Equipment") as may be
necessary and proper for performing its obligations pursuant to
the Agreement, and keep all SO Equipment in good working order
and repair at all times;
(c) Shall, at its sole expense, obtain all permits and licenses which
may be required under any applicable federal, state or local law,
rule, regulation or ordinance to perform its obligations pursuant
to the Agreement, including, without limitation, installing and
maintaining the Signal Distribution System in any SO Property;
(d) Shall pay and discharge all license fees and business, use,
sales, gross receipts, income, property or other taxes which may
be charged or levied upon SO by reason of the performance of its
obligations pursuant to the Agreement;
(e) Shall, at all times throughout the Term, present a professional
business appearance and attitude;
(f) Shall not engage in any financial transactions with subscribers
residing in SO Properties which elicit or seek to elicit from
subscribers a fee, license, or other payment incident to receipt
of DIRECTV Programming by such subscriber, other than the fees
charged by DIRECTV, fees assessed any such subscriber by the SO
Property's owner, manager, or homeowners' association, or
commercially reasonable fees assessed any such subscriber by SO
for installation, maintenance, upgrade, or other such services as
outlined in the GSS System Operator Policy Manual;
(g) Shall not engage in any activity or business transaction which
could be considered unethical, as determined by GSS or DIRECTV in
its sole discretion, or damaging to the image, goodwill or
business of GSS or DIRECTV;
(h) Shall maintain throughout the Term, at its sole expense, any and
all insurance and/or bonds that may be required under the laws,
ordinances and regulations of any governmental authority with
respect to SO's performance of its obligations hereunder,
including installation of the Signal Distribution System and
Components in MDU Properties and sale or solicitation of orders
for DIRECTV Programming. Such insurance coverage shall include,
but not be limited to, (i) workers compensation insurance as
required by applicable laws; (ii) employer's liability insurance
with limits of not less than $1,000,000 per occurrence; (iii)
commercial general liability insurance, including contractual
liability and personal injury liability with limits of not less
than $2,000,000 combined single limit per occurrence, to provide
protection against claims and/or
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liabilities including, but not limited to, claims for bodily
injury or property damage, which may arise or result from
performance of obligations under the Agreement, whether the
services are performed by SO or by an agent and/or by anyone
directly or indirectly employed by SO or any subcontractors or
agents of any of them. Simultaneous with the execution of the
Agreement. SO shall deposit with GSS evidence of the required
insurance protection in the form of certificates of insurance for
the insurance coverage described above. The amounts shall not be
less than the amounts specified above, or such other amounts as
specified in advance in writing by DIRECTV's or GSS's insurance
office. These certificates must include DIRECTV and GSS as
additional insureds. All certificates shall provide that the
insurer give thirty (30) days written notice to GSS prior to the
effective date of expiration, any material change or
cancellation; and
(i) shall, throughout the Term, maintain a valid Right of Entry for
each SO Property.
3) GSS Representations and Warranties. GSS hereby represents, warrants and
covenants that it shall:
(a) Comply with any and all applicable federal, state and local laws,
rules, regulations and ordinances applicable to GSS, its
employees and agents relating to GSS's obligations pursuant to
the Agreement; and
(b) At its sole expense, obtain all permits and licenses which may be
required under any applicable federal, state or local law, rule,
regulation or ordinance to perform its obligations pursuant to
the Agreement.
4) Proprietary Information; Confidentiality.
(a) Except as otherwise provided for in the Agreement, without the
express written consent of a party (the "Providing Party"), which
may be granted or withheld in the Providing Party's sole
discretion, the other party (the "Receiving Party") shall not
use, other than as necessary to comply with the terms of the
Agreement, and shall not provide or sell to any third party,
other than as provided to DIRECTV under the MSO Agreement and
this Agreement; any Confidential Information, other than as set
forth in Section 4(b) below. "Confidential Information" shall
mean any information, in whatever form (paper, computer files,
oral statements, etc.) of the Providing Party's intellectual
property, customer information, or any other information obtained
by the Receiving Party in connection with the Agreement or the
actions contemplated thereby, whether provided by the Providing
Party, or derived independently or otherwise, including, without
limitation: (i) all customer lists and other information related
to customer's ordering any DIRECTV services; (ii) all market
information and studies and marketing information; (iii) all
information pertaining to purchasers, renters or lessees of
Signal Distribution Systems from SO and (iv) all of the written
data, summaries, reports, other proprietary information, trade
secrets and information of all kinds, acquired, devised or
developed in any manner from the other party's personnel or files
or pursuant to the Agreement. Immediately upon the Providing
Party's written request (which request the Providing Party may
make, as a specific or general request, in its sole discretion at
any time up to one year after the last day of the Term), the
Receiving Party shall provide to the Providing Party (or destroy
if the Providing Party so requests) all requested Confidential
Information. Notwithstanding the foregoing, DIRECTV shall be
entitled to use for any purpose and shall not be required to
provide to SO, or destroy, any records or information pertaining
to SO Properties, (except Designs), SO Subscribers or potential
SO Subscribers.
(b) In addition, the parties agree that, except as otherwise provided
for in the Agreement, they and their employees have and will
maintain in confidence the terms and provisions of the Agreement,
as well as all of the Confidential Information of the other party
and that they have not and will not reveal the same to any
persons not employed by the other party except: (i) at the
written direction of the other party; (ii) to the extent
necessary to comply with the law or the valid order of a court of
competent jurisdiction, in which event the disclosing party shall
so notify the other party as promptly as practicable (and, if
possible, prior to making any disclosure) and shall seek
confidential treatment of such information, or in connection with
any arbitration proceeding; (iii) as part of its normal reporting
or review procedure to its parent company, its auditors and its
attorneys, and such parent company, auditors and attorneys agree
to be bound by the provisions of this Section 4; (iv) in order to
enforce any of its rights pursuant to the Agreement; (v) to
current or potential investors, insurers or financing entities;
provided, however, that such person described above agrees to be
bound by the provisions of this Section 4; (vi) if, prior to the
time of disclosure, the Confidential Information is in the public
domain or is otherwise validly known to the intended recipient;
or (vii) after the Confidential Information becomes part of the
public domain by written publication through no fault of the
party revealing such Confidential Information. The parties agree
to maintain as such Confidential Information any oral statements
in accordance with standard industry practice (subject to the
foregoing exceptions for Confidential Information).
5) Press Release. During the term of the Agreement, neither party shall issue
an independent press release with respect to the
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Agreement or the transactions contemplated hereby without the prior written
consent of the other party.
6) Compliance with Law. Each party shall comply with all applicable
governmental statutes, laws, rules, regulations, ordinances, codes,
directives, and orders (whether federal, state, municipal or otherwise) and
is solely responsible for the compliance with all such laws arising out of
or relating to its obligations under the Agreement, including, without
limitation, all federal and state laws governing direct sales, and any
rules and regulations of any homeowners' associations governing MDU
Properties solicited by SO.
7) Power and Authority: No Breach. Each of the parties represents and warrants
that it has full power and authority to enter into the Agreement and
perform its obligations hereunder and that its execution of the Agreement
and performance of its obligations hereunder does not and will not violate
any law or result in a breach of or default under the terms of any
contractor agreement by which such party is bound.
8) Indemnification. Each party shall indemnify, defend and hold harmless the
other, and their respective employees, officers and directors from and
against any and all any losses, damages, claims, demands, suits,
liabilities and expenses (including reasonable attorneys' fees and other
costs of investigation and defense) (collectively, "Claims") caused by or
arising out of, directly or indirectly, a breach of the indemnifying
party's obligations under the Agreement or negligence in the performance
thereof. In addition, SO shall indemnify DIRECTV, GSS, and their employees,
officers and directors from and against any and all Claims arising out of
SO's actions or inactions, or breach of any of the terms of this Agreement
which may apply to such SO's construction, installation and/or maintenance
of the Signal Distribution System or any other equipment utilized in
connection with the provision of DIRECTV services to SO Properties,
including, without limitation, any Claims that arise out of or result from
any infringement, suit, claim or allegation of infringement of any patent,
trademark, copyright, trade secret or other proprietary interest based on
the Signal Distribution System, or any Claims with respect to the Signal
Distribution System or any Component thereof being defective or not
suitable for the purpose intended or used. Notwithstanding anything to the
contrary contained herein, SO expressly waives any right to indemnification
from DIRECTV and from GSS arising from (i) the content of any programming
(including, without limitation, claims relating to trademark, copyright,
music, performance and other proprietary interests), or (ii) the
construction, use and/or operation of any satellites of DIRECTV or an
affiliated company from which DIRECTV Programming originates.
9) No Unauthorized Warranties or Representations. SO shall make no warranty or
representation inconsistent with or in addition to any warranty or
representation stated in writing by GSS or DIRECTV or a manufacturer of
Signal Distribution Systems or Components. If SO makes any such
inconsistent or additional warranty or representation, SO shall, at its own
expense, indemnify, defend and hold GSS and DIRECTV harmless from any claim
relating thereto.
10) LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THE AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF THE OTHER PARTY OR ANY THIRD PARTY,
WHETHER FORESEEABLE OR NOT AND REGARDLESS OF THE FORM, LEGAL THEORY OR
BASIS OF RECOVERY OF ANY SUCH CLAIM.
11) Assignment. SO shall not transfer any of its rights or obligations under
the Agreement without the prior written consent of GSS, which consent shall
not be unreasonably withheld. GSS may assign the Agreement or any of its
rights or obligations thereunder and shall provide written notice to S.O.
12) Taxes. Any taxes (including, without limitation, any property, employee,
service, franchise, customs, import/export duties, excise and any other
related taxes) asserted against SO or DIRECTV by any local, state, national
or international entity as a result of or arising under the performance of
its obligations under the Agreement shall be the responsibility of the
party against which such taxes are asserted. Each party shall be
responsible for any taxes related to its income hereunder.
13) Arbitration. Any dispute or disagreement arising between GSS and SO shall
be resolved according to binding arbitration conducted in Los Angeles,
California in accordance with the Expedited Procedures of the Commercial
Arbitration Rules of the American Arbitration Association then in effect;
provided, however, that the parties may seek Injunctive relief in any court
of competent jurisdiction and may enforce the provisions of any arbitration
award in any court of competent jurisdiction. Arbitration shall be by a
single arbitrator chosen by the parties, provided that, if the parties fail
to agree and to appoint a single arbitrator within thirty (30) calendar
days from the date a party has made a demand for arbitration, then the
arbitrator shall be chosen in accordance with the Rules. The decision of
the arbitrator shall be final and binding on the parties and any award of
the arbitrator may be entered in any court of competent jurisdiction.
Notwithstanding the foregoing, the arbitrator shall not be authorized to
award punitive damages with respect to any such controversy, claim or
dispute, nor shall any party seek punitive damages relating to any matter
arising out of, or relating to, the Agreement in any other forum. The cost
of any arbitration hereunder, including the cost of the record or
transcripts thereof, if any, administrative fees, attorneys' fees and all
other fees involved, shall be paid by the party determined by the
arbitrator to not be the prevailing party, or otherwise allocated in an
equitable manner as determined by the arbitrator. All rights and remedies
of either party are cumulative of each other and of every other right or
remedy such party may otherwise have at law or in equity, and the exercise
of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies.
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<PAGE>
Independent Contractor. No Agents; Relationship: No Third Party
Beneficiaries. The parties agree that SO is an independent contractor in
performing the construction and installation of Signal Distribution
Systems, the marketing of DIRECTV programming and other services described
in the Agreement. No party (nor any of its officers, directors, agents or
employees) shall act or hold itself out as an agent of the other party
hereto. The parties do not intend the Agreement or the relationship
hereunder to constitute a joint venture, partnership or franchise of any
type.
15) Audit Rights. DIRECTV and GSS or their representatives shall have the
right, exercisable no more than once per year (and once following
termination of the Term), at their sole cost and expense (unless a
discrepancy of five percent [5%] or more is revealed, in which case SO
shall bear all such costs and expenses), to audit SO and its books and
other records relating to its obligations under the Agreement. In addition,
GSS shall have reasonable access to SO and its personnel, the SO Properties
and SO's facilities, but only upon reasonable notice and during regular
business hours at SO's place of business and without unreasonable
disruption to SO's business.
16) Force Majeure. Notwithstanding any other provision in the Agreement,
neither GSS nor SO shall have any liability to the other or any other
person or entity with respect to any failure of GSS or SO to perform its
obligations under the terms of the Agreement if such failure is due to a
Force Majeure. "Force Majeure" shall mean any labor dispute; fire; flood;
earthquake; riot; legal enactment; governmental regulation; Act of God; any
problem associated with the construction, use and/or operation of DIRECTV's
satellite(s) or related systems any problem associated with any
scrambling/descrambling equipment or any other equipment owned or
maintained by others; or any cause beyond the reasonable control of both
parties.
17) Notices. All notices and other communications from wither party to the
other hereunder shall be in writing and shall be deemed received upon
actual receipt when personally delivered, upon acknowledgement or receipt
of sent by facsimile, or upon the expiration of the third business day
after being deposited in the United States mails, postage prepaid,
certified or registered mail, addressed to the other part at a location
specified in writing by such party. Until notice in accordance with Section
17 is given to the contrary, the addresses, phone numbers and facsimile
number for purposes of giving notice are as follows:
GOLDEN SKY SYSTEMS
(a) If by mail:
GOLDEN SKY SYSTEMS
605 West 47th Street, Ste. 300
Kansas City, MO 64112
Attn: System Operator Program
cc: Legal Department
(b) If by personal delivery:
GOLDEN SKY SYSTEMS
605 West 47th Street, Ste. 300
Kansas City, MO 64112
Attn: System Operator Program
cc: Legal Department
(c) If by facsimile:
Attn: System Operator Program at (816) 753-0886
cc:/ Legal Department at (816) 753-5595
18. Severability. Nothing contained in the Agreement shall be construed to
require commission of any act contrary to law and, whenever there is any
conflict between any provision of the Agreement and any law, such law shall
prevail; provided, however, that in such event, the affected provisions of
the Agreement shall be modified to the minimum extent necessary to permit
compliance with such law and all other provisions shall continue in full
force and effect.
/s/ Illegible
-------------------------
System Operator Signature
iv
<PAGE>
EXHIBIT B
<PAGE>
Exhibit B
DIRECTV PROGRAMMING PACKAGES
----------------------------
(Effective April 10, 1997, until replaced by DIRECTV)
Total Choice(Registered) Platinum(Trademark) Programming Package (containing
those video, audio and data programming services selected by DIRECTV)
$47.99 per month or $575.88 per year per subscriber
Total Choice(Registered) Gold(Trademark) Programming Package (containing those
video, audio and data programming services selected by DIRECTV)
$39.99 per month or $479.88 per year per subscriber
Total Choice(Registered) Silver(Trademark) Programming Package (containing those
video, audio and data programming services selected by DIRECTV)
$39.99 per month or $479.88 per year per subscriber
Total Choice(Registered) Programming Package (containing those video, audio and
data programming services selected by DIRECTV)
$29.99 per month or $359.88 per year per subscriber
SELECT CHOICE(Registered) Programming Package (containing those video, audio and
data programming services selected by DIRECTV)
$19.99 per month or $239.88 per year per subscriber
Total Choice(Registered) Plus ENCORE(Registered) (containing those video, audio
and data programming services selected by DIRECTV)
$33.99 per month or $407.88 per year per subscriber
A La Carte Subscription Services (orders must not be taken as stand alone
services - orders for a services must be taken in conjunction with the specified
programming package)
The Golf Channel
- ----------------
$6.95 per month or $83.40 per year per subscriber (orders must be
taken in conjunction with Total Choice, Total Choice Silver,
Select Choice, Plus DIRECTV, or DIRECTV Limited)
Playboy TV
- ----------
$12.99 per month or $155.88. per year per subscriber (orders must
be taken in conjunction with one of the "Total Choice" packages,
Select Choice, Plus DIRECTV or DIRECTV Limited(Trademark))
PrimeTime 24 (ABC, NBC, CBS, FOX, PBS)*
- ---------------------------------------
$4.99 per month or $59.88 per year per subscriber (orders must be
taken in conjunction with one of the "Total Choice" packages,
Select Choice, Plus DIRECTV or DIRECTV Limited")
1
<PAGE>
or
5.99 each service/month or $10.95 each service/year per
subscriber (orders must be taken in conjunction with one of the
"Total Choice" packages, Select Choice, Plus DIRECTV or DIRECTV
Limited(Trademark)")
*PrimeTime 24 services are available for purchase solely through DIRECTV's
customer service number, and CANNOT BE SOLD (OR ACTIVATED) by Agent. A
subscriber is only eligible to purchase and receive from DIRECTV those PrimeTime
24 services for which they do not receive an acceptable picture at their
residence from a local affiliate of the network(s) with a conventional rooftop
television antenna; provided, subscriber must not have received cable television
at any time during the past three months at his/her current residence. DIRECTV
is solely responsible for prequalifying all subscribers for eligibility to
receive any of these PrimeTime 24 services (according to the above guidelines
and those set forth in the Satellite Home Viewer Act of 1994) however, no
Commissions shall be paid on PrimeTime 24 services under this Agreement.
2
<PAGE>
EXHIBIT C
<PAGE>
NRTC Service Areas
As of December 1995
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT D
<PAGE>
MDU Technical Specification
[DIRECTV LOGO]
Multi-user Systems Specifications
MDU Technical Specification
Revision 1.3
- --------------------------------------------------------------------------------
NOTICE
Use of the technologies described in this specification may infringe patents,
copyrights or other intellectual property rights. Nothing in this specification
should be construed as granting permission to use any of the technologies
described. Anyone planning to make use of technology covered by the intellectual
property rights of others should first obtain permission from the holder(s) of
the rights. DIRECTV, Inc. strongly encourages anyone implementing any part of
this specification to determine first whether the part(s) sought to be
implemented are covered by the intellectual property of others, and, if so, to
obtain appropriate licenses or other permission from the holder(s) of such
intellectual property prior to implementation. No representation or warranty is
made that compliance with these specifications and minimum requirements and/or
use of the designs and information provided by DIRECTV will result in an
operative system in any particular MDU environment. Additional design,
installation and maintenance assistance may be required. This specification is
subject to change without notice. DIRECTV, Inc. does not accept any
responsibility whatsoever for damages or liability, direct or consequential,
which may result from use of this specification or any information provided by
DIRECTV.
- --------------------------------------------------------------------------------
1998-01-16
<PAGE>
MDU Technical Specification
DIRECTV and DSS are registered trademarks of DIRECTV, Inc., a unit of Hughes
Electronics Corporation.
USSB is an official trademark of United States Satellite Broadcasting Company,
Inc., a subsidiary of Hubbard Broadcasting, Inc.
Copyright(Copyright) 1996 by DIRECTV, Inc. All rights reserved. Any reproduction
or distribution or use of this document or the information therein without the
express written consent of DIRECTV, Inc. is strictly prohibited.
DIRECTV, Inc., El Segundo, CA USA
<PAGE>
MDU Technical Specification
FORWARD
This Specification
The DSS Network, in general, is described in the DSS Specifications of DIRECTV,
Inc. The particular aspects of the DSS Network that apply to Multi-user Systems
and, in particular MDUs, are described, herein, in the MDU Technical
Specifications. Requirements specified herein shall be viewed as minimum
requirements and shall not be construed to imply that implementation of said
requirements guaranty a successful installation of the MDU Signal Distribution
System. The System Operator has the sole responsibility to evaluate each MDU
configuration, develop a specific cable plant design, perform a successful
installation, and maintain proper performance.
Intellectual Property Rights
This Specification is a document of DIRECTV, Inc. Any reproduction or
distribution of this document without the express written consent of DIRECTV,
Inc. is strictly prohibited.
- --------------------------------------------------------------------------------
NOTICE
Use of the technologies described in this specification may infringe patents,
copyrights or other intellectual property rights. Nothing in this specification
should be construed as granting permission to use any of the technologies
described. Anyone planning to make use of technology covered by the intellectual
property rights of others should first obtain permission from the holder(s) of
the rights. DIRECTV, Inc. strongly encourages anyone implementing any part of
this specification to determine first whether the part(s) sought to be
implemented are covered by the intellectual property of others, and, if so, to
obtain appropriate licenses or other permission from the holder(s) of such
intellectual property prior to implementation. No representation or warranty is
made that compliance with these specifications and minimum requirements and/or
use of the designs and information provided by DIRECTV will result in an
operative system in any particular MDU environment. Additional design,
installation and maintenance assistance may be required. This specification is
subject to change without notice. DIRECTV, Inc. does not accept any
responsibility whatsoever for damages or liability, direct or consequential,
which may result from use of this specification or any information provided by
DIRECTV.
- --------------------------------------------------------------------------------
<PAGE>
MDU Technical Specification
MDU Technical Specification
1. Scope
This document provides requirements to System Operators to use in design,
construction, and maintenance of MDU Signal Distribution System.
2. General Requirements
The System Operator (SO) shall install and maintain MDU systems that at a
minimum meet the technical requirements as defined in this section. The SO shall
establish and implement design, installation, and maintenance procedures,
including record keeping, that adhere to the requirements specified in this
section. For an example, the SO shall develop and document each MDU System
design including schematics that precisely represent the MDU installation. The
SO shall use a DIRECTV approved MDU Signal Distribution System installer.
The MDU Signal Distribution System must contain devices to perform two basic
functions: (1) powering the LNB and (2) distribution and interface of the DSS
signal to each IRD in the MDU.
The SO shall employ one of the two Signal Distribution System models outlined in
Sections 5 or 6. Theses sections also contain typical examples of the models for
SOs consideration. The example for the SO selected Signal Distribution System
model may be used as a reference to assist in generating designs that meet the
requirements of specific MDUs.
2.1 Availability
The SO shall maintain the Signal Distribution System in such a manner that the
service availability to the subscribers, excluding rain and broadcast outages,
is no less than 99.90%.
2.2 Completeness
This system shall provide the entire DSS signal (presently 32 transponders,
subject to change) to every IRD connected to the Signal Distribution System.
2.3 Regulations, Ordinances, and Codes
The Signal Distribution System shall be installed and maintained in accordance
with all applicable local, state, and federal regulations, ordinances, codes and
other requirements, including, but not limited to, building codes and other
safety codes.
2.4 Minimum Installation
The SO shall adhere to the minimum installation requirements: installation of an
antenna and 100% of all backbone wiring, and sufficient floor distribution
hardware must be installed to service 30% of units. This minimum installation
must also be sufficient to support rapid connection of service to any unit (up
to 100% penetration) in the MDU within 48 hours of such service request by
subscriber(s). The SO shall maintain ready to access inventory of all required
signal distribution components to ensure the 48 hour service requirement.
2.5 Outdoor Unit (ODU)
Each MDU installation shall include an ODU. The ODU for MDU installations
includes an antenna reflector, a feed horn, a Dual LNB, mounts, and cable
connections. The antenna diameter (dish size) shall be between 24" and 36".
Rev. 1.3 1
<PAGE>
MDU Technical Specification
2.5.1 Grounding Block
A grounding block shall be installed with the antenna in accordance to the
National Electrical Code (NEC) regulations, which specify that cable grounding
be implemented when IF signals from an outside satellite antenna are routed to
an indoor location. This grounding block installation shall be performed in
compliance to the NEC codes.
2.5.2 Heating Elements
Use of a heated dish and/or LNB may be required to achieve the required signal
quality (see Table 2.6) in cold weather environments.
2.5.3 Mounting
The ODU shall operate in any wind speed up to 50 miles per hour and shall not
incur permanent damage for wind speeds up to 100 miles per hour.
2.6 Signal Distribution System Critical Parameters
The SO shall design, install, and maintain the Signal Distribution System in
compliance with the Critical Parameters as indicated below in Table 2.6 at each
subscriber drop.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Critical Parameter Signal Levels
------------------ -------------
-------------------------------------------------------------------------------------------
<S> <C>
Variation across a single 24 MHz transponder less than or equal to
(peak-to-peak). 1.0 (+/-0.5) dB
-------------------------------------------------------------------------------------------
Difference between total power in any two adjacent less than or equal to 1.0 dB
co-polarized 24 MHz transponders.
-------------------------------------------------------------------------------------------
Variation across all transponders (500 MHz band, less than or equal to
peak-to-peak). 5.0 (+/-2.5) dB
-------------------------------------------------------------------------------------------
Difference between the total power levels in two less than or equal to 10.0 dB
adjacent cross-polarized 24 MHz LHCP and RHCP
Transponders.
-------------------------------------------------------------------------------------------
IRD Signal Meter reading, all LHCP transponders Region A: 80
(Specified values are minimum). Regions defined in Region B: 70
Figure 1.6. Region C: 80
Region D: 90
-------------------------------------------------------------------------------------------
IRD Signal Meter reading, all RHCP transponders Region A: 89
(Specified values are minimum). Regions defined in Region B: 84
Figure 1.6. Region C: 89
Region D: 93
-------------------------------------------------------------------------------------------
IRD input total power (across 500 MHz). -55 to -30 dBm
-------------------------------------------------------------------------------------------
</TABLE>
Table 2.6 Critical Parameters
2 Rev. 1.3
<PAGE>
MDU Technical Specification
[GRAPHIC OMITTED]
Figure 2.6 Signal Strength Regions
2.7 Analog Service Channels
For each instance where the SO provides Master Antenna or headend based analog
TV service, the SO shall provide a complete, high quality distribution
infrastructure for those modulated analog channels in the VHF/UHF broadcast
spectrum. The SO shall provide all channels for which the MDU site for off-air
is within the corresponding Grade B contour of the broadcast transmitter.
Each drop within an MDU shall provide the local broadcast channel signals that
meet the signal quality requirements as defined in Table 2.7.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Minimum Below
-------------
Parameter Carrier
--------- -------
-----------------------------------------------------------------------------------------
<S> <C>
Carrier-to-Noise Ratio 49 dB
-----------------------------------------------------------------------------------------
Carrier to Cross Modulation and/or Intermodulation 48 dBc
-----------------------------------------------------------------------------------------
Composite Triple Beat 52 dBc
-----------------------------------------------------------------------------------------
Second Order Beat 52 dBc
-----------------------------------------------------------------------------------------
Carrier-to-low-frequency Disturbances (hum) 40 dBc
-----------------------------------------------------------------------------------------
</TABLE>
Table 2.7 Customer drop analog service quality requirements
2.8 Test Point Requirements
As a minimum, the SO shall provide one test point per floor by using unallocated
tap ports as test points, or by an equivalent method. These test points shall be
properly labeled and terminated and identified on the schematic with expected
measurement values.
Rev. 1.3 3
<PAGE>
MDU Technical Specification
3. Environmental Performance Requirements
????? devices that are located within the MDU building shall meet the same
environmental and product design requirements that are required of Indoor Units.
All Outdoor Units (ODU) shall meet the Outdoor Unit requirements. These
requirements are stipulated in Table 3 below.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Parameters Outdoor Units Indoor Units
---------- ------------- ------------
-----------------------------------------------------------------------------------------
<S> <C> <C>
Operating temperature -30 to +60(degrees) C 0 to +50(degrees) C
(-22 to 140(degrees) F) (32 to 122(degrees) F)
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Storage temperature -50 to +60(degrees) C -50 to +60(degrees) C
(-58 to 140(degrees) F) (-58 to 140(degrees) F)
-----------------------------------------------------------------------------------------
Humidity 0 to 100%, 0 to 99%, non-
condensing condensing
-----------------------------------------------------------------------------------------
Power (Voltage) 115 VAC, 60 Hz 115 VAC, 60 Hz
-----------------------------------------------------------------------------------------
Life 10 Years 10 Years
Minimum Minimum
-----------------------------------------------------------------------------------------
</TABLE>
Table 3. Environmental requirements for the components
4. Maintenance
????? SO shall maintain parameters as defined in this specification at all times
throughout the MDU system life time. The SO shall maintain sufficiently trained
staff to perform periodic monitoring of the performance of the Signal
Distribution System, timely resolution of service outages and initiation of new
subscribers as outlined herein,
4.1 Restoration of Service Outage
Rapid restoration of service outages is required. Therefore, support personnel
and a sufficient inventory of components must be maintained to achieve service
restoration with a mean time of repair of 8 hours or less and not exceeding 16
hours in the worst case outages.
4.2 Documentation and Record Keeping
The SO shall maintain a service log of all periodic maintenance and service
calls. The service log, as a minimum, must include a service date, performer
identification, and a record of problems and corrective actions. In addition, a
detailed update of all design documentation must be maintained when a new
subscriber service initiation requires a modification to the Signal Distribution
System.
The documentation set is intended to ensure that the implementation reflects the
actual design. This set, as a minimum, includes schematics, component
specifications, test point locations and estimated signal values, installation
planning, and procedures. The SO shall revise all documents required to reflect
any changes to the Signal Distribution System to allow easy future maintenance
when required.
The SO shall provide GSS with copies of the up-to-date design documentation set
within two business days at GSS request, if such request is made.
4 Rev. 1.3
<PAGE>
MDU Technical Specification
5. Test Equipment Recommendations
Proper test equipment is required to install, service, and maintain an MDU cable
plant system. As a minimum. SO must allocate one IRD and one spectrum analyzer
to verify the system performance. The spectrum analyzer shall be capable of
monitoring the parameters listed in Table 2.6. The SO shall determine all
equipment required to meet requirements stipulated in this specification.
6. The Dual 500 Signal Distribution System
The Dual 500 MHz distribution system (Figure 6) uses dual trunk lines that each
carry a 500 MHz bandwidth signal. The signal is positioned in the L-band,
between 950 MHz and 1450 MHz, so that it may be combined onto a cable with an
806 MHz (or up to 860 MHz) bandwidth CATV signal or with a VHF/UHF (off-air)
signal.
The Dual 500 solution distributes each of the 500 MHz Intermediate Frequency
(IF) signals on a separate cable trunk line. Optionally, CATV and/or off-airs
can be added onto each of the two trunk lines or alternatively onto a third
trunk line. These two or three cable lines are distributed to localized clusters
of voltage controlled switches. The switches are typically grouped together into
multi-switches. The multi-switch provides for selection of one of the two
signals present on the dual trunk line and combines the CATV signals onto the
selected L-band signal. This selected signal is then routed to wall jack(s) in
the MDU units. One diplexer per IRD is used to separate the off-air antenna
and/or cable feed and a selected (LHCP or RHCP) LNB feed. In addition, all
signal distribution components used in this model must be rated for the Dual 500
frequency range.
______________________ __________________________
2000 2025
1900 |
1800 DSS signal |
1700 (LHCP) |
1600 __________________________ |
1500 ______________________ __________________________ 1525
1400 1450
1300 DSS signal |
1200 (LHCP or RHCP DSS signal |
1100 voltage selected) (RHCP) |
1000 ______________________ __________________________ 950
900 ______________________ __________________________ |
800 Few CATV U Few CATV U 860
700 ______________________ __________________________ |
600 Some CATV H Some CATV H |
500 ______________________ __________________________ |
400 Many CATV F Many CATV F |
300 ______________________ __________________________ |
200 V V |
100 Most CATV H Most CATV H |
0 F F |
______________________ __________________________ 54
______________________ __________________________
Dual 500 MHz Single 1000 MHz
Figure 6 DSS frequency assignment on cable distribution systems.
Rev. 1.3 5
<PAGE>
MDU Technical Specification
6.1 MDU Dual 500 Model Example
An example of a Dual 500 model system is depicted in Figure 6.1. This dual cable
Signal Distribution system uses two cables requiring all components be rated to
operate up to 1450 MHz.
[GRAPHIC OMITTED]
Figure 6.1 Dual 500 Reference Model
6.2 Design Requirements
The Design for the Dual 500 Signal Distribution System model shall include the
following as a minimum:
o Schematic of MDU Signal Distribution System
-- The design analysis and architecture schematic shall represent 100%
subscriber penetration
-- The schematic shall identify initial build out plan that indicates
actual initial design implementation
-- All test points (minimum one per floor) must be indicated with design
power levels indicated (dBm, each 24 MHz signal)
-- All Components must be labeled with make and model number
7. Single 1000 Signal Distribution System
The Single 1000 Signal Distribution System uses a single trunk line to carry the
1000 MHz aggregate (Figure 6) DSS signal. To do this, the Single 1000 solution
takes the two 500 MHz Intermediate Frequency (IF) signals (LHCP and RHCP) and
stacks them in frequency onto a single cable. This Signal can then be routed to
every wall jack in the MDU using a traditional single line architecture that is
upgraded to support the frequencies of this system.
The Single 1000 model uses a wide band Dual LNB (or, alternatively, an
Up-Converter) capable of relocating one of the two frequency bands to a higher
range so that they can be aggregated on a single
6 Rev. 1.3
<PAGE>
MDU Technical Specification
cable for distribution. This approach requires a subscriber module that provides
voltage controlled frequency band selection and frequency down conversion (when
the selected frequency band is the upconverted band). The subscriber module or
Down-Converter is located at each IRD.
7.1 MDU Signal 1000 Model Example
An example of a Single 1000 model system is depicted in Figure 7.1. This Signal
distribution System uses one cable requiring all components be rated to operate
up to 2025 MHz.
[GRAPHIC OMITTED]
Figure 7.1 Single 1000 Reference Model
7.2 Design Requirements
The Design for the MDU Signal Distribution System model shall include the
following as a minimum:
o Schematic of MDU Signal Distribution System
-- The design analysis and architecture schematic shall represent 100%
subscriber penetration
-- The schematic shall identify initial build out plan that indicates
actual initial design implementation
-- All test points (minimum one per floor) must be indicated with design
power levels indicated (dBm)
-- All Components must be labeled with make and model number
Rev. 1.3 7
<PAGE>
MDU Technical Specification
Exhibit Z: Technical Registration Form
SO shall measure the digital signal quality for each transponder using a DSS IRD
at the worst case drop for this MDU Signal Distribution System.
By completing Table Z-1 and Z-2 below. SO is hereby warranting that no
subscriber within this MDU (l00% penetration) shall exhibit worse performance
than that recorded below for the Term of this Agreement.
================================================================================
Property Location & Information
- --------------------------------------------------------------------------------
Installation Date: MDC Control Number:
- --------------------------------------------------------------------------------
Property Address:
- --------------------------------------------------------------------------------
Property Description
- --------------------------------------------------------------------------------
Number of Number of Apartments Total Number of
Floors: per Floor: Apartments:
================================================================================
================================================================================
System Operator Information
- --------------------------------------------------------------------------------
Business Name: SO Number:
- --------------------------------------------------------------------------------
Business Mailing Address:
- --------------------------------------------------------------------------------
Telephone #: Facsimile #:
================================================================================
================================================================================
Actual Measurements Records
- --------------------------------------------------------------------------------
Measurements Taken At Test Point, Floor Apartment
(Check One)
- --------------------------------------------------------------------------------
Floor Number & Test Point ID:
- --------------------------------------------------------------------------------
IRD Located in an Apartment No: IRD Serial No.:
================================================================================
8 Rev. 1.3
<PAGE>
================================================================================
Measure signal strength using an IRD and record measured numeric value for each
transponder in the following table.
- --------------------------------------------------------------------------------
Transponder No.: Measured Value: Transponder No.: Measured Value:
- --------------------------------------------------------------------------------
1 17
- --------------------------------------------------------------------------------
2 18
- --------------------------------------------------------------------------------
3 19
- --------------------------------------------------------------------------------
4 20
- --------------------------------------------------------------------------------
5 21
- --------------------------------------------------------------------------------
6 22
- --------------------------------------------------------------------------------
7 23
- --------------------------------------------------------------------------------
8 24
- --------------------------------------------------------------------------------
9 25
- --------------------------------------------------------------------------------
10 26
- --------------------------------------------------------------------------------
11 27
- --------------------------------------------------------------------------------
12 28
- --------------------------------------------------------------------------------
13 29
- --------------------------------------------------------------------------------
14 30
- --------------------------------------------------------------------------------
15 31
- --------------------------------------------------------------------------------
16 32
================================================================================
Table Z-1 Digital Signal Quality Measurements
================================================================================
Critical Parameter Specification Measurements
- --------------------------------------------------------------------------------
Variation across a single 24 MHz less than or equal to __dB.transponders__
transponder (peak-to-peak) 1.0 (+/-0.5) dB
- --------------------------------------------------------------------------------
Difference between total power in less than or equal to __dB.transponders__
any two adjacent co-polarized 1.0 dB and___
24 MHz transponders
- --------------------------------------------------------------------------------
Variation across all transponders less than or equal to __dB.
(500 MHz band, peak-to-peak). 5.0 (+/-2.5) dB
- --------------------------------------------------------------------------------
Difference between the total less than or equal to __dB.transponders__
power levels in two adjacent 10.0 dB and___
cross-polarized 24 MHz LHCP and
RHCP Transponders
- --------------------------------------------------------------------------------
IRD input total power (across -55 to -30 dBm ______ dBm
24 MHz transponder)
================================================================================
Table Z-2 Signal levels for critical parameters
Rev. 1.3 9
<PAGE>
November 26, 1997
DIRECTV's Design Documentation Requirements
-------------------------------------------
Attached here-to is an example illustrating DIRECTV's documentation
requirements for a typical design. This example includes the following listed
information which must be included on the submitted documentation.
o Property information: Complex name, address, number of buildings and
identify different types, building profile: number of floors, number of
apartments per floor, etc. for each building type.
o DIRECTV assigned property ID
o List component by its part numbers and vendor identification
o Including cable types and lengths for each cable segment or section
o Indicate signal losses and gain (for amplifier) for components and cable
segments using parenthesis, example for a 100' RG6 cable - indicate losses
as (-9.1dB)
o Calculate and include power levels at various nodes. In a typical
application, with 60cm reflector LNB output may be -35 dBm and 90 cm
reflector will likely be -32 dBm.
o At the wall outlet you want to maintain signal reception between -55 dBm to
-30 dBm.
The documentation example includes the above listed information.
1
<PAGE>
[GRAPHIC OMITTED]
60 CM Reflector, Part Number (P/N)_____________________; LNB P/N______________
<PAGE>
EXHIBIT E
---------
<PAGE>
EXHIBIT E.1
-----------
Provision of IRD's. For each S.O. Subscriber who activates a minimum of Total
Choice programming package during the term of this Agreement, DIRECTV, through
GSS, shall provide one DSS Receiver, provided that the brand, model and type of
DSS Receiver provided shall be determined by DIRECTV and/or GSS in their sole
discretion. Notwithstanding the foregoing. DIRECTV, through GSS, will provide
the DSS Receiver, in the aggregate, up to the total number of residential units
for each S.O. Property. As a way of example, if an S.O. Property has 100
apartment units, DIRECTV, through GSS, will provide a quantity of DSS Receivers
not to exceed 100 Receivers. DSS Receivers provided hereunder shall, at all
times, be proportionate to the number of active S.O. subscribers at such S.O.
Property. S.O. represents and warrants that each DSS Receiver provided hereunder
will generate, during the Term of this Agreement and any extension thereof,
gross revenues of $480.00 or more in DIRECTV Programming purchases (including
pay-per-view movies and events and sports programming subscriptions) on an
aggregate basis (collectively, the "Gross Revenues"). Upon the expiration or
termination of this Agreement, if the aggregate Gross Revenues from all S.O.
Properties are less than $480.00 times the aggregate number of DSS Receivers
provided to such S.O. Properties (the "Aggregate Minimum Gross Revenues"), S.O.
shall pay GSS the difference between the Aggregate Minimum Gross Revenues and
the actual gross revenues generated from the S.O. Properties. At GSS's option,
such amount may be offset against any amounts otherwise owing to S.O. under this
Agreement.
<PAGE>
EXHIBIT E.2.
------------
Payment of Prepaid Commissions. During the term of this Agreement, GSS will pay
S.O. a prepaid commission in the amount of one hundred dollars ($100.00) (the
"PPC") for each activation of Commissionable Programming Package for S.O.
Subscribers provided that S.O. shall have submitted all required Subscriber
Information for each SO. Subscriber in accordance with the terms of this
Agreement. The PPC represents a prepaid commission for the sale of 12 months of
a Commissionable Programming Package; in the event an order on which such a PPC
was paid is canceled or terminated in fewer than 12 months, DIRECTV, through
GSS, shall have the right to charge S.O. back (or deduct from any Commissions
otherwise payable to S.O.) a portion of such PPC, prorated to reflect the
portion of the 12 month period for which such Commissionable Programming
Package was not paid by the applicable S.O. Subscriber. As a way of example, if
an S.O. Subscriber cancels its DIRECTV Programming after three (3) months. GSS
shall have the right to charge back seventy-five dollars ($75) or 9/12 of $100.
Notwithstanding anything to the contrary contained herein, DIRECTV shall only
pay, through GSS, and S.O. shall only earn, the PPC up to the total number of
units in each S.O. Property. As a way of example, if an S.O. Property has 100
apartment units, the maximum PPC payable for such S.O. Property is 100 times
$100 or $10,000.
<PAGE>
EXHIBIT F
<PAGE>
DIRECTV/GSS
System Operator Policies and Procedures
January 1998
1) Introduction
This Policies and Procedures Manual describes certain obligations
of MDU System Operators, GSS, and DIRECTV and the manner and
method in which those obligations shall be fulfilled. Unless
otherwise defined, capitalized terms shall have the meanings set
forth in the Golden Sky Systems MDU System Operator Agreement
between GSS and System Operator (the "System Operator
Agreement"). In the event that any provisions of this Policies
and Procedures Manual conflict with the System Operator
Agreement, then the System Operator Agreement shall govern.
2) DIRECTV MDU Master System Operator
DIRECTV MDU Master System Operators (MSOs) have established a
business relationship with DIRECTV whereby a Master System
Operator (MSO) (GSS) will assist its associated System Operators
in their efforts to (i) establish and maintain Signal
Distribution Systems in MDU Properties to enable MDU residents to
receive DIRECTV Programming, and (ii) act as commissioned sales
representatives for DIRECTV to solicit and take orders for
DIRECTV Programming from such MDU residents.
The MSO will be responsible for facilitating the business needs
of their affiliated SO network. MSO responsibilities include: the
coordination of all initial and ongoing sales, technical and
procedural training; the processing of Right-of-Entry Agreements,
system design requirements, technical registration of "wired" MSO
properties, and customer activation requests; and providing top
level customer service functions to MSO subscribers. The MSO will
also interface between DIRECTV and its affiliated System Operator
network providing communications regarding program revisions and
enhancements and service updates.
3) Training
DIRECTV Sales and Technical Training information for Master
System Operators and its affiliated SO's are of paramount
importance. The goals of such training seminars are (i) to
promote a complete understanding and knowledge of DIRECTV
Programming, special packages and events, and customer service,
(ii) to provide SOs the information and procedures with respect
to soliciting and transmitting Orders for DIRECTV Programming,
and (iii) provide technical and installation guidelines for all
Signal Distribution Systems in order to provide quality DIRECTV
service.
MSO will be responsible for providing this training to its
employees and affiliated SOs at no charge. DIRECTV will provide
high level "train-the-trainer" training to Master System Operator
designated training staff and will provide initial approved
training materials and training outlines.
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System Operator Policies and Procedures
January 1998
3.1 MDU Sales Training
a) Initial Training
i) DIRECTV Training of SO Trainers
DIRECTV shall provide the initial MDU Sales Training to MSO
designated trainers, key employees and managers. Upon completion
of the MDU Sales Training, MSO shall receive a certificate of
completion and certification from DIRECTV.
ii) Training of Affiliated SO Sales Personnel
All MSO sales personnel and its affiliated SO sales personnel
must receive the DIRECTV MDU Sales Training before they are
authorized to market, solicit, take or transmit (collectively,
"Sell" or "Selling") any orders for DIRECTV Programming. MSO
and/or its affiliated SO sales personnel who do not complete
training shall not be eligible to Sell Orders for DIRECTV
Programming.
MSO will be responsible for providing such training to its
affiliated SOs and their employees. MSO shall also arrange for
its sales personnel and its affiliated SO sales personnel to
receive the training seminar and associated training materials.
DIRECTV shall have the right, in its reasonable discretion, to
approve the agenda, length and content of any DIRECTV Sales
training conducted by MSO trainers for its sales and its
affiliated SO sales personnel.
DIRECTV Sales Training materials, and periodic revisions of such
training materials, shall be made available by DIRECTV to MSO for
use in its training.
MSO, MSO employees, affiliated SOs and their employees shall
treat all DIRECTV MDU sales training materials as confidential.
DIRECTV may notify MSO that certain DIRECTV materials and
information are confidential and MSO shall thereafter notify All
employees and affiliates of the confidentiality of such materials
and information.
b) Additional Training
MSOs shall provide refresher training courses for its sales
personnel and affiliated SO's sales personnel at least once per
calendar year, or on an as needed basis, regarding new DIRECTV
Programming, promotions and special events. All additional
training of MSO and affiliated SO employees shall follow the same
guidelines used for the DIRECTV MDU Sales Training and shall
include any materials or instruction as DIRECTV may reasonably
request.
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System Operator Policies and Procedures
January 1998
3.2 MDU Technical Training
Each MSO and SO affiliate shall elect one of the following
technical training options relative to constructing an MDU Signal
Distribution System; (i) MSO or affiliated SO technical personnel
shall be trained and receive appropriate technical qualification
by DIRECTV and/or MSO authorized trainers; (ii) Approved
Applicant shall use only DIRECTV and/or MSO approved installers
to design, construct, install and maintain the Signal
Distribution System and connect individual subscribers to the
Signal Distribution System.
DIRECTV shall have the right, in its reasonable discretion, to
approve the agenda, length and content of any DIRECTV Technical
training conducted by MSO trainers for its own and it affiliated
SOs' technical and installation personnel.
a) Technical Training
i) DIRECTV Training of SO Trainer(s)
MSO technical training personnel shall attend and participate in
a special Grade 4 DIRECTV MDU Technical Training Seminar prior
to providing training services to its SO affiliates. Upon
successful completion of the Technical Training, MSO Technical
Training personnel shall receive a certificate of completion and
an identifying number ("MSO Technical Trainer Number") from
DIRECTV.
ii) Training of Affiliated SO Technical Personnel
Following Grade 4 Technical Trainer certification, SO technical
training personnel may train technical staff employees and
individuals from affiliated SO's technical personnel and issue an
"Authorized Trainer Number" upon successful completion of a
trainer training program. The qualified individual, as a minimum,
shall possess an "Approved Installer Number" issued by DIRECTV
SO technical trainer. Authorized SO Trainers are qualified to
train installers and obtain an "Approved Installer Number" from
DIRECTV for each installer upon successful completion of the
installer training program.
iii) Additional Training
All approved installers and approved MSO trainers must receive
refresher training at least once per calendar year, or as
reasonably required by DIRECTV, to address new technical
developments in the DSS system or design and construction of
Signal Distribution Systems.
One set of technical training materials, and periodic revisions
of such training materials, shall be made available by DIRECTV
to approved MSO trainers for use in providing DIRECTV MDU
technical training to its own and affiliated SO personnel. MSO
may be required to purchase additional quantities of training
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System Operator Policies and Procedures
January 1998
materials for use in technical training seminars.
iv) Training Material Confidentiality
Some DIRECTV MDU Technical Training seminar materials may be
marked with a confidential clause. MSO shall notify all employees
and SO affiliates to maintain strict adherence to the
confidentiality clause in handling and use of such materials.
b.) Use of DIRECTV Approved MDU Installers
System Operators may choose to forego DIRECTV technical training
and elect to use existing DIRECTV approved Grade 2 MDU
installers to complete service installation and maintenance on
Signal Distribution Systems in SO Properties. If this option is
selected, an approved MDU installer's signature and ID number
must be included on all technical paperwork required from SO
under the System Operator Agreement, including, without
imitation, the Signal Distribution System Design and Technical
Registration Form. DIRECTV shall provide to MSO upon its request
the name and contact information of DIRECTV approved MDU
installers.
MSO/System Operator Procedures
Under the System Operator Agreement, SO must obtain and maintain
throughout the Term a valid Right of Entry for each SO Property,
granting SO access to an MDU Property for purposes of
constructing the Signal Distribution System and soliciting orders
for DIRECTV Programming. Set forth below are certain procedures
with which SO must comply in order (i) properly to obtain Rights
of Entry for MDU Properties; (ii) to receive GSS and DIRECTV
approval of Signal Distribution System Designs, Technical
Registration Forms, Subscriber Orders, and (iii) to provide
adequate customer service for SO Subscribers.
4.1 Right of Entry
SOs shall follow the process outlined below in obtaining Right of
Entry Agreements (ROE) for MDU Properties. The ROE is a written
agreement between the SO and the owner or manager of an MDU
Property which authorizes the SO to install and maintain the
Signal Distribution System in the MDU Property and solicit orders
for DIRECTV Programming.
a.) System Operator shall contact multiple-dwelling property
owners and management companies and market the DIRECTV
multi-unit service concept.
b.) Upon verifying that the selected property represents
strong potential, System Operator shall transmit to MSO via
facsimile property information to determine if the property
is located in an NRTC Area. MSO will notify System Operator
if the property is in a NRTC Area. If the property is in an
NRTC Area, the MSO will
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
direct the affiliated SO to the corporate offices of the NRTC
for appropriate NRTC affiliate information.
c.) Upon MSO clearance above, SO System Operator shall
proceed secure owner/property management signatures on an
ROE.
d.) System Operator shall forward all relevant information
concerning the MDU Property and a copy of the fully executed
ROE to MSO for filing. It will be the MSO's responsibility to
maintain all ROE files for its own and its affiliated SO
activity. As ROE documentation is received the MSO will
forward copies to DIRECTV. DIRECTV, from time to time, may
audit the ROE files to ensure that proper ROE documentation
and service rights exist.
No Commissions or other monies shall be paid by DIRECTV to MSO
with respect to an MDU Property unless and until DIRECTV has
received a copy of the executed ROE and required property
information. Property information shall include: MDU Property
name; owner and management company name, name of contact person,
address, and telephone number: total number of units; main
property address; listing of property unit addresses; and
property description (i.e., apartment, condo, townhouse complex,
etc.) and size (i.e. number of units).
a.) Upon receipt of the fully executed ROE and the required
property information. DIRECTV will notify MSO that the ROE
and MDU Property have been accepted. The MSO will forward
this information to its SO affiliate.
4.2 Building Design Process
Prior to the installation of a Signal Distribution System in an
SO property, the SO shall provide to SO for review, an MDU design
and installation document package as required by the System
Operator Agreement. During such initial phase, SO may review each
affiliated SO submitted MDU design package and SO may require
modifications. Installation may not commence until the updated,
resubmitted MDU design package has received written acceptance
from Grade 4 certified SO engineering personnel. The length of
such MDU review period shall be determined by SO. The SO must
maintain building design files on each property that is submitted
and must forward such designs to DIRECTV. In addition, DIRECV
engineering staff may, from time to time; request access to such
files and review approved building designs to ensure/verify
technical compliance.
The Signal Distribution System design shall adhere to the MDU
Technical Specifications including, but not limited to, the
following procedures:
a) SO shall prepare the Signal Distribution System design and
installation schedules. The Design shall include a schematic of
the MDU Signal Distribution System which indicates the planned
signal distribution infrastructure, all test points (minimum one
5
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
per floor) with design power levels (dBm), cable type and segment
lengths, and the manufacturer and model of any Components (signal
distribution components) to be used. Design requirements, as
noted in DIRECTV's MDU Technical Specifications, Exhibit D to
the SO Agreement, may be periodically revised by DIRECTV to
reflect changes in the MDU delivery systems technology and new
developments in Components. SOs shall receive from MSO revised
Design requirements and will have thirty (30) days to incorporate
such revisions as are commercially and technically feasible to
enable each Signal Distribution System to meet the Technical
Specifications.
b) Affiliated SOs shall submit Design and material plans
(according to MDU Technical Specifications) to its supporting
MSO.
c) MSO's engineering staff will review submitted Designs for
compliance with the Technical Specifications. MSO will notify
System Operator in writing as to the status of submitted Designs.
If MSO believes, in good faith, that a Design does not comply
with the Technical Specifications or is otherwise not feasible,
MSO shall notify affiliated SO and may, if possible, suggest
changes to bring the Design into compliance.
d) Upon receipt of MSO's letter indicating its acceptance of a
submitted Design, System Operator may commence Signal
Distribution System construction. A copy of the design and its
acceptance letter shall be forwarded to DIRECTV by MSO. As
required by the SO Agreement, affiliated SOs shall use only
DIRECTV and/or MSO approved MDU installers to construct and
maintain the Signal Distribution System (including the DSS
Receivers, DSS Dishes and any Components) in an MDU Property.
e) SOs shall provide installation progress reports to MSO
periodically or as MSO may reasonably request. SOs shall also
promptly notify MSO of any material changes to the installation
schedule or the Design.
f) The review and approval requirements by DIRECTV or MSO
authorized personnel, set forth herein, are intended to identify
potential problems that could cause non-compliance with the MDU
Technical Specification. However, neither the review or approval
may be construed to mean, explicitly or implicitly, that the
system will function properly or that it will meet electrical,
fire, or any other system function and compliance, and for safety
requirements. SO shall bear the sole responsibility for system
function and compliance, and for obtaining all necessary MDU
installation inspection and approvals from local authorities per
applicable local and national electrical and fire codes.
g) Upon receipt of DIRECTV's letter indicating end of the initial
review and approval period, no MDU design package copy needs to
be submitted for review or approval to DIRECTV. However, for
each MDU installation, an MDU design package shall be retained
and filed by the MSO. DIRECTV reserves the right to request
design documentation of specific MDU(s) for review. MSO shall
provide, on its SO's behalf, to DIRECTV copies of the MDU design
documentation within two (2) business days of receipt of a
written request from DIRECTV.
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
h) DIRECTV reserves the right to inspect MDU site(s) to verify
full compliance to DIRECTV's satisfaction. The MSO shall grant
access to the requested MDU site(s) and assist DIRECTV or its
designee with a technical review, inspection and measurements of
the system's performance. Access shall be granted within two (2)
business days of receipt of a written request from DIRECTV.
4.3 Technical Registration Process
Upon completion of construction of the Signal Distribution
System, System Operator shall promptly forward to MSO a completed
Technical Registration Form, in the form of Exhibit E to the SO
Agreement, and comply with the following procedures:
a.) SOs shall measure the digital signal quality for each
transponder in the Signal Distribution System using a DSS IRD, or
other signal measurement equipment such as a spectrum Analyzer,
at the [worse case drop] point.
b.) SO shall complete the Technical Registration Form in its
entirety and according to the instructions described therein.
c.) SO shall return the Technical Registration Form to the
address set forth in these Policies and Procedures.
d.) Upon receipt and review of the Technical Registration Form,
DIRECTV shall notify MSO of DIRECTV's determination whether the
Technical Registration Form demonstrates that the Signal
Distribution System meets the minimum reporting requirements of
the Technical Specifications. If at any time DIRECTV determines
in good faith that a Signal Distribution System is not in
compliance with the Technical Specifications, because it does not
meet the measurement standards or otherwise, the SO shall cure
such noncompliance within thirty (30) days of MSO's notification
thereof. Following such a notification, the SO shall submit a new
Technical Registration Form reflecting the corrective action
taken. After the 30-day cure period has elapsed, and prior to
DIRECTV receiving evidence of corrective action and a new
Technical Registration Form, DIRECTV may suspend payment of any
Commissions or other payments otherwise due the SO (payable
through the MSO) until such corrective action is taken and a new
Technical Registration Form is received and approved.
e.) SO will ensure all contract, addendum, schedules and
agreements are executed and agrees to follow all procedures as
determined by DIRECTV with respect to specific broadcast service
models (i.e.: transport, bulk, direct to home, etc.).
4.4 Subscriber Orders and Service
The following procedures shall be followed by SOs before DIRECTV
will accept subscriber orders and establish SO Subscriber
accounts. It will be
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
the SO's responsibility to ensure that all order processing
procedures are adhered to.
4.4.1 Order Processing
a.) MSO shall permit only employees and/or affiliated SOs, and
not any independent contractors, agents or other persons or
entities, to solicit, or take any orders for DIRECTV Programming,
b.) SOs shall forward to the MSO and received/solicited order for
DIRECTV Programming from a resident of an SO Property within two
(2) business days of receipt, order shall include all of the
Subscriber Information pertaining to an order set forth in
Subscriber Set-up (below).
4.4.2 Subscriber Set-up
a.) SOs shall complete each section of the DSS Subscriber
Activation Form and deliver such form to the MSO, who in turn
will forward or transfer the information to DIRECTV.
b.) When completing the DSS Subscriber Activation Form, SO shall:
1. Ensure that each blank on the form is completed and
the information supplied is legible.
2. Include the SO Number assigned at the time of MSO
approval.
3. Include the subscriber's physical address where the
DSS Receiver is located. A subscriber account cannot be
established with a P.O. box or other non-residential
address, please specify. Provide the Property ID Number
for the corresponding SO Property.
4. Specify the county that the subscriber lives in.
5. Always specify at the bottom of the Subscriber
Activation Form whether the services will be billed to
service operator or to the customer.
6. Indicate whether the subscriber is ordering a
monthly or annual DIRECTV Programming package.
c.) Following completion of the DSS Subscriber Activation Form,
SO shall transmit the form to the MSO. After verifying order
completeness, the SO will then forward or transmit the
information to DIRECTV. Only after receiving, approving and
accepting an order from the SO shall DIRECTV be obligated to
establish a customer account for the subscriber and arrange for
activation of DIRECTV Programming.
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
4.4.3 Subscriber Installation and Activation
a.) For each SO Subscriber, SO shall obtain a pending account
number from MSO, then install the DSS Receiver, connect it to the
Signal Distribution System and request activation, by DIRECTV
within five (5) business days from the order date by contacting
DIRECTV Customer Service. SOs shall also measure, using the
customer's IRD, the digital signal quality for each transponder
to ensure that the signal quality is in compliance with the
DIRECTV Technical Specifications.
b.) SOs shall provide new customers with information and
instruction on how to use DSS service equipment. In addition, new
customers shall be instructed to forward all billing inquiries to
DIRECTV Customer Service.
4.4.4 Subscriber Billing and Collections
a.) After receiving a DIRECTV Programming order for an SO
Subscriber and the corresponding Subscriber Activation Form, SO
shall cooperate with DIRECTV in its efforts to collect DIRECTV
Programming fees from SO Subscribers.
b.) SO, however, shall not collect any monies due to DIRECTV from
any DIRECTV Subscriber or potential subscriber. If SO should
receive any subscription fees or other money due to DIRECTV, then
SO shall promptly notify MSO of such payments and perform such
actions in connection therewith as reasonably requested by MSO
including, without limitation, remitting to DIRECTV such fees,
money, and applicable taxes. Any subscription fees remitted to
SOs, and not immediately forwarded to DIRECTV shall be deducted
from SO's future Commissions, including interest and penalties
thereon.
4.4.5 Customer Service
a.) SOs shall provide and/or coordinate necessary and appropriate
customer service functions to all SO Subscribers which service
shall include a 24 hours a day, 7 days a week reporting mechanism
or procedure enabling residents of SO Properties to leave
messages regarding service with SO.
b.) SO shall respond to all customer service messages promptly
and shall contact any customer reporting a problem or concern
with a DSS Receiver or Signal Distribution System within 24 hours
of such customer report.
c.) SO will be responsible for coordinating the customer service
activities for its SO subscribers. SO will be responsible for
resolving all service quality inquiries from SO subscribers.
After a good faith effort to address such inquiries in a
satisfactory manner, MSO may notify DIRECTV regarding any
inquiries that MSO technical personnel and/or affiliated SOs are
unable to resolve. In the event of this occurrence, DIRECTV may
assist SO in identifying a
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
possible resolution to such inquiry.
d.) DIRECTV shall be solely responsible for billing DIRECTV
Subscribers for DIRECTV Programming, responding to DIRECTV
billing and programming inquiries, collecting of subscription
fees, and performing any other customer service functions not
specifically designated to the SO herein.
5. MARKETING AND MARKETING SUPPORT
5.1 Advertising
SOs shall adhere to the Advertising Guidelines established by
DIRECTV and outlined in the "Advertising Guidelines For DIRECTV
Programming and the DSS System" attached hereto and comply with
DIRECTV trademark and logo usage guidelines contained therein.
DIRECTV may send approved advertising copy to MSO or its
affiliated SOs, or may approve advertising copy submitted to
DIRECTV by the MSO for use over a specified time period. MSO or
its affiliated SOs shall not distribute photocopies of DIRECTV
sales and advertising materials without the prior written
approval of DIRECTV.
5.1.1 Demonstrations of Broadcast Services
Each SO Property is granted access to one (1) Demo Package. This
service must be located in the property's Leasing/Sales Office.
This service is provided to the SO Property at no charge. The SO
agrees to install and maintain the rules deemed appropriate by
DIRECTV in conducting demonstrations of broadcast services. Any
misuse of this package shall result in automatic disconnection of
service and possible disciplinary action. The SO is responsible
for the hardware and hardware installation.
a.) SO must complete and fax the "Demo Package Request Form" to
Special Markets Sales Agent Support at 310/964-3289 for approval
and qualification.
b.) The Property ID/SO Number will be verified in the Billing
System.
c.) There is NO MIRRORING or PPV/IPPV allowed on Demo accounts.
6. POLICIES AND PROCEDURES MANUAL UPDATES
GSS may, in its sole discretion, amend this Policies and Procedures Manual at
any time and System Operator shall be provided copies of any such amendments.
Master System
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DIRECTV/GSS
System Operator Policies and Procedures
January 1998
Operator shall have thirty (30) days from the date of receipt of such
amendments to come to compliance with any material changes therein.
7. NOTICES
All notices, submissions, questions or other business required by these
Policies and Procedures shall be directed as follows to GSS:
GOLDEN SKY SYSTEMS
605 West 47th Street, Suite 300
Kansas City, MO 64112
Attention: SYSTEM OPERATOR PROGRAM
Phone: 816-753-5544
Fax: 816-753-5595
8. MDU System Operator Policies and Procedures
Addendum: Access Card Replacement
An SO may supply to an SO Subscriber access to SO owned DSS equipment for
residential viewing and/or purchase of DIRECTV programming broadcast offers.
Upon the SO Subscriber's termination of DIRECTV programming service
agreement, the SO shall return the access card to MSO for return to DIRECTV
for generation of the final bill and replacement of the access card for the
authorized building/property unit. This will allow the SO to utilize the
existing DSS receiver equipment for a future SO subscriber.
Please note that parentage of the access card is extremely important in the
access card replacement process. Parentage of the access card is determined
by which company, DIRECTV or USSB activated its programming service on the
access card first. The parent of the card, which programmer activated
programming services first, determines which company will replace that card
when it needs to be replaced. The Subscriber Tracking Management System
(STMS), DSS Card Screen shows the parentage of the access cards. The SO will
need to contact USSB, if USSB services were activated prior to DIRECTV
service (USSB: 1-800-204-8772). If USSB replaces the access card, the System
Operator must call USSB to activate the card also, otherwise the DIRECTV
programming will not appear (i.e. once parentage is established for a DSS
receiver, it remains for the service life of that IRD).
DIRECTV will waive the standard access card replacement fee to SO who has
possession of an SO owned and/or DIRECTV provided DSS receiver that is
utilized for the purpose of supplying DIRECTV programming services to SO
subscribers in approved SO Properties.
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January 1998
This waiver does not apply to Residential Direct to Home (DTH) models if:
a.) The residential subscriber has purchased or owns the DSS receiver.
b.) The access card is destroyed or appears to be damaged.
Until such time when In-Field IRD access card recycling is developed,
DIRECTV may exercise the option to charge SO the standard residential access
card replacement fee if it is deemed the SO is abusing DIRECTV's option to
waive the standard access fee. Upon implementation of the functionality to
conduct In-Field IRD access card recycling, processes and processing fee(s)
will no longer be applicable.
a.) Upon the termination of agreement between the SO and the SO
Residential Subscriber, the SO will notify DIRECTV immediately.
b.) The SO will complete and mail a DSS Access Card Replacement Form and
the applicable access card(s) to notify DIRECTV that service to an SO
subscriber and the residential has been terminated and that the SO
owns the associated DSS hardware and primary use of the access card.
c.) The System Operator (at his own expense) will return the access
card(s) to DIRECTV via registered, signature required delivery (i.e.:
US Mail, FedEx, and UPS). DIRECTV will generate the SO subscriber's
final billing statement, disassociate the access card from the
customer account, and ship a replacement card back to the SO.
A card will not be replaced if:
a.) The SO owning the associated DSS hardware and primary use of the
access card is considered in a risk condition, as determined by the
discretion of DIRECTV.
b.) The residential subscriber account is a Direct to Home (DTH) model
and the subscriber has purchased in full the DSS hardware, and been
supplied the access card during the said requisition.
c.) If USSB is the parent company for the access card.
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July 7, 1999
Mr. Mike Smith
FutureTrak International, Inc.
3635 Park Central Blvd. North
Pompano Beach, FL 33064
Dear Mike:
This letter is in connection with the Golden Sky Systems MDU System Operator
Agreement dated July 9, 1999 (the "Agreement"), by and between Golden Sky
Systems, Inc., and FutureTrak, Inc. GSS is amenable to amending certain
provisions of the Agreement. Accordingly, the following shall set forth the
proposed amendment to the Agreement.
1. Article 3.1 (Term and Termination) of the Agreement is deleted in its
entirety and replaced with the following:
"3.1(a) Unless earlier terminated in accordance with this Agreement,
the term of this Agreement (the "Term") shall commence on the
Execution Date and continue through the longer of (i) five (5) years
or (ii) with respect to each SO Property, the initial term of the
Right of Entry for each SO Property during the said five-year period,
with the final expiration date of this Agreement coinciding with the
latest Right of Entry expiration date of the SO Properties. As a way
of example, if SO obtains a Right of Entry for an MDU Property on
January 1, 1999, and the initial term of such Right of Entry is for
seven (7) years, the Term with respect to such SO Property would
extend through December 31, 2005; provided, however, that no MDU
property may become an SO Property after the fifth anniversary date of
this Agreement unless this Agreement is renewed or otherwise extended
as provided below.
3.1(b) Notwithstanding the foregoing, after the initial term, this
Agreement shall automatically renew for one additional five (5) year
period unless terminated by either party with written notice delivered
to the non-terminating party sixty (60) days prior to the expiration
date.
3.1(c) Either party may terminate this Agreement, effective
immediately (i) upon sixty (60) days written notice to the other party
following a material breach of this Agreement by the other party, and
the terminating party may suspend its performance during such period;
provided, however, DIRECTV shall not cease providing programming or
customer service to SO Subscribers; (ii) upon the filing of a petition
in bankruptcy or for reorganization by or against the other party for
the benefit of its creditors, or the appointment of a receiver,
trustee, liquidator or custodian for all or a substantial part of the
other party's property, if such order of appointment is not vacated
within thirty (30) days; and (iii) upon the assignment by the other
party of this Agreement contrary to the terms hereof."
<PAGE>
2. Except as otherwise amended herein, all other terms of the Agreement
shall continue unmodified and in full force and effect.
If the foregoing amendment meets with your approval, please execute this letter
in the space provided below and return it to our office. If you have any
questions regarding the foregoing, please do no hesitate to contact us.
Very truly yours,
Golden Sky Systems, Inc.
Rodney A. Weary
AGREED, ACCEPTED AND ACKNOWLEDGED TO THE FOREGOING:
FutureTrak, Inc.
By: /s/ Michael Smith
----------------------
Name: Michael Smith
----------------------
Title: President
----------------------
Date: 7/9/99
----------------------
<PAGE>
ADDENDUM TO GOLDEN SKY SYSTEMS
MDU SYSTEM OPERATOR AGREEMENT
GSS agrees to make available to S.O. additional support services GSS may develop
in the future, if any, under terms and conditions GSS and S.O. may negotiate at
the time such services, if any, are made available to S.O.
Agreed and Accepted:
FutureTrak, Inc. Golden Sky Systems, Inc.
- ---------------------------------------
System Operator Name
By: /s/ J. Michael Smith By: /s/ Rodney A. Weary
----------------------------------- ----------------------------
Signature Rodney A. Weary
President
J. Michael Smith
-----------------------------------
Print Name
President
-----------------------------------
Title
7/9/99
-----------------------------------
Date
<PAGE>
4.3 Counterparts. This Agreement may be executed by the parties in
counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written
above.
GOLDEN SKY SYSTEMS, INC. FutureTrak, Inc.
By: /s/ Rodney A. Weary By: /s/ J. Michael Smith
------------------------ --------------------------
Name: Rodney A. Weary Name:
Title: President Title: President
Federal Tax ID Number: 65-0893586
S.O. Address:
-------------
If By Mail:
3635 Park Central Blvd. N.
Pompano Beach, FL 33064
Attention: Michael Smith
If By Personal Delivery:
SAME
-------------------------------
-------------------------------
-------------------------------
Attention:
---------------------
If By Fax: (954) 971-2228
Attention: Michael Smith
Telephone #: (954) 971-2244
SALES REPRESENTATIVE AGREEMENT
-----------------------------
This Sales Representative Agreement (this "Agreement"), made this ___
day of _, 1999, by and between FutureTrak, Inc., a Florida corporation,
hereinafter referred to as "Company" whose principal place of business is 3635
Park Central Blvd. North, Pompano Beach, Florida 33064, and Gulfstream Marine
Products, Inc., a Florida corporation, hereinafter referred to as
"Representative", whose principal place of business is 7855 126th Avenue North,
Largo, Florida 34643.
WITNESSETH
----------
WHEREAS, the Company is engaged in the business of manufacturing,
distributing, and selling marine satellite systems and related items; and
WHEREAS, Representative is an independent business entity which has
established expertise in the marine industry and has business relationships with
a certain geographical area; and
WHEREAS, Company desires to appoint and Representative desires to
accept such appointment, as the exclusive sales agent of the Products (as
hereinafter defined) in a certain geographical territory, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties agree as
follows:
Appointment.
------------
(A) Without limiting the generality of Section 1(b), and
subject to Section 6 hereof, Company shall retain the
right itself. To market and sell the Products as
specified in Exhibit A within the territory (as
defined below).
(B) Representative is hereby appointed the exclusive sales
agent of the Products within the following described
territory (hereinafter referred to as the
"Territory"):
North America,
(C) Products. For purpose of this Agreement, "Products"
shall mean those Products specified in Exhibit A
hereto, as may be amended from time to time by the
Company. Such amendment shall be effective upon
receipt by Representative of notice from Company
amending Exhibit A.
<PAGE>
(D) Distribution Outside the Territory. Company may elect
to consider, at its sole option, sales and shipments
of the Products by Representative to be made outside
of the Territory, provided, however, that the making
of any such sales and/or shipments, and the terms
hereof, shall be negotiated in each individual case
prior to Company's acceptance of the order and shall
be subject to the prior approval of the Company.
Term.
-----
(A) This Agreement shall be effective when signed by the
last of the parties hereto required to sign, and shall
be in effect for an initial term of one (1) year,
unless earlier terminated as provided herein.
(B) This Agreement may be renewed for successive terms of
one (1) year each, if the parties hereto agree in
writing no later than ninety (90) days prior to the
expiration of the initial term or any successive terms
of this Agreement.
Duties and Obligations of Representative. Representative
---------------------------------------------------------
hereby agrees:
--------------
(A) To use its best efforts to vigorously promote and sell
the Products within the Territory, including, but not
limited to, establishment of an adequate and trained
sales force and adequate marketing, advertising and
sales of the Products;
(B) To pay to Company all bills, invoices, fees, and
promptly meet all other obligations to Company;
(C) To protect the integrity of Company's trademarks,
trade names and other proprietary marks;
(D) To develop procedures and records to assure systematic
and complete coverage of customers or prospects within
the Territory; and
(E) The Representative shall keep the Company properly
advised and informed as to the general conditions
which pertain to or affect the sale of its products
and services. The Representative agrees to comply with
directives and policies established by the Company and
agrees to carry out such policies in dealing with
customers and trading in products in so far as such
policies and directives are not inconsistent with the
terms of this Agreement. The Representative shall use
its best efforts to obtain credit and financial
information on customers and prospects in the
territory granted to Representative and shall report
such information to the Company so as to keep the
Company completely informed of circumstances and
occurrences surrounding such customers. The
Representative shall use its best efforts to assist
the Company in the
<PAGE>
processing of orders and other transactions between
the Company and customers upon which the
Representative earns commission credit.
(F) During the term of this Agreement and for a period of
not less than two (2) years following the termination
thereof, the Representative shall, at its sole cost
and expense, obtain and maintain, in full force and
effect, the following insurance: comprehensive general
liability insurance, including contractual liability
insurance, on an "occurrence' basis against claims for
bodily injury or death, including personal injury, and
property damage, with limits of not less than One
Hundred Thousand Dollars ($100,000) per person and not
less than Three Hundred Thousand Dollars ($300,000)
per occurrence.
(G) All policies of insurance that the Representative is
required to carry and maintain under this Section
shall provide that the Company shall be an additional
insured. In addition, all such policies shall contain
an agreement on the part of the insurers that, in the
event of cancellation of the policy in whole or in
party, or a reduction as to coverage or amount
thereof, whether initiated by the insurer or any
insured, the insurer shall provide at least thirty
(30) days' advance written notice to the Company prior
to such cancellation or reduction in coverage.
(H) Representative shall furnish the Company evidence of
the insurance required to be maintained and that it
has obtained pursuant to this Section. Such evidence
shall be in the form of insurance certificates, which
certificates shall contain the notice provision as
well as the additional insured or loss payee
requirements described above.
Duties and Obligations of the Company. Company hereby
--------------------------------------
agrees:
(A) To provide the Products; and
(B) At the sole cost and expense of Representative,
Company shall use reasonable efforts to assist
Representative in sales seminars and training sessions
and to provide sales literature to help promote sales
of the Products. All sales literature relating to the
Products must be approved by Company prior to its
distribution and all literature and related sales
materials (whether prepared by Representative or
Company) shall be returned to Company, at
Representative's sole cost and expense, upon
termination of this Agreement.
Minimum Sales Requirements.
---------------------------
Representative agrees to sell a minimum of number
units of the Products per month commencing on the
effective date hereof as specified in Exhibit B
hereto. Representative's failure or refusal to comply
with the terms of
<PAGE>
this paragraph shall constitute a material breach of
this Agreement and shall entitle Company to terminate
this Agreement.
Commission.
-----------
(A) Representative shall be entitled to receive a
commission payment from the Company in an amount of
ten percent (10%) of the net sales price (excluding
applicable taxes) of Products sold by the Company to
customers within the territory granted to the
Representative. The amount of commission payable to
Representative shall be based upon transactions where
the Company has received purchase orders from
customers within the Representative Territory.
Commission shall be earned and payable to the
Representative based solely upon the sale of Products
and receipt of the entire purchase price by the
Company. Acceptance of all orders, pricing, terms and
associated arrangements are subject to the acceptance
of the Company in its sole discretion.
(C) Notwithstanding Section 6(a) above, Company shall have
the right set-off from the amount of commission
payable under this Section 6, ten percent (10%) of the
net sales price of any Products which were sold in the
Territory during the term of this Agreement and
subsequently returned to Company.
Commission Reporting
--------------------
The Company shall furnish to the Representative a
commission statement once each month. Commissions
payable to the Representative shall be paid on or
before the 20th day of the month following the month
the sale is transacted and the Representative has
earned commission.
Samples.
--------
The Company shall furnish ____ samples to the
Representative. Title and ownership of the samples
shall remain with the Company unless and until payment
for the samples has been made by the Representative.
The Representative shall exercise reasonable care and
control over the samples and shall not use them in any
way detrimental to interests of the Company. The
Representative shall account for all samples delivered
to Representative, returned to the Company and for all
samples disposed of in any manner by Representative.
Sale of Competitive Products.
-----------------------------
Representative hereby agrees that it shall not
engage, either within or outside of the Territory, in
the marketing, sale and/or distribution of
<PAGE>
products which are competitive with the Products
during the term of this Agreement.
Advertising,Sales and Promotional Material.
-------------------------------------------
In connection with the sale, promotion or advertising
of the Products, Representative shall use and
distribute only such advertising or promotional
material supplied by the Company or approved in
writing by the Company. All such material not
supplied by or purchased from Company shall be
submitted to Company prior to its use or
dissemination. Company may, but is not required, from
time to time make available for sale to
Representative promotional material and products at
such prices as may be from time to time established
by Company, provided however, that Representative
shall be under no obligation to purchase such
promotional materials.
Sales: Collections.
-------------------
(A) Representative shall sell the Products only to
customers doing business or resident in
Representative's Territory.
Expenses.
---------
All expenses incurred by Representative in connection
with selling Company's products, including, but not
limited to travel expenses, salaries, advertising or
promotion in which Company has not agreed to
participate, and any expenses incurred in the
maintenance of show rooms or offices, shall be the
sole expense and obligation of Representative.
Independent Contractor.
-----------------------
The relationship between the Company and
Representative shall be that of an independent
contractor and Representative shall not be considered
under the provisions of this Agreement or otherwise
as having the status of an employee or Representative
of Company. Furthermore, as an independent
contractor, Representative shall have no authority to
make any contract or commitments on behalf of Company
or otherwise bind Company without the express prior
written approval, authorization and acceptance by
Company.
<PAGE>
Indemnification.
----------------
The parties shall be indemnified and held harmless as
follows:
(A) Representative shall indemnify and hold harmless
Company from and against any and all claims, demands,
losses, costs, damages, suits, judgements, penalties,
expenses and liabilities of any kind or nature
whatsoever, including attorney's fees, arising
directly or indirectly out of or in connection with
Representative's sales of the Products or operation or
conduct of Representative's business.
(B) Company shall indemnify and hold harmless
Representative from and against any and all claims,
demands, losses, costs, damages, suits, judgements,
penalties, expenses, and liabilities of any kind or
nature whatsoever, including attorney's fees arising
directly or indirectly out of or in connection with
Company's manufacture, production, contract for
manufacture, promotion, sale or operation of the
Products.
Use of Proprietary Marks.
-------------------------
Representative acknowledges the validity of Company's
trade names, trade marks and other proprietary marks,
and that the same are the property of Representative.
Representative shall not in any way infringe upon,
harm, misuse or contest the rights of Company to such
marks and names. Representative shall not use any
other mark or name in connection with the Products
and shall not remove from the Products any such names
or marks placed thereon by Company. Representative's
right to use Company's names and marks shall
terminate upon termination of this Agreement for any
reason.
Confidentiality.
----------------
Company may, from time to time, disclose or make
known to Representative certain proprietary
information and trade secrets relating to its
business, profitability, methods, techniques,
projected results, contracts, pricing, marketing,
financial information and results, customer list and
other information and know-how all relating to or
useful in Company's business. Representative agrees
not to divulge to third parties or use such
information without the prior written consent of
Company. Notwithstanding anything to the contrary
contained herein, Representative shall not be
prohibited from disclosing to third parties, or using
without the prior written consent of Company,
information that (A) was, on the date of this
Agreement, generally known to the public, (B) .is at
the time of disclosure known to Representative as
evidenced by written records in the possession of
Representative, (C) is subsequently disclosed to
Representative by a third party who is in lawful
possession of such
<PAGE>
information and is not under an obligation of
confidence, (D) is disclosed by Company to third
parties generally without restriction on use and
disclosure or (E) Representative is required to
disclose by law or a final order of a court or other
governmental agency or authority of competent
jurisdiction.
Termination by Representative.
------------------------------
Representative shall have the right to terminate this
Agreement immediately upon a written notice to
Company upon the occurrence of any of the following:
(A) Company files a voluntary petition in bankruptcy or
for relief under any provision of the bankruptcy laws
for relief from debts; provided that Representative
may do business with any debtor in possession, trustee
or receiver under any such bankruptcy proceedings
without waiving Representative's rights, under this
Agreement, including its right to terminate this
Agreement; or
(B) The filing against Company of any involuntary
bankruptcy proceeding or the appointment of a receiver
over the business or property of the Company, where
Company has failed to secure the dismissal of such
involuntary petition or to obtain the removal of the
receiver within ninety (90) days.
Termination by Company.
-----------------------
Company shall have the right to terminate this
Agreement immediately upon a written notice to
Representative upon the occurrence of any of the
following:
(A) Representative engages in conduct or business
practices adversely affecting the sale or reputation
of Company's products;
(B) Representative files a voluntary petition in
bankruptcy or for relief under any provision of the
bankruptcy laws for relief from debts; provided that
Company may do business with any debtor in possession,
trustee or receiver under any such bankruptcy
proceedings without waiving Company's rights, under
this Agreement, including its right to terminate this
Agreement;
(C) The filing against Representative of any involuntary
bankruptcy proceeding or the appointment of a receiver
over the business or property of the Representative,
where Representative has failed to secure the
<PAGE>
dismissal of such involuntary petition or to obtain
the removal of the receiver within thirty (30) days;
(D) The unauthorized use by Representative of Company's
proprietary marks.;
(E) The unauthorized sale of the Products outside of
Representative's Territory; or
(F) Representative's breach or failure to comply with any
of the terms and conditions of this Agreement.
Company's right to terminate upon the occurrence of
the foregoing events shall be at Company's option and
shall be in addition to any other rights or remedies
available to Company at law or in equity, including
damages and injunctive relief
Customer Information.
---------------------
The Company shall keep the Representative informed of
communications between customers upon which
Representative earns commission. Upon request the
Company shall provide the Representative with copies
of invoices pertaining to transactions upon which
Representative earns commissions. Any and all
information provided to Representative shall be
deemed to be confidential and shall remain the
property of the Company and returnable to the Company
upon request. Representative shall not disclose
confidential information to third parties nor cause
such information to become public information without
the express written agreement and permission of the
Company.
Rcpresentation and Warranty by Representative.
----------------------------------------------
Representative represents and warrants that it is a
corporation duly authorized, validly existing and in
good standing under the laws of the State of Florida,
is duly qualified to transact business in all the
states that comprise the Territory, and has all
necessary corporate powers to own its properties and
carry on its business as now owned and operated by
it.
Entire Agreement.
-----------------
This Agreement represents the entire understanding
and agreement between the parties with respect to the
subject matter hereof, and supersedes all other
negotiations, understandings and representations (if
any) made by and between such parties.
<PAGE>
Amendments.
-----------
The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a
writing signed by the party as to whom enforcement of
any such amendment, supplement, waiver or
modification is sought and making specific reference
to this Agreement.
Assignments.
------------
No party shall assign his or its rights and/or
obligations hereunder without the prior written
consent of the other party (parties).
Further Assurances.
-------------------
The parties hereby agree from time to time to execute
and deliver such further and other transfers,
assignments and documents and do all matters and
things which may be convenient or necessary to more
effectively and completely carry out the intentions
of this Agreement.
Binding Effect.
---------------
All of the terms and provisions of this Agreement,
whether so expressed or not, shall be binding upon,
inure to the benefit of, and be enforceable by the
parties and their respective legal representatives,
successors and permitted assigns.
Notices.
--------
All notices, requests, consents and other
communications required or permitted under this
Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected
by the person giving such notice) delivered,
telecommunicated, or mailed (airmail if
international) by registered or certified mail
(postage prepaid), return receipt requested at the
addresses of the parties set forth above or to such
other address as any party may designate by notice
complying with the terms of this Section. Each such
notice shall be deemed delivered (a) on the date
delivered if by personal delivery, (b) on the datc
telecommunicated if by telegraph, (c) on the date of
transmission with confirmed answer back if by telex,
and (d) on the date upon which the return receipt is
signed or delivery is refused or the notice is
designated by the postal authorities as not
deliverable, as the ease may be, if mailed.
<PAGE>
Headings.
---------
The headings contained in this Agreement are for
convenience of reference only, and shall not limit or
otherwise affect in any way the meaning or
interpretation of this Agreement.
Severability.
-------------
If any part of this Agreement or any other Agreement
entered into pursuant hereto is contrary to,
prohibited by or deemed invalid under applicable law
or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall
not be invalidated thereby and shall be given full
force and effect so far as possible.
Survival.
---------
All covenants, agreements, representations and
warranties .made herein or otherwise made in writing
by any party pursuant hereto shall survive the
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
Waivers.
--------
The failure or delay of any party at any time to
require performance by another party of any provision
of this Agreement, even if known, shall not affect
the right of such party to require performance of
that provision or to exercise any right, power or
remedy hereunder, and any waiver by any party of any
breach of any provision of this Agreement should not
be construed as a waiver of any continuing or
succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right, power or
remedy under this Agreement. No notice to or demand
on any party in any case shall, of itself, entitle
such party to any other or further notice or demand
in similar or other circumstances.
Specific Performance.
---------------------
Each of the parties acknowledges that the parties
will be irreparably damaged (and damages at law would
be an inadequate remedy) if this Agreement is not
specifically enforced. Therefore, in the event of a
breach or threatened breach by any party of any
provision of this Agreement, then the other parties
shall be entitled, in addition to all other rights or
remedies, to injunctions restraining such breach,
without being required to show any actual damage or
to post any bond or other security, and/or to a
decree for specific performance of the provisions of
this Agreement.
<PAGE>
Governing Law and Venue.
------------------------
This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of
the State of Florida without regard to principles of
conflicts of laws. Venue of all proceedings in
connection herewith shall be in Broward County,
Florida.
Submission to Jurisdiction.
---------------------------
Each of the parties irrevocably and unconditionally
(a) agrees that any suit, action or other legal
proceeding arising out of or relating to this
Agreement may be brought in the courts of record of
the State of Florida in Broward County or the courts
of the United States, Southern District of Florida;
(b) consents to the jurisdiction of each such court
in any such suit, action or proceeding; (c) waives
any objection which it may have to the laying of
venue of any such suit, action or proceeding in any
of such court; and (d) agrees that service of any
court paper may be effected on such party by mail, as
provided in Section 22 hereof, or in such other
manner as may be provided under applicable laws or
court rules in said State.
Enforcement Costs.
------------------
If any legal action or other proceeding, including
arbitration, is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach,
default or misrepresentation in conne tion with any
provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to
recover reasonable attorney's fees, court costs and
all expenses even if not taxable as court costs,
incurred in that action or proceeding, in addition to
any other relief to which such party or parties may
be entitled.
Remedies Cumulative.
--------------------
No remedy herein conferred upon any party is intended
to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by
statute or otherwise. No single or partial exercise
by any party of any right, power or remedy hereunder
shall preclude any other or further exercise thereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
COMPANY:
FUTURETRAK, INC.
By: /s/ Robert S. Kelner C.O.O.
-------------------------------
Its: C.O.O. 2/8/99
------------------
REPRESENTATIVE:
GUTLFSTREAM MARINE PRODUCTS, INC.
By: /s/ [ILLEGIBLE]
-------------------------------
Its: President
------------------
2/5/99
5
<PAGE>
EXHIBIT A
PRODUCTS
1. FutureTrak International, Inc. Space Scanner Unit, Model A I (the
"Space Scanner Unit").
2. Space Scanner Unit Installation Kits.
3 Space Scanner Unit Additional Power Supplies.
4 DTN
5 VIDEO ON DEMAND
6 VOICE OVER IP
7 ALL FUTURETRAK PRODUCTS SOLD TO MARINE INDUSTRY
<PAGE>
EXHIBIT B
MINIMUM SALES REQUIREMENTS
Period Minimum Volume
------ --------------
January, 1999 through June, 1999 Reasonable & Best Effort
July, 1999 through December, 1999 Reasonable & Best Effort
AGREEMENT FOR PURCHASE
AND SALE OF ASSETS
BY AND AMONG
FUTURETRAK INTERNATIONAL, INC.
AND
SATELLITE TECHNOLOGY, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE PAGE
- ------- ----
I
Sale and Purchase of Assets and Purchase Price.............................. 1
1.01 Transfer of Assets.......................................... 1
1.02 Excluded Assets............................................. 1
1.03 Purchase Price and Method of Payment........................ 1
1.04 Retained Liabilities........................................ 2
1.05 No General Assumption of Liabilities........................ 2
II
Closing Date and Deliveries at Closing...................................... 2
2.01 Closing Date................................................ 2
2.02 Deliveries by Seller........................................ 2
2.03 Possession by Purchaser..................................... 3
2.04 Further Assurance........................................... 3
2.05 Deliveries by Purchaser..................................... 3
2.06 Further Assurances of Purchaser............................. 3
III
Representations and Warranties of Seller.................................... 3
3.01 Due Organization............................................ 3
3.02 Power and Authority......................................... 4
3.03 Contracts................................................... 4
3.04 Intellectual Property....................................... 4
3.05 Litigation.................................................. 4
3.06 Legal Compliance............................................ 4
3.07 Approvals................................................... 5
3.08 Taxes....................................................... 5
3.09 Restrictions................................................ 5
3.10 Conditions Affecting........................................ 5
3.11 Brokers..................................................... 5
3.12 Accuracy.................................................... 5
IV
Purchaser's Representations and Warranties.................................. 6
4.01 Due Organization............................................ 6
4.02 Power and Authority......................................... 6
4.03 Accuracy.................................................... 6
4.04 Approvals................................................... 6
<PAGE>
ARTICLE PAGE
- ------- ----
4.05 Brokers..................................................... 6
VI
Indemnification............................................................. 7
5.01 Indemnification Obligation.................................. 7
5.02 Indemnification Notice...................................... 7
5.03 Indemnification Payment and Limitations..................... 7
VII
Pre-Closing and Post-Closing Covenants...................................... 8
6.01 Examinations; Due Diligence................................. 8
6.02 Update Information.......................................... 9
6.03 Purchaser's Covenants....................................... 9
6.04 Retained Liabilities........................................ 9
6.05 Disputes Involving Assumed Liabilities...................... 9
6.06 Access to Records........................................... 9
6.07 Set-Off Rights.............................................. 9
Conditions Precedent to Purchaser's Obligations............................. 9
7.01 No Termination.............................................. 9
7.02 Representations True and Correct............................ 10
7.03 Compliance with Covenants................................... 10
7.04 No Adverse Proceedings...................................... 10
7.05 Proceedings Satisfactory.................................... 10
7.06 No Material Adverse Changes................................. 10
7.07 Certificate................................................. 10
7.08 Documents................................................... 10
7.09 Due Diligence............................................... 10
VIII
Conditions Precedent to Seller's Obligations................................ 10
8.01 No Termination.............................................. 1O
8.02 Representations True and Correct............................ 10
8.03 Compliance with Covenants .................................. 10
8.04 No Adverse Proceedings...................................... 10
8.05 Purchaser's Certificate..................................... 11
8.06 Proceedings Satisfactory.................................... 11
8.07 Documents................................................... 11
ii
<PAGE>
ARTICLE PAGE
- ------- ----
IX
Termination............................................................ 11
X
Confidentiality and Publicity............................................... 11
10.01 Confidentiality............................................. 11
10.02 Publicity................................................... 11
XI
Miscellaneous
11.01 Transaction Costs........................................... 12
11.02 Amendments.................................................. 12
11.03 Assignments................................................. 12
11.04 Further Assurances.......................................... 12
11.05 Binding Effect.............................................. 12
11.06 Headings.................................................... 12
11.07 Notices..................................................... 12
11.08 Severability................................................ 13
11.09 Waivers..................................................... 13
11.10 Pronouns.................................................... 13
11.11 Third Parties............................................... 13
11.12 Enforcement Costs........................................... 13
11.13 Remedies Cumulative......................................... 13
11.14 Counterparts................................................ 13
11.15 Governing Law............................................... 14
11.16 Preparation of Agreement.................................... 14
11.17 Survival.................................................... 14
11.18 Inducement to Transaction................................... 14
11.19 Knowledge................................................... 14
11.20 Entire Agreement............................................ 14
EXHIBITS
Exhibit "A" Transferred Assets
Exhibit "B" Form Promissory Note
Exhibit "C" Form Bill of Sale
Exhibit "D" Kevin T. Ryan Non Competition Agreement
iii
<PAGE>
AGREEMENT FOR PURCHASE AND SALE
OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (this "Agreement") is
made and entered into as of this 5th day of January, 1999, by and among
SATELLITE TECHNOLOGY, INC., a Florida corporation (hereinafter referred to as
the "Seller"), and FUTURETRAK INTERNATIONAL, INC., Florida corporation
(hereinafter referred to as "Purchaser").
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, all of the Assets (as hereinafter defined); and
WHEREAS, as a material inducement to Purchaser to purchase the
Assets, Seller desires to make certain representations and warranties and agrees
to be bound by certain covenants and obligations as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
---------
Sale and Purchase o Assets and Purchase Price
---------------------------------------------
1.01 Transfer of Assets. Subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell, convey, transfer, assign and
deliver to Purchaser, and Purchaser agrees to purchase from Seller, on the
Closing Date (as hereinafter defined) all of the assets and properties owned by
Seller and more particularly described in Exhibit attached hereto and made a
part hereof (the assets being transferred hereunder are collectively referred to
as the "Assets").
At Closing, the Assets shall be conveyed to Purchaser free and clear of
all liens, pledges, security interests, charges, claims, restrictions,
mortgages, and encumbrances of any nature.
1.02 Excluded Assets. Shall be all the assets not specifically listed
in Section 1.01 or Exhibit A.
1.03 Purchase Price and Method of Payment. On the Closing Date,
Purchaser shall pay Seller for the Assets as follows: (i) Purchaser shall issue
200,000 shares of Purchaser's common stock to Seller (the "Shares"), and (ii)
execute a promissory note in the original principal amount of $160,347 (the
"Note") in the form attached hereto as Exhibit (collectively, "Purchase Price").
The Shares shall consist of 100,000 restricted shares and 100,000 freely trading
shares of Purchaser.
1.04 Retained Liabilities. All liabilities or obligations of Seller
which are not specifically designated as Assumed Liabilities hereunder shall
collectively be referred to as the "Retained Liabilities.
<PAGE>
1.05 No General Assumption of Liabilities. Except as specifically set
forth above, Purchaser shall not assume, pay or discharge any debts,
obligations, contracts, loans commitments, undertakings or liabilities of
Seller, whether fixed, unliquidated, contingent or otherwise, of any nature
whatsoever arising before or after the Closing or in connection with any of the
Assets or the Seller's business including, without limitation, (i) federal,
state, local or other taxes of any kind other than personal property taxes
related to the Assets; (ii) wages, salaries, benefits, bonuses or compensation
of any kind payable to any of the employees, officers, agents or independent
contractors of Seller, as the case may be; (iii) any claim against Seller,
regardless of the manner in which asserted or the nature of the claim. ~ or
cause of action alleged including, without limitation, professional negligence,
negligence, product liability, breach of contract, intentional tort or injury to
person or property arising from or related to the Seller's business, Seller, its
employees, independent contractors, agents, officers, directors or shareholders,
as the case may be; (iv) any liabilities or obligations of Seller to trade
creditors attributable to the Seller's business existing as of the date of this
Agreement or arising between the date of this Agreement and the Closing Date; or
(v) any liability or obligation of Seller arising or incurred in connection with
the negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby and the fees and expenses of counsel,
accountants and other experts retained by Seller, all of which shall be
considered Retained Liabilities for the purposes of this Agreement. Seller shall
retain and discharge all Retained Liabilities, and shall indemnify, defend and
hold Purchaser harmless against any costs or expenses in connection with the
Retained Liabilities pursuant to Section 5.01(a).
ARTICLE II
----------
Closing Date and Deliveries at Closing
--------------------------------------
2.01 Closing Date. Subject to the provisions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
be held at the offices of Gunster, Yoakley, ValdesFauli & Stewart, P.A., Broward
Financial Centre, Suite 1400, 500 East Broward Boulevard, at 10:00 A.M., local
time, on January 5, 1999, or on such other date and at such other place as may
be mutually agreed upon by the parties.
2.02 Deliveries by Seller. In addition to and without limiting any
other provision of this Agreement, Seller agrees to deliver, or cause to be
delivered, to Purchaser at or prior to the Closing the following:
(a) The certificate referred to in Section 7.08 hereof
(b) A bill of sale and such other deeds, certificates of
title, assignments, assurances and other instruments and documents as Purchaser
may reasonably request in order to effect the sale, conveyance, transfer and
assignment of the Assets to Purchaser, including without limitation the
conveyance documents set forth in Exhibit "C" attached hereto and made a part
hereof;
(c) A non-competition agreement executed by Kevin T. Ryan, in
the form attached hereto as Exhibit "D" and made a part hereof, effective as of
the Closing Date;
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<PAGE>
(d) A certified copy of resolutions of the Board of Directors
of Seller authorizing the execution and delivery of this Agreement and the
transactions contemplated herein; and
(e) Such other documents, instruments or certificates as
shall be reasonably requested by Purchaser or its counsel.
2.03 Possession by Purchaser. Simultaneously with the consummation of
the transfer of the Assets, Seller will put Purchaser into full possession and
enjoyment of all Assets to be conveyed and transferred by this Agreement.
2.04 Further Assurance. Seller at any time on or after the Closing Date
will execute, acknowledge and deliver at Seller's expense any further
assignments, conveyances and other assurances, documents and instruments of
transfer reasonably requested by Purchaser, and will take any other action
consistent with the terms of this Agreement that may reasonably be requested by
Purchaser for the purpose of assigning, transferring, granting, conveying and
confirming to Purchaser, or reducing to possession, any or all of the Assets.
2.05 Deliveries by Purchaser. In addition to, and without limiting any
other provisions of this Agreement, Purchaser agrees to deliver at the Closing
on the Closing Date:
(a) The Purchase Price as described in Section 1.03 hereto
(b) A certified copy of resolutions adopted by the Board of
Directors of Purchaser authorizing the execution and delivery of this Agreement
and the transactions contemplated herein;
(c) The certificate referred to in Section 8.05 hereof;
(d) Executed UCC-l financing statements securing the full
amount of the Note and providing Seller with a security interest in all of
Purchaser's marketable space scanner inventory.
(e) Such other documents, instruments or certificates as
shall be reasonably requested by Seller or its counsel.
2.06 Further Assurances of Purchaser. Purchaser shall at any time on or
after the Closing Date cooperate with Seller by furnishing any additional
information, executing and delivering any additional documents and/or
instruments and doing any and all such other things as may be reasonably
required by Seller or its counsel to consummate or otherwise implement the
transactions contemplated by this Agreement.
ARTICLE III
-----------
3
<PAGE>
Representations and Warranties of Seller
----------------------------------------
Seller represents and warrants to Purchaser (which warranties and
representations shall survive the Closing to the extent set forth in Section
11.17 hereof regardless of what examinations, inspections, audits and other
investigations Purchaser has heretofore made or may hereafter make, with respect
to such warranties and representations), as follows:
3.01 Due Organization. Seller is a duly organized and validly existing
corporation under the laws of the State of_______ and Seller has the full power
and lawful authority to own its properties and to transact the business in which
it is currently engaged. Seller is not, nor is it required to be, qualified to
transact business as a foreign entity in any jurisdiction.
3.02 Power and Authority.
--------------------
(a) Seller has full corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the other agreements, documents and instruments required
to be delivered by Seller pursuant to this Agreement (the "Seller Documents")
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by Seller's Board of Directors. No other acts
or proceedings on the part of Seller will be necessary to authorize the
performance of this Agreement or the Seller Documents by Seller or the
transactions contemplated hereby and thereby. This Agreement constitutes, and
the Seller Documents will constitute, a valid and legally binding obligations of
Seller enforceable against it in accordance with their respective terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general application relating to creditors' rights or by
the application of equitable principles when equitable remedies are sought.
(b) Neither the execution and delivery of this Agreement or
the Seller Documents, nor the consummation of the transactions contemplated
hereby or thereby, nor compliance by Seller with any of the provisions hereof,
will:
(i) violate, or conflict with, or result in a breach of
any provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
actual or possible termination of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Seller; under any of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Seller;
or any note, bond, mortgage, indenture, deed of trust, contracts, permits,
license, agreement, lease or other instrument or obligation to which Seller is a
party, or by which Seller or any of the Business or Assets, may be bound or
affected; or
(ii) violate any order, judgment, writ, injunction,
decree, or any law, statute, rule, ordinance or regulation, applicable to Seller
or any of the Assets.
3.03 Contracts. Seller is not party to, nor are any Assets owned by it
bound by or subject to, any other contract which (i) has a monetary value of$
100 or more, either individually or in the aggregate with the same party, or
(ii) affects the Assets. All such Contracts that are Assets are valid, binding
and enforceable on and against Seller, and against the other parties thereto, in
accordance with their terms
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<PAGE>
except as limited by applicable bankruptcy, insolvency, reorganization.
Moratorium or other laws of general application relating to creditors' rights or
by the application of equitable principles when equitable remedies are sought.
Neither Seller nor any other person, firm, corporation or entity, is in breach
of, or default under, any Contract in any respect which would result in damages
in excess of $10,000, and no event or action has occurred, is pending, or is
threatened, which after the giving of notice, or the lapse of time, or
otherwise, would constitute or result in a breach or default in any respect by
Seller or any other person, firm, corporation or entity, under any Contract.
Seller has not received notice that any party to any of the Contracts intends to
cancel, suspend or terminate any of the Contracts or to exercise or not
exercise any options under any of the Contracts.
3.04 Intellectual Property. To the best of Seller's knowledge, there is
not now and has not been during the past six (6) years any infringement, misuse
or misappropriation by Seller of any valid patent, trademark, trade name,
software, service mark, copyright or trade secret (collectively, the
"Intellectual Property") which relates to the Assets and which is owned by any
third party, and there is not now any existing or, to the knowledge of Seller,
threatened claim against Seller of infringement, misuse or misappropriation of
any Intellectual Property.
3.05 Litigation. There are no actions, investigations, reviews, suits
or proceedings pending or threatened, including, without limitation, actions,
investigations, reviews, suits or proceedings relating to product, service or
personal injury liability claims or reimbursement claims, against or affecting
the Assets, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign; Seller has no knowledge of any state of
facts or contemplated event relating to the Assets which may reasonably be
expected to give rise to any such claim, action, review, suit, proceeding or
investigation; and Seller is not operating under, or subject to, or in default
with respect to, any order, writ, injunction or decree of any court or
governmental agency or body, domestic or foreign.
3.06 Legal Compliance. Seller is not conducting or carrying on its
business or affairs in violation in any material respect of any applicable
foreign, federal, state or local law, statute, ordinance, rule, regulation or
court or administrative order or process.
3.07 Approvals. No permits, approvals, consents, satisfaction of
waiting periods, or waivers thereof of agencies of any jurisdiction or
governmental body, or of any other person whatsoever, are necessary to allow
Seller to consummate the transactions contemplated in this Agreement in
compliance with, and not in breach of, all applicable laws, rules, regulations,
orders or governmental or other agency directives, or the provisions of any
contract or obligation binding upon Seller.
3.08 Taxes.
(a) All federal, state, local and foreign tax returns,
reports, statements and other similar filings required to have been filed by
Seller (the "Tax Returns") with respect to any federal, state, local or foreign
taxes, assessments, interest, penalties, deficiencies, fees and other
governmental charges or impositions (including without limitation all income
tax, unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise license, school and any other tax or
similar governmental charge or imposition under laws of the United States of any
state or
5
<PAGE>
municipal or political subdivision thereof Or any foreign country or political
subdivision thereof) (the "Taxes"), have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns properly reflect the liabilities
of Seller for Taxes for the periods, property or events covered thereby. All
Taxes, including those without limitation which are called for by the Tax
Returns, or heretofore or hereafter claimed to be due by any taxing authority
from Seller has been properly accrued or paid. Seller has made all deposits
required by law to be made with respect to employees' withholding and other
employment taxes, including without limitation the portion of such deposits
relating to Taxes imposed upon Seller. Since the Balance Sheet Date, Seller has
not incurred any liability with respect to any Taxes except in the ordinary and
regular course of business.
(b) Seller agrees to indemnify Purchaser for any undisclosed
sales tax liabilities payable by Seller and accrued prior to the Closing Date
and paid by Purchaser subsequent to the Closing Date.
(c) No waiver by Seller of the statute of limitations with
respect to any Taxes is in effect. None of the Tax Returns of Seller has been or
are being audited by the Internal Revenue Service or any other regulatory
authority. There are no present or potential disputes as to Taxes payable by
Seller that could themselves have or result in any adverse effect on the Assets.
3.09 Restrictions. Seller is not a party to any indenture, agreement,
contract, commitment, lease, plan, license, permit, authorization or other
instrument, document or understanding, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award which affects or restricts or may in the future affect or
restrict, the business, operations, assets, properties, prospects or condition
(financial or otherwise) of the Assets after consummation of the transactions
contemplated hereby.
3.10 Brokers. Neither this Agreement nor the sale and purchase of the
Assets or any other transaction contemplated hereby was induced by or procured
through any person, firm, corporation or other entity acting on behalf of, or
representing Seller as a broker, finder, investment banker, financial advisor or
in any similar capacity.
3.11 Accuracy. All certificates, documents and instruments furnished by
Seller or its employees in connection with this Agreement, or any other
transaction contemplated by this Agreement, are or will be true and complete in
all respects, and neither this Agreement nor any other certificate, document or
instrument furnished by Seller or its employees in connection with this
Agreement, or any other transaction contemplated by this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements included herein
or therein not misleading in light of the circumstances under which they were
made.
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<PAGE>
ARTICLE IV
----------
Purchaser's Representations and Warranties
------------------------------------------
Purchaser hereby represents and warrants to Seller (which warranties
and representations shall survive the Closing to the extent set forth in Section
11.1 7 hereof regardless of what examinations, inspections, audits and other
investigations Seller has heretofore made or may hereafter make, with respect to
such warranties and representations) as follows:
4.01 flue Organization. Purchaser is a duly organized and validly
existing corporation in good standing under the laws of the State of Florida and
has the power and lawful authority to own its properties and to transact the
business in which it is currently engaged.
4.02 Power and Authority.
--------------------
(a) Purchaser has full power to enter into this Agreement and
to carry out its obligations thereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated thereby,
including the execution and delivery of the Note, have been duly and validly
authorized by its Board of Directors. No other acts or proceedings on the part
of Purchaser will b necessary to authorize this Agreement or the transactions
contemplated thereby, and this Agreement and the Note when executed at Closing
shall constitute valid and legally binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to creditors' rights or by the application of
equitable principles when equitable remedies are sought.
(b) Neither the execution and delivery of this Agreement or
the Note, nor the consummation of the transactions contemplated thereby, nor
compliance by Purchaser with any of the provisions thereof, will:
(i) violate, or conflict with, or result in a breach of
any provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, any of the terms,
conditions or provisions of the Articles of Incorporation or By-laws of
Purchaser, or any note, bond, mortgage, indenture, deed of trust, license,
agreement or other instrument or obligation to which it or any subsidiary is a
party, or by which they or any of their properties or assets may be bound or
affected; or
(ii) violate any order, writ, injunction or decree, or
any statute, rule or regulation applicable to Purchaser or any of its properties
or assets.
4.03 Accuracy. All certificates, documents and instruments furnished by
Purchaser or any of its directors, officers, employees or shareholders in
connection with this Agreement, or any other transaction contemplated by this
Agreement, are true and complete, and neither this Agreement, nor any
certificate, document or instrument furnished by Purchaser or any of its
directors, officers, employees or shareholders in connection with this
Agreement, or any other transaction contemplated by this Agreement, contains any
untrue statement of a material fact or omits to state a material fact necessary
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<PAGE>
in order to make the statements included herein or therein not misleading in
light of the circumstances under which they were made.
4.04 Approvals. No permits, approvals, consents, satisfaction of
waiting periods, or waivers thereof of agencies of any jurisdiction or
governmental body, or of any other person whatsoever, related exclusively to
Purchaser are necessary to allow Purchaser to consummate the transactions
contemplated in this Agreement in compliance with, and not in breach of, all
applicable laws, rules, regulations, orders or governmental or other agency
directives, or the provisions of any contract binding upon Purchaser.
4.05 Brokers. Neither this Agreement nor the sale and purchase of the
Assets or any other transaction contemplated hereby was induced by or procured
through any person, firm, corporation or other entity acting on behalf of, or
representing Purchaser as a broker, finder, investment banker, financial advisor
or in any similar capacity.
ARTICLE V
---------
Indemnification
---------------
5.01 Indemnification Obligation.
(a) Seller shall indemnify and hold harmless Purchaser, its
successors and assigns, against and in respect of any and all direct or indirect
damages, claims, losses, liabilities and reasonable expenses (including, without
limitation, legal, accounting, and other expenses) suffered by Purchaser, or its
successors and assigns, which may arise out of or be in respect of: (i) any
breach or violation of this Agreement by Seller, (ii) any falsity, inaccuracy or
misrepresentation in or breach of any of the representations, warranties or
covenants made in this Agreement, or in any certificate, document or instrument
delivered at or prior to the Closing by or on behalf of Seller, (iii) any
action, event, condition, omission or failure to act of or by Seller, its
officers, directors, employees or agents, as the case may be, prior to the
Closing Date, (iv) any tax obligations imposed on Purchaser attributable to the
revenues or income of Seller earned prior to the Closing Date, (v) any of the
Retained Liabilities.
(b) Purchaser shall indemnify and hold harmless Seller, its
successors and assigns, against and in respect of any and all direct or indirect
damages, claims, losses, liabilities and reasonable expenses (including, without
limitation, legal, accounting, and other expenses) suffered by Seller, or its
successors and assigns, which may arise out of or be in respect of: (i) any
breach or violation of this Agreement by Purchaser or (ii) any falsity,
inaccuracy or misrepresentation in or breach of any of the representations,
warranties or covenants made in this Agreement or in any certificate, document
or instrument delivered at or prior to the Closing by or on behalf of Purchaser.
(c) The indemnification obligations of both Purchaser and
Seller under this Section 5.01 shall be capped at $160,347.
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<PAGE>
5.02 Indemnification Notice
----------------------
(a) Upon obtaining knowledge thereof, the indemnified party
shall promptly notify the indemnifying party, in writing, of any facts or
circumstances which may give rise to a right of indemnification under Section
5.01 hereof ("Notice of Claim"). The Notice of Claim shall specify the nature
and details of such facts and circumstances (including any amount claimed) which
may give rise to such right of indemnification. The indemnifying party shall not
be obligated to indemnify an indemnified party for the increased amount of any
claim or other matter which would otherwise have been payable to the extent such
increase results from a failure to reasonably and promptly provide a Notice of
Claim.
(b) If the claim or demand set forth in the Notice of Claim
relates to a claim or demand asserted by a third party (a "Third Party Claim"),
the indemnifying party shall have the right to employ counsel acceptable to the
indemnified party to defend any such claim or demand, and the indemnified party
shall have the right to participate in the defense of any such Third Party
Claim. The indemnifying party shall notify the indemnified party, in writing,
within fifteen (15) days after the Date of the Notice of Claim (as hereinafter
defined), of their decision to defend in good faith any Third Party Claim. So
long as the indemnifying party is defending in good faith any such Third Party
Claim, the indemnified party shall not settle or compromise such Third Party
Claim. The indemnified party shall make available to the indemnifying party or
its representatives all records and other materials reasonably required by them
for their use in contesting any Third Party Claim and shall cooperate with the
indemnifying party in connection therewith. If the indemnifying party does not
so elect to defend any such Third Party Claim, the indemnified party shall have
no obligation to do so.
(c) As soon as is reasonably practicable after the Date of
the Notice of Claim (as hereinafter defined), the indemnified party and the
indemnifying party shall endeavor to agree upon the amount, if any, to which the
indemnified party is entitled under this Article V. In the event the
indemnifying party, on the one hand, and the indemnified party are unable to
reach agreement upon the right of the indemnified party to indemnification
hereunder, or upon the amount of any such indemnification hereunder, either the
indemnified party or the indemnifying party may submit such dispute to any court
of competent jurisdiction for resolution.
5.03 Indemnification Payment and Limitations.
----------------------------------------
(a) Within thirty (30) days after either the indemnifying
party and the indemnified party reach agreement on the amount of any
indemnification obligation of the indemnifying party or any such indemnification
obligation is determined by a court of competent jurisdiction (in either case,
the "Indemnification Amount"), all in accordance with Section 5.02(c), the
indemnified party shall demand payment of the Indemnification Amount from the
indemnifying party, who shall pay such amount due in cash within thirty (30)
days of the indemnified party's demand therefor. With respect to any
Indemnification Amount or portion thereof not paid by the indemnifying party
within such thirty (30) day period, the indemnified party may, at its option,
from time to time, in addition to any other remedies or rights it may have with
respect to the collection thereof, offset the amount of any Indemnification
Amount due the indemnified party from the indemnifying party against any other
agreements with the indemnifying party, including, without limitation, the Note.
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(b) The term Date of the Notice of Claim" as used herein
shall mean the date the notice is deemed delivered pursuant to Section 11 .07
hereof.
ARTICLE VI
----------
Pre-Closing and Post-Closing Covenants
--------------------------------------
6.01 Examinations: Due Diligence. From and after the date hereof, and
until the Closing Date, Seller shall, unless Purchaser shall otherwise agree in
writing:
(a) promptly furnish or cause to be furnished, at its sole
cost and expense, to Purchaser and its representatives originals or copies of
all documents, records, data and information concerning the Assets that may be
reasonably requested;
(b) permit Purchaser to consult with the accountants for
Seller, and said accountants are hereby authorized to disclose all information
in their possession to Purchaser with respect to the Assets;
(c) with the prior approval of Seller, which shall not be
unreasonably withheld, permit Purchaser and its representatives and agents to
discuss the proposed sale of the Assets with the employees, suppliers, and/or
other representatives of Seller;
(d) carry on the Seller's business in the ordinary course;
(e) refrain from doing, or causing to be done, anything which
would cause the representations and warranties set forth in Article III hereof
from being true, complete and accurate in all respects on the Closing Date as if
made on such date;
(f) continue to insure the Assets owned by Seller in
accordance with the prior practice;
(g) refrain from doing any act or omitting to do any act, or
permitting any act or omission to act, which will cause a breach of any
contract, commitment or obligation of Seller related to the Assets;
(h) refrain from soliciting or encouraging (by way of
furnishing information, or otherwise) any inquiries or proposals for the
acquisition of the Assets;
(i) promptly notify Purchaser in writing of any action,
written investigation, claim, action, suit or proceeding, which is commenced
against, by or relating to the Assets, or this Agreement before any court or
governmental department, commission, board, bureau, agency or instrumentality;
(j) refrain from doing any act or omitting to do any act, or
permitting any act or omission to act, which will cause any of the Assets to be
depleted other than in the ordinary course of business: and
10
<PAGE>
(k) use its best efforts to cause all of the conditions to
the obligations of Seller or Purchaser under this Agreement to be satisfied on
or prior to the Closing Date.
6.02 Update lnformation. Prior to Closing, Seller shall promptly
disclose to Purchaser any information contained in its representations and
warranties, which, because of an event occurring after the date hereof or
thereof, is incomplete or is no longer correct in any respect as of all times
after the date hereof until the Closing Date.
6.03 Purchaser's Covenants. Prior to Closing, Purchaser will not take
any action which would result in a breach in any material respect of any of its
representations and warranties hereunder. Furthermore, Purchaser shall cooperate
with Seller and use diligent efforts to cause all of the conditions to the
obligations of Purchaser under this Agreement to be satisfied on or prior to the
Closing Date.
6.04 Retained Liabilities. Subsequent to the Closing Date, Seller shall
he responsible for, and timely discharge, all the Retained Liabilities.
6.05 Disputes Involving Assumed Liabilities. From and after the Closing
Date, Purchaser shall have complete control over the payment, settlement or
other disposition of, or any dispute involving, any of the Assumed Liabilities
and Purchaser shall have the right to conduct and control all negotiations and
proceedings with respect thereto. Seller shall notify Purchaser immediately of
any claim made with respect to any such Assumed Liability and shall not, except
with the prior written consent of Purchaser, make any payment of, or settle or
offer to settle, or consent to any compromise with respect to, any such Assumed
Liability. Seller shall, at Purchaser's expense, cooperate with Purchaser in any
manner reasonably requested by Purchaser in connection with any negotiations or
proceedings involving any such Assumed Liability.
6.06 Access to Records. At all times after the Closing Date, upon the
request of either party, the other party shall make available any records,
documents and data with respect to the Assets or Assumed Liabilities which are
in such party's' possession and which relate to the period prior to the Closing
Date. Each party shall preserve until the second anniversary of the Closing Date
all records relating to any of the Assets, or Assumed Liabilities prior to the
Closing Date.
6.07 Set-Off Rights. Purchaser shall have the right to set-off against
any sums payable under the Note for any claims for indemnification under Article
V hereof.
ARTICLE VII
-----------
Conditions Precedent to Purchaser's Obligations
-----------------------------------------------
The obligation of Purchaser to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to the Closing Date, of
the following conditions:
7.01 No Termination. This Agreement shall not have been terminated
pursuant to Article IX hereof.
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7.02 Representations True and Correct. The representations and
warranties of Seller contained in this Agreement shall be true and correct in
all respects on and as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.03 Compliance with Covenants. Seller shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by them prior to or
at the Closing Date.
7.04 Adverse Proceedings. On the Closing Date, no action or proceeding
shall be pending by any public authority or private individual or entity before
any court or administrative body to restrain, enjoin or otherwise prevent the
consummation of this Agreement or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of the transactions
proposed hereby.
7.05 Proceedings Satisfactory. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement and all documents incident thereto, shall be reasonably satisfactory
in form and substance to Purchaser and its counsel, and Purchaser and its
counsel shall have received copies of such documents as Purchaser and its
counsel may reasonably request in connection therewith including, but not
limited to, the documents to be delivered by Seller to Purchaser pursuant to
Section 2.02 hereof.
7.06 No Material Adverse Changes. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in (i)
the Assets or (ii) the Assumed Liabilities of the Seller..
7.07 Certificate. At the Closing on the Closing Date, Seller shall have
delivered to Purchaser a certificate to the effect that the conditions set forth
in Sections 7.02, 7.03 and 7.06 have been satisfied.
7.08 Documents. Purchaser shall have received each of the certificates,
documents, agreements, opinions and instruments referenced in Section 2.02
hereof, in form and substance reasonably satisfactory to Purchaser and its
counsel.
7.09 Due Diligence. Purchaser shall have completed its due diligence
investigation of the Assets, and is satisfied, in its sole and absolute
discretion, with its findings.
ARTICLE VIII
------------
Conditions Precedent to Seller's Obligations
--------------------------------------------
The obligation of Seller to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to the Closing Date, of
the following conditions:
8.01 No Termination. This Agreement shall not have been terminated
pursuant to Article IX hereof.
12
<PAGE>
8.02 Representations True and Correct. The representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
8.03 Compliance with Covenants. Purchaser shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date.
8.04 No Adverse Proceedings. On the Closing Date, no action or
proceeding shall be pending by any public authority or individual or entity
before any court or administrative body to restrain, enjoin or otherwise prevent
the consummation of this Agreement or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of the transactions
proposed hereby.
8.05 Purchaser's Certificate. At the Closing on the Closing Date,
Purchaser shall have delivered to Seller a certificate executed by Purchaser to
the effect that the conditions set forth in Sections 8.02, 8.03 and 8.04 have
been satisfied.
8.06 Proceedings Satisfactory. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement, and all documents incident thereto, shall be reasonably satisfactory
in form and substance to Seller and its counsel, and its counsel shall have
received copies of such documents as Seller and its counsel may reasonably
request in connection with said transactions, including but not limited to, the
documents to be delivered by Purchaser to Seller pursuant to Section 2.05
hereof.
8.07 Documents. Seller shall have received each of the documents,
agreements, opinions and instruments referenced in Section 2.05 hereof, in form
and substance reasonably satisfactory to Seller and its counsel.
ARTICLE IX
----------
Termination
-----------
This Agreement may be terminated at any time prior to the Closing as
follows, and in no other manner:
(i) by mutual consent of Purchaser and Seller;
(ii) by Purchaser, if at or before the Closing, any conditions set
forth herein for the benefit of Purchaser shall not have been timely met;
(iii) by Seller, if at or before the Closing, any conditions set
forth herein for the benefit of Seller shall not have been timely met;
(iv) by Purchaser, if any representation or warranty made herein
for the benefit of Purchaser or in any certificate or document furnished to
Purchaser pursuant to this Agreement is untrue in any
13
<PAGE>
material respect or Seller shall have defaulted in any respect in the
performance of any material obligation herein contained; or
(vi) by Seller, if any representation or warranty made herein for
the benefit of Seller or in any certificate or document furnished to Seller
pursuant to this Agreement is untrue in any material respect or Purchaser shall
have defaulted in any respect in the performance of any material obligation
herein contained.
ARTICLE X
---------
Confidentiality and Publicity
-----------------------------
10.01 Confidentiality. Prior to Closing, Purchaser will hold in
confidence all information concerning the business, operations, prospects and
other matters of or relating to Seller and will use or disclose such information
only for the purpose of considering and obtaining financing for the transactions
proposed herein. Prior to Closing, Purchaser further agrees that it will not
otherwise disclose any such information to any third party, except to its
employees, agents, accountants, attorneys, consultants and lenders, except upon
the written consent of Seller, or except as required by law. If the Closing
shall not occur for any reason, Purchaser will return all such information
furnished to it and all copies thereof to the party that furnished such
information. Such obligation of confidentiality shall not extend to any
information which is or has been generally known to others engaged in the same
trade or business as the furnishing party, or that is or shall be public
knowledge through no act or omission of Purchaser or its directors, officers,
employees, professional advisors or other representatives or as required by law
or a final order of a court or other governmental agency or authority of
competent jurisdiction.
10.02 Publicity. Before, during and after the Closing Date (except in
the event this Agreement has been terminated pursuant to Article IX hereof),
Seller hereby agrees that, subject at all times to compliance with the law, any
proposed press release pertaining to the transactions contemplated herein shall
be coordinated solely by Purchaser but in consultation with Seller. Subject to
the foregoing and subject at all times to compliance with the law, the parties
agree to keep confidential and not disclose or communicate, either directly or
indirectly, the terms or conditions of this Agreement, to any third person
(other than professional advisors).
ARTICLE XI
----------
Miscellaneous
-------------
11.01 Transaction Costs.
-----------------
(a) Except as otherwise provided herein, Seller shall pay all
of its costs and expenses (including attorneys' fees and other legal costs and
expenses and accountants' fees and other accounting costs and expenses) incurred
in connection with this Agreement.
14
<PAGE>
(b) Except as otherwise provided herein. Purchaser shall pay
all of its costs and expenses (including attorneys' fees and other legal costs
and expenses and accountants' fees and other accounting costs and expenses)
incurred in connection with this Agreement.
11.02 Amendments. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
11.03 Assignments. No party shall assign his or its rights and/or
obligations hereunder without the prior written consent of each other party to
this Agreement.
11.04 Further Assurances. The parties hereby agree from time to time to
execute and deliver such further and other transfers, assignments and documents
and do all matters and things which may be convenient or necessary to more
effectively and completely carry out the intentions of this Agreement.
11.05 Binding Effect. All of the terms and provisions of this
Agreement, whether so expressed or not, shall be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective
administrators, executors, legal representatives, heirs, successors and
permitted assigns.
11.06 Headings. The headings contained in this Agreement are for
convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect in any way the meaning or interpretation of this
Agreement.
11.07 Notices. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To Purchaser: With a copy to:
FutureTrak International, Inc. Gunster, Yoakley, Valdes-Fauli
3635 Park Central North Blvd. & Stewart, P.A.
Pompano Beach, FL 33069 Broward Financial Centre, Suite 1400
500 East Broward Boulevard
Attention: Chief Operating Officer Fort Lauderdale, Florida 33394
Attention: Charles J. Duffy, III
15
<PAGE>
To Seller: With a copy to:
Satellite Technologies, Inc. Farrell Fritz, P.C.
2000 PGA Blvd., Suite 2100 EAB Plaza
North Palm Beach, FL 33408 Uniondale, New York 11556
Attention: Kevin T. Ryan Attention: Stephen F. Melore, Esq.
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by telex, telefax or other telegraphic method; and (c)
on the date upon which the return receipt is signed or delivery is refused or
the notice is designated by the postal authorities as not deliverable, as the
case may be, if mailed.
11.08 Severability. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given full force and effect so far as possible. If any provision of this
Agreement may be construed in two or more ways, one of which would render the
provision invalid or otherwise voidable or uninforceable and another of which
would render the provision valid and enforceable, such provision shall have the
meaning which renders it valid and enforceable.
11.09 Waivers. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder. Any waiver by any
party of any breach of any provision of this Agreement should not be construed
as a waiver of any continuing or succeeding breach of such provision, a waiver
of the provision itself, or a waiver of any right, power or remedy under this
Agreement. No notice to or demand on any party in any case shall, of itself,
entitle such party to any other or further notice or demand in similar or other
circumstances.
11.10 Pronouns. In this Agreement, the use of any gender shall be
deemed to include all genders, and the use of the singular shall include the
plural and vice versa, wherever it appears appropriate from the context.
11.11 Third Parties. Unless expressly stated herein to the contrary,
nothing in this Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto and their respective administrators, executors, other
legal representatives, heirs, successors and permitted assigns. Nothing in this
Agreement is intended to relieve or discharge the obligation of liability of any
third persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Agreement.
16
<PAGE>
11.12 Enforcement Costs. If any legal action or other proceeding is
brought fur the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party or panics shall be entitled to
recover reasonable attorneys' fees, sales and use taxes, court costs and all
expenses even if not taxable as court costs (including, without limitation, all
such fees, taxes, costs and expenses incident to arbitration, appellate,
bankruptcy and post-judgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or parties may
be entitled. Attorneys' fees shall include, without limitation, paralegal fees,
investigative fees, administrative costs, sales and use taxes, and all other
charges billed by the attorney to the prevailing party.
11.13 Remedies Cumulative. Except as otherwise expressly provided
herein, no remedy herein conferred upon any party is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise. No single or partial
exercise by any party of any right, power or remedy hereunder shall preclude any
other or further exercise thereof.
11.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Confirmation of execution
by telex or by telecopy or telefax of a facsimile signature page shall be
binding upon any party so confirming.
11.15 Governing Law. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida. The parties hereto acknowledge that the
anticipated performance and execution of this Agreement occurred or shall occur
in Broward County, Florida, and that, therefore, the parties irrevocably and
unconditionally (a) agree that any suit, action or Legal proceeding arising out
of or relating to this Agreement shall be brought in the courts of record of the
State of Florida in Broward County or the court of the United States, Southern
District of Florida; (b) consent to the jurisdiction of each such court in any
suit, action or proceeding; and (c) waive any objection which it may have to the
laying of venue of any such suit, action or proceeding in any of such courts.
11.16 Preparation of Agreement. This Agreement shall not be construed
more strongly against any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and is equally responsible
for its preparation.
11.17 Survival. All representations, warranties, covenants and
agreements made herein or otherwise made in writing by any pasty pursuant hereto
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby for two (2) years from the Closing Date.
11.18 Inducement to Transaction. All representations and warranties
made by any party in this Agreement shall be deemed made for the purpose of
inducing the other party to enter into this Agreement.
17
<PAGE>
11.19 Knowledge. When used in this Agreement, the terms "knowledge" or
"known," when used (i) with respect to Seller, shall mean the actual knowledge
of or matters actually known to the officers of Seller, and (ii) with respect to
Purchaser, shall mean the actual knowledge of or matters actually known to the
officers of Purchaser.
11.20 Entire Agreement. This Agreement and the Exhibits hereto
represents the entire understanding and agreement among the parties with respect
to the subject matter hereof, and supersedes all other negotiations,
understandings and representations (if any) made by and among such parties.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Attest "PURCHASER"
-----------
FUTURETRAK INTERNATIONAL, INC.,
a Florida corporation
By: /s/ Robert S. Kelner By: /s/ Ahmad Muradi ceo
------------------------ ------------------------
Name: Robert S. Kelner Name: Ahmad Muradi phD
------------------------ -----------------------
Its: C.E.O.
------------------------
"SELLER"
--------
SATELLITE TECHNOLOGY, INC.,
a Florida corporation
By: /s/ [ILLEGEBLE] By: /s/ [ILLEGEBLE]
------------------------ ------------------------
Name: [ILLEGEBLE] Name: [ILLEGEBLE]
------------------------ -----------------------
Its: President
------------------------
19
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
PURPOSE OF THE PLAN............................................................................................1
DEFINITIONS....................................................................................................1
STOCK SUBJECT TO OPTION........................................................................................2
Total Number of Shares.......................................................................................2
Expired Options..............................................................................................3
ADMINISTRATION OF THE PLAN.....................................................................................3
Board........................................................................................................3
Stock Option Plan Committee..................................................................................3
Compliance with Internal Revenue Code........................................................................3
SELECTION OF OPTIONEES.........................................................................................3
Discretion of the Board......................................................................................3
Limitation on Grant of Options...............................................................................3
Nondiscretionary Grants to Directors.........................................................................4
OPTION AGREEMENT...............................................................................................4
OPTION PRICES..................................................................................................4
Determination of Option Price................................................................................4
Determination of Fair Market Value...........................................................................4
Determination of Stock Ownership.............................................................................4
TERM OF OPTION.................................................................................................4
EXERCISE OF OPTION.............................................................................................5
Limitation on Exercise of Option.............................................................................5
Exercise Prior to Cancellation...............................................................................5
Method of Exercising an Option...............................................................................5
Payment for Option Stock.....................................................................................6
Cashless Exercise............................................................................................6
Delivery of Stock to Optionee................................................................................6
NONTRANSFERABILITY OF OPTIONS..................................................................................6
General......................................................................................................7
Incentive Stock Options......................................................................................7
TAX EFFECTS OF PLAN PARTICIPATION..............................................................................7
COMPLIANCE WITH SECURITIES LAWS................................................................................7
Restrictions on Transfer of Shares...........................................................................7
Optionee's Written Statement.................................................................................8
Registration Requirements....................................................................................8
Restrictive Legend...........................................................................................8
CHANGES IN CAPITAL STRUCTURE OF COMPANY........................................................................8
REORGANIZATION, DISSOLUTION OR LIQUIDATION.....................................................................9
OPTION TO REPURCHASE...........................................................................................9
Company's Option.............................................................................................9
Procedure for Exercise......................................................................................10
Delivery of Stock Certificates..............................................................................10
RIGHT OF FIRST REFUSAL........................................................................................10
Right of First Refusal for Offers...........................................................................10
Procedure for Exercise......................................................................................10
Delivery of Stock Certificates..............................................................................11
Company's Option in Event of Involuntary Transfer...........................................................11
FutureTrak International, Inc.
1998 Stock Option Plan
Page i
<PAGE>
ESCROW........................................................................................................11
APPLICATION OF FUNDS..........................................................................................11
OPTIONEE'S RIGHTS AS A HOLDER OF SHARES.......................................................................11
Prior to Exercise...........................................................................................11
Dividends After Exercise....................................................................................11
Voting Rights...............................................................................................12
AMENDMENT AND TERMINATION OF THE PLAN.........................................................................12
Discretion of the Board.....................................................................................12
Automatic Termination.......................................................................................12
MISCELLANEOUS.................................................................................................12
Notices.....................................................................................................12
Effective Date of the Plan..................................................................................12
Employment..................................................................................................12
Plan Binding................................................................................................12
Gender......................................................................................................12
Headings....................................................................................................12
Applicable Law..............................................................................................12
INDEMNIFICATION...............................................................................................12
</TABLE>
FutureTrak International, Inc.
1998 Stock Option Plan
Page ii
<PAGE>
FUTURETRAK INTERNATIONAL, INC.
------------------------------
1998 STOCK OPTION PLAN
----------------------
FUTURETRAK INTERNATIONAL, INC., a Florida corporation, hereby adopts a
stock option plan for its key employees, officers, directors and consultants, in
accordance with the following terms and conditions.
1. Purpose of the Plan. The purpose of the Plan is to advance the
growth and development of the Company by affording an opportunity to executives,
consultants and key employees of the Company as well as directors of the Company
and its affiliates to purchase shares of the Company's common stock and to
provide incentives for them to put forth maximum efforts for the success of the
Company's business. The Plan is intended to permit certain designated stock
options granted under the Plan to qualify as incentive stock options under
Section 422A of the Code.
2. Definitions. For purposes of this Plan, the following capitalized
terms shall have the meanings set forth below:
"Board" means the board of directors of the Company.
"Cause" means: (i) commission of a felony or a charge of theft,
dishonesty, fraud or embezzlement; (ii) failure to adhere to Company's
reasonable directives and policies, (iii) willful disobedience or
insubordination; (iv) disclosing to a competitor or other unauthorized person,
proprietary information, confidences or trade secrets of the Company or any
Subsidiary; (v) recruitment of personnel of the Company or any Subsidiary on
behalf of a competitor or potential competitor of the Company, any Subsidiary,
or any successor thereof; (vi) solicitation of business on behalf of a
competitor or potential competitor of the Company, any Subsidiary, or any
successor thereof; or (vii) material breach of any employment or consulting
agreement with the Company or any Subsidiary or any successor thereof.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder and pursuant thereto, as currently in effect
or as hereafter amended.
"Common Stock" means the common stock of the Company, par value
$.001 per share.
"Company" means FutureTrak International, Inc., a Florida
corporation.
"Continuous Employment" means the absence by any employee of any
interruption or termination of employment with the Company or any Subsidiary
which now exists or hereafter is organized or acquired by the Company.
Continuous Employment with the Company shall not be considered interrupted in
the case of sick leave, military leave, or any other leave of absence approved
by the Company or in the case of transfers between locations of the Company or
between any Subsidiary or successor thereof.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 1
<PAGE>
"Eligible Employee" means any officer, or executive, managerial, or
other employee of the Company or any Subsidiary. In order to be eligible for an
Incentive Stock Option, a director or a consultant must also be a common law
employee of the Company as provided in Section 422A of the Code; however, in
order to be eligible for a Nonqualified Stock Option, a director or consultant
need not be a common law employee of the Company.
"Incentive Stock Option" means a stock option granted to an Eligible
Employee to purchase shares of Stock which is intended to qualify as an
"incentive stock option," as defined in Section 422A of the Code.
"Nonqualified Stock Option" means a stock option granted to an
Optionee to purchase shares of Stock which is not intended to qualify as an
Incentive Stock Option.
"Option" means any unexercised and unexpired Incentive Stock Option
or Nonqualified Stock Option issued under this Plan, or any portion thereof
remaining unexercised and unexpired.
"Option Grant" means a written agreement between the Company and an
Optionee setting forth the terms and conditions of the Option granted by the
Board to such Optionee.
"Optionee" means any person who is granted an Option as provided in
the Plan.
"Person" means shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, labor union or other entity
or governmental body.
"Plan" means the Company's 1998 Stock Option Plan.
"Shareholder" means a holder of record of the Company's Common
Stock.
"Stock" means the authorized and unissued shares of the Company's
Common Stock.
"Subsidiary" means any present or future "subsidiary corporation" of
the Company, as such term is defined in Section 425(f) of the Code, which the
Board has elected to be covered by the Plan.
Where applicable, the terms used in this Plan with reference to
Options have the same meanings as the terms used in the Code.
3. Stock Subject to Option.
------------------------
3.1 Total Number of Shares. The total number of shares of Stock
which may be issued by the Company to all Optionees under this Plan is one
million five hundred thousand (1,500,000) shares. The total number of shares of
Stock which may be so issued may be increased only by a resolution adopted by
the Board and approved by the Shareholders.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 2
<PAGE>
3.2 Expired Options. If any Option granted under this Plan is
terminated or expires for any reason whatsoever, in whole or in part, then the
shares (or remaining shares) of Stock subject to that particular Option shall
again be available for grant under this Plan.
4. Administration of the Plan.
---------------------------
4.1 Board. This Plan shall be administered by the Board which may,
from time to time, issue orders or adopt resolutions, not inconsistent with the
provisions of the Plan, to interpret the provisions and supervise the
administration of the Plan. All determinations shall be by the affirmative vote
of a majority of the members of the Board at a meeting, or reduced to writing
and signed by all of the members of the Board. Subject to the Company's Bylaws,
all decisions made by the Board in selecting Optionees, establishing the number
of shares and terms applicable to each Option, and in construing the provisions
of this Plan shall be final, conclusive and binding on all persons, including
the Company, Shareholders, Optionees, and purchasers of shares pursuant to this
Plan. No member of the Board shall be liable for any action or determination
made in good faith with respect to the Plan or an Option granted hereunder.
4.2 Stock Option Plan Committee. The Board may from time to time
appoint a Stock Option Plan Committee consisting of not less than two (2)
directors (the "Committee"). The Board may delegate to such Committee full power
and authority to take any action required or permitted to be taken by the Board
under this Plan, subject to restrictions on affiliate participation under the
Securities Exchange Act of 1934, pertaining to, among other things, Section
16(b). All determinations shall be by the affirmative vote of a majority of the
members of the Committee at a meeting, or reduced to writing and signed by all
members of the Committee. The Board may from time to time, in its sole
discretion, remove members from or add members to the Committee. Vacancies may
be filled by the Board only. Where the context requires, the Board shall mean
the Committee, if appointed, for matters dealing with administration of the
Plan.
4.3 Compliance with Internal Revenue Code. The Board shall at all
times administer this Plan and make interpretations hereunder in such a manner
that Options granted hereunder designated as Incentive Stock Options will meet
the requirements of Section 422A of the Code.
5. Selection of Optionees.
-----------------------
5.1 Discretion of the Board. In determining which Persons shall be
offered Options as well as the terms thereof, the Board shall evaluate, among
other things, (i) the duties and responsibilities of Eligible Employees, (ii)
their past and prospective contributions to the success of the Company, (iii)
the extent to which they are performing and will continue to perform outstanding
services for the benefit of the Company, and (iv) such other factors as the
Board deems relevant. All grants must be approved by a disinterested majority of
the Board (or Committee, if appointed).
5.2 Limitation on Grant of Incentive Stock Options. An Incentive
Stock Option may not be granted to any Optionee if the grant of such Option to
such Optionee would otherwise cause the aggregate fair market value (determined
at the time the Option is granted) of the Stock for which Options are
exercisable for the first time by such Optionee under all
FutureTrak International, Inc.
1998 Stock Option Plan
Page 3
<PAGE>
incentive stock option plans of the Company during any calendar year to exceed
$100,000. Any options granted in excess of this limitation shall be Nonqualified
Stock Options. The grant of Nonqualified Stock Options is not subject to
limitations and may be granted at the sole discretion of the Board.
5.3 Nondiscretionary Grants to Directors. Each member of the Board
of Directors shall receive a Nonqualified Option for 10,000 shares of Stock upon
initial appointment to the Board and at each annual meeting of directors in
consideration of the director's service on the Board of Directors for the coming
year. All such options shall fully vest on the date of grant and shall have a
term of five (5) years.
6. Option Agreement. Subject to the provisions of this Plan, each
Option granted to an Optionee shall be set forth in an Option Grant upon such
terms and conditions as the Board determines, including a vesting schedule, if
desired. Each such Option Grant shall incorporate the provisions of this Plan by
reference. The date of the grant of an Option is the date specified in the
Option Grant. Any Option Grant shall clearly identify such Options as Incentive
Stock Options or Nonqualified Stock Options.
7. Option Prices.
7.1 Determination of Option Price. The option price for Stock shall
not be less than one hundred percent (100%) of the fair market value of the
Stock on the date of the grant of such Option. The price for Stock under an
Incentive Stock Option granted to an Eligible Employee who possesses more than
ten percent (10%) of the total combined voting power of all classes of common
stock of the Company shall not be less than one hundred ten percent (110%) of
the fair market value of the Stock on the date of the grant of such Option.
7.2 Determination of Fair Market Value. For the purpose of this
Plan, fair market value of one share of Stock shall be determined by the Board
in good faith in accordance with the provisions of this Plan; provided, however,
that where there is a public market for the Company's Stock, the fair market
value per share shall be the average of the closing bid and asked prices of the
Company's Stock quoted in the Over-The-Counter Market Summary or the closing
prices quoted on the NASDAQ National Market System or on any exchange on which
the Stock is listed, whichever is applicable, as published in the Eastern
Edition of the Wall Street Journal (or, if not so reported, as otherwise
reported by the NASDAQ System) for the five (5) trading days prior to the date
of determination of fair market value.
7.3 Determination of Stock Ownership. For purposes of Articles 7 and
8, an Optionee's Stock ownership shall be determined by taking into account the
rules of constructive ownership set forth in Section 424(d) of the Code.
8. Term of Option. The term of an Option may vary within the sole
discretion of the Board; however, the term of an Incentive Stock Option granted
to an Eligible Employee shall not exceed ten (10) years from the date of grant
of such Incentive Stock Option; provided, however, that the term shall not
exceed five (5) years for any Optionee who possesses more than ten percent (10%)
of the total, combined voting power of all classes of Common Stock of the
Company. An Incentive Stock Option may be canceled only in connection with the
termination of employment or death of the Optionee (as more particularly
described in Article 9 hereof) or any unauthorized, attempted transfer or
assignment of the Option (as more
FutureTrak International, Inc.
1998 Stock Option Plan
Page 4
<PAGE>
particularly described in Article 10 hereof). A Nonqualified Stock Option may be
canceled only in connection with the termination of employment or death of an
Optionee, the removal for cause of an Optionee who is a director, the breach by
any consultant of its consulting agreement with the Company, or any
unauthorized, attempted transfer or assignment of the Option.
9. Exercise of Option.
9.1 Limitation on Exercise of Option. Except as otherwise provided
herein, the Board, in its sole discretion, may limit an Option by restricting
its exercise in whole or in part to specified vesting periods or until specified
conditions have occurred. The vesting periods and any restrictions will be set
forth in the Option Grant.
9.2 Exercise Prior to Cancellation. An Option shall be exercisable
only during the term of the Option. Notwithstanding the preceding sentence, as
long as the Option's term has not expired or terminated early, an Option which
is otherwise exercisable in accordance with its provisions shall be exercisable:
(a) for a period ending ninety (90) days after the termination
of the Optionee's Continuous Employment with the Company, unless the Optionee
was terminated for Cause by the Company, in which case the Option will terminate
on the effective date of termination of employment; or
(b) for a period ending one hundred eighty (180) days after
the removal for Cause of the Optionee from the Board or from the board of
directors of any Subsidiary on which such Optionee has served; or
(c) by the estate of the Optionee, within one (1) year after
the date of the Optionee's death; or
(d) within six (6) months after the Optionee's employment with
the Company terminates if the Optionee becomes disabled during Continuous
Employment with the Company and such disability is the cause of termination.
9.3 Method of Exercising an Option. Subject to the provisions of any
particular Option Agreement, including any provisions relating to vesting of an
Option, an Optionee who desires to exercise an Option, in whole or in part, must
first provide written notice to the Company stating in such written notice the
number of shares of Stock such Optionee elects to purchase, and the time of the
delivery thereof, which time shall be at least fifteen (15) days after the
giving of such notice, unless an earlier date shall have been agreed upon by the
Board. Upon receipt of such written notice, the Company shall provide the
Optionee with that information required by applicable state and federal
securities laws. If, after receipt of such information, the Optionee desires to
withdraw such notice of exercise, then the Optionee may withdraw such notice of
exercise by notifying the Company, in writing, prior to the time set forth for
delivery of the shares of Stock. The date of exercise shall be the date a proper
notice of exercise is received by the designated Company authority. An Optionee
is under no obligation to exercise an Option or any part thereof.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 5
<PAGE>
9.4 Payment for Option Stock. The exercise of any Option shall be
contingent upon prior or simultaneous receipt by the Company of cash or a
certified bank check to its order, transferable or redeemable shares of the
Company's Stock, or any combination of the foregoing in an amount equal to the
full option price of the shares of Stock being purchased. For purposes of this
Section 9.4, shares of the Company's Stock that are delivered in payment of the
option price shall be valued at their fair market value as determined under the
provisions of this Plan. In the alternative, the Board may, but is not required
to, accept a promissory note, secured or unsecured, or other consideration in
the amount of the option price made by the Optionee and on terms and conditions
satisfactory to the Board.
9.5 Cashless Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of Stock is greater than the
full option price of such share of Stock (at the date of calculation as set
forth below), in lieu of exercising any Option for cash, the Optionee may elect
to receive Stock equal to the value (as determined below) of the Option (or the
portion thereof being exercised) by delivery to the designated Company authority
of the properly completed and endorsed Notice of Exercise of Option, in which
event the Company shall issue to the Optionee a number of shares of Stock
computed using the following formula:
X= Y (A-B)
-------
A
Where X = the number of shares of Stock to be issued to the
Optionee
Y = the number of shares of Stock purchasable under the
Option or, if only a portion of the Option is being
exercised, then the portion of the Option being
exercised (at the date of such calculation)
A = the fair market value of one share of the Company's
Stock (at the date of such calculation)
B = the full Option price of one share of Stock being
purchased (as adjusted to the date of such
calculation)
9.6 Delivery of Stock to Optionee. Provided the Optionee has
delivered proper notice of exercise and full payment of the option price, the
Company shall undertake and follow all necessary procedures to make prompt
delivery of the number of shares of Stock which the Optionee elects to purchase
at the time specified in such notice. Such delivery, however, may be postponed,
without postponing the actual date of exercise, at the sole discretion of the
Company to enable the Company to comply with any applicable procedures,
regulations or listing requirements of any governmental agency, stock exchange
or regulatory authority. As a condition to the issuance of shares of Stock, the
Company may require such additional payments from the Optionee as may be
required to allow the Company to withhold any income taxes which the Company
deems necessary to insure the Company that it can comply with any federal or
state income tax withholding requirements.
10. Nontransferability of Options.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 6
<PAGE>
10.1 General. Except as otherwise provided in section 9.2(c) above,
an Option granted to an Optionee may be exercised only during such Optionee's
lifetime by such Optionee. An Option may not be sold, exchanged, assigned,
pledged, gifted, encumbered, hypothecated or otherwise transferred except by
will or by the laws of descent and distribution. No Option or any right
thereunder shall be subject to transfer by operation of law, execution,
attachment, or similar process by any creditors of or claimants against the
Optionee. Upon any attempted sale, assignment, transfer, exchange, pledge, gift,
hypothecation or other encumbrance of any Option contrary to the provisions
hereof, such Option and all rights thereunder shall immediately terminate and
shall be null and void with respect to the transferee or assignee.
10.2 Incentive Stock Options. With respect to Incentive Stock
Options, notwithstanding anything else to the contrary in this Plan, no
disposition or transfer of any Stock purchased under an Incentive Stock Option
may be made by the Optionee within two (2) years from the date the Option was
granted nor within one (1) year after the date the shares were transferred to
the Optionee. Any Optionee who makes a transfer of Stock in violation of this
Section 10.2 shall promptly provide the Company written notice of such transfer.
Such transfer shall be deemed to disqualify the Option from treatment as an
Incentive Stock Option and shall cause the Option to be treated as a
Nonqualified Stock Option.
11. Tax Effects of Plan Participation. Incentive Stock Options granted
under the Plan shall satisfy the requirements of Section 422A of the Code. No
taxable income is recognized by the Optionee at the time of the Option grant,
and, generally, no taxable income is recognized at the time that the Option is
exercised. The Optionee will, however, recognize taxable income (generally in
the form of capital gain) in the year in which the purchased shares are sold or
otherwise made subject to disposition. For federal tax purposes, dispositions
are divided into two categories:
(i) The Optionee will make a qualifying disposition of the purchased
shares if the sale or other disposition of such shares is made after the
Optionee has held the shares for more than two (2) years after the grant date of
the Option and more than one (1) year after the exercise date. If the Optionee
fails to satisfy either of these two holding periods prior to the sale or other
disposition of the purchased shares, then a disqualifying disposition will
result. Upon a qualifying disposition of the shares, the Optionee will recognize
long-term capital gains in an amount equal to the excess of (a) the amount
realized upon the sale or other disposition of the purchased shares over (b) the
exercise price paid for such shares.
(ii) If there is a disqualifying disposition of the shares, or if
the option is granted as a Nonqualified Stock Option, then the excess of (a) the
fair market value of those shares on the date the Option was exercised over (b)
the exercise price paid for the shares will be taxable as ordinary income. Any
additional gain recognized upon the disposition will be a capital gain. If the
Optionee makes a disqualifying disposition of the purchased shares, then the
Company will be entitled to an income tax deduction for the taxable year in
which such disposition occurs in an amount equal to the excess of (a) the fair
market value of such shares on the date the Option was exercised over (b) the
exercise price paid for the shares.
12. Compliance with Securities Laws.
--------------------------------
FutureTrak International, Inc.
1998 Stock Option Plan
Page 7
<PAGE>
12.1 Restrictions on Transfer of Shares. Subject to the Company's
repurchase rights and rights of first refusal, as more particularly set forth in
Articles 15 and 16 below, the shares of Stock acquired by an Optionee pursuant
to the exercise of an Option hereunder shall be freely transferable; provided,
however, that such shares of Stock may not be sold, transferred, pledged or
hypothecated, unless (i) a registration statement covering the securities is
effective under the Act and appropriate state securities laws, or (ii) an
opinion of counsel, satisfactory to the Company, that such sale, transfer,
pledge or hypothecation may legally be made without registration of such shares
under federal or state securities laws has been received by the Company.
12.2 Optionee's Written Statement. The Board may, in its sole
discretion, require that, at the time an Optionee elects to exercise his option,
the Optionee shall furnish a written statement to the Company that he is
acquiring such shares of Stock for investment purposes only and that he has no
intention of reselling or otherwise disposing of such Stock, along with a
written acknowledgment that the Option and the shares of Stock pertaining to the
Option are not registered under the Securities Act of 1933, as amended (the
"Act"), the Florida securities laws, or any other state securities laws. In the
event that shares of Stock subject to the Option are registered with the
Securities and Exchange Commission, an Optionee shall no longer be required to
comply with this Section 12.2.
12.3 Registration Requirements. If, at any time, the Board, in its
sole discretion, determines that the listing, registration or qualification of
the shares of Stock subject to an Option upon any securities exchange or under
any state or federal securities laws, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares thereunder, then the Option
may not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained (and the
same shall have been free of any conditions not acceptable to the Board).
12.4 Restrictive Legend. In order to enforce the restrictions
imposed upon shares of Stock under this Plan, the Company shall make appropriate
notation in its stock records or, if applicable, shall issue an appropriate
stock transfer instruction to the Company's stock transfer agent. In addition,
the Company may cause a legend or legends to be placed on any certificates
representing shares of Stock issued pursuant to this Plan, which legend or
legends shall make appropriate reference to such restrictions in substantially
the following form:
These shares have not been registered under the Securities Act of 1933,
as amended (the "Act"), the Florida Securities and Investor Protection
Act, or any other state securities laws and, therefore, cannot be sold
unless they are subsequently registered under the Act and any
applicable state securities laws or an exemption from registration is
available.
The shares of Common Stock evidenced by this certificate have been
issued under the FutureTrak International, Inc. 1998 Stock Option Plan
(the "Plan") and are subject to the terms and provisions of such Plan.
These shares are subject to a repurchase agreement and right of first
refusal as set forth in the Plan and the Stock Option Agreement by and
between the shareholder and FutureTrak International, Inc., and any
sale, transfer, gift, pledge, or encumbrance of these shares is subject
to this repurchase agreement and right of first refusal.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 8
<PAGE>
13. Changes in Capital Structure of Company. In the event of a capital
adjustment resulting from a stock dividend, stock split, reverse stock split,
reclassification, or recapitalization, or by reason of a merger, consolidation,
or other reorganization in which the Company is the surviving entity, the Board
shall make such adjustment, if any, as it may deem appropriate in the number and
kind of shares authorized by this Plan, or in the number, option price and kind
of shares covered by the Options granted. The Company shall give notice of any
adjustment to each Optionee, and such adjustment shall be deemed conclusive. The
foregoing adjustments and the manner of application of the foregoing provisions
shall be determined solely by the Board, and any such adjustment may provide for
the elimination of fractional shares.
14. Reorganization, Dissolution or Liquidation. In the event of the
dissolution or liquidation of the Company or any merger or combination involving
the Company in which the Company is not the surviving entity, or a transfer by
the Company of substantially all of its assets or property to another
corporation, or in the event any other corporation acquires control of the
Company in a reorganization within the meaning of Section 368(a) of the Code,
all outstanding Options shall thereupon terminate unless such Options are
assumed or substitutes therefor are issued (within the meaning of Section 425(a)
of the Code) by the surviving or acquiring corporation in any such merger,
combination or other reorganization. Notwithstanding the previous sentence, the
Company shall give at least fifteen (15) days written notice of such transaction
to holders of unexercised Options prior to the effective date of such merger,
combination, reorganization, dissolution or liquidation. The Board, in its sole
discretion, may, but is not obligated or required to, elect to accelerate the
vesting schedules of any of the Options previously issued upon such notice, and
the holders thereof may, in such event, exercise such Options prior to such
effective date, notwithstanding any time limitation previously placed on the
exercise of such Options. The Board also shall have the authority to condition
any such Option acceleration upon the subsequent termination of the Optionee's
employment within a specified period following the change in control. The
acceleration of Options in the event of such an acquisition of the Company or
other change in control may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a take-over attempt, or other
effort to gain control of the Company.
15. Option to Repurchase.
---------------------
15.1 Company's Option. Stock purchased pursuant to this Plan shall
be subject to an option to repurchase by the Company only (i) in the event of
the Optionee's termination of employment for any reason, whether voluntary or
involuntary (except in the event of a sale or liquidation of the Company in an
acquisition), and including the event of the Optionee's death or termination due
to disability, or (ii) in the event of the removal for cause of the Optionee
from the Board or from the board of directors of any Subsidiary or a successor
of any of them (each a "Terminating Event"). The Company must elect to exercise
the option to repurchase for a period within ninety (90) days after the
Terminating Event (the exercise period as determined above is referred to as the
"Exercise Period"). The Company's repurchase rights under this Section 15.1
shall apply to any Stock acquired by the Optionee upon exercise of an Option
granted under the Plan, including any Stock acquired after termination of
employment and any Stock or other securities acquired by the Optionee pursuant
to any capital
FutureTrak International, Inc.
1998 Stock Option Plan
Page 9
<PAGE>
adjustment affecting the Stock acquired under this Plan. As used in this Article
15, "Optionee" shall include the executor or administrator of the estate of the
Optionee or the person to whom the Stock shall pass by will or by the laws of
descent and distribution.
15.2 Procedure for Exercise. In order to exercise the option set
forth in Section 15.1, the Company must notify the Optionee of its intent to
exercise its option by mailing a notice to the Optionee or the representative of
the Optionee's estate at the last address contained in the Company's records for
such Optionee. Such notice shall state that the Company intends to exercise its
option and shall state the purchase price per share which will be paid by the
Company and the date on which such option will be exercised, which date will not
be earlier than ten (10) days following the date of mailing said notice nor
later than six (6) months following the end of the Exercise Period (the
"Termination Date"). Such purchase price shall be the greater of (i) the fair
market value of the Stock as of the Termination Date and (ii) the original
exercise price per share paid by the Optionee. The purchase price shall be
evidenced by a promissory note, bearing simple interest at the applicable
federal rate determined under Section 1274(d) of the Code, which note may be
paid in full at any time without penalty. Payments on the note shall be made in
three (3) equal annual installments of principal and interest commencing one (1)
year after the Termination Date.
15.3 Delivery of Stock Certificates. Upon receipt of any notice
pursuant to Section 15.2 hereof from the Company, the Optionee shall deliver the
certificate(s) representing such shares of Stock to the Company within ten (10)
days from the date of such notice, along with a properly executed stock power
(with signature medallion guaranteed) authorizing transfer of these shares to
the Company, its successor or assignee.
16. Right of First Refusal.
-----------------------
16.1 Right of First Refusal for Offers. Until Stock held by an
Optionee becomes eligible for sale on the NASDAQ over-the-counter market or
other stock exchange, the Company will have the irrevocable right, privilege,
and option to purchase any Stock purchased by the Optionee pursuant to an Option
at any time when the Optionee receives a bona fide, written offer ("Offer") to
purchase part or all of such Stock by any other Person ("Offeror"), which offer
is acceptable to Optionee, at the same price and upon the same terms as such
Offeror offers for the Stock or at fair market value of the Stock, whichever
price is lower. As used in this Article 16, "Optionee" shall include the
executor or administrator of the estate of the Optionee or the person to whom
the Stock shall pass by will or by the laws of descent and distribution.
16.2 Procedure for Exercise. The Optionee will, upon receipt of an
Offer, notify the Board of such Offer and provide the Company with a copy of the
Offer signed by the Offeror, and the Company will then be allowed thirty (30)
days from the date the Company receives such notice, not counting the day of
receiving the same, within which to notify the Optionee of the Company's
intention to exercise this option. The Company shall enter into an agreement in
writing with the Optionee within fifteen (15) days after giving notice to the
Optionee to effectuate the purchase. Payment shall be deemed to have been made
by the Company, its successor or assignee, upon the deposit of a check for the
full purchase price in the U.S. Mail, addressed to the Optionee at the
Optionee's last known address. No Optionee may sell Stock to any other party
until he has conformed to the requirements of this Article 16 and the Company
has failed or refused to exercise its option.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 10
<PAGE>
16.3 Delivery of Stock Certificates. Upon Optionee's receipt of any
notice of intent to exercise from the Company pursuant to Section 16.2 hereof,
the Optionee shall deliver the certificate(s) representing such shares of Stock
to the Company within ten (10) days from the date of such notice, along with a
properly executed and guaranteed stock power authorizing the Company to transfer
such shares to the Company, its successor or assignee.
16.4 Company's Option in Event of Involuntary Transfer. Until Stock
held by an Optionee becomes eligible for sale on the NASDAQ over-the-counter
market or other stock exchange, if any of the Optionee's Stock should become
subject to an involuntary transfer, by operation of law or otherwise, including,
without limitation, divorce decree, the event of Optionee's bankruptcy, levy or
attachment, or the default of a bona fide loan made to Optionee for which the
Stock was pledged as collateral which would otherwise be null and void pursuant
to Section 10.1 above, then the Company shall have the right, but not the
obligation, to acquire any or all of the Stock subject to such attempted
involuntary transfer. The Company shall have thirty (30) days after receipt of
notice from the Optionee of the involuntary transfer of the Company's intent to
exercise its option to acquire any or all of such Stock subject to the claim of
involuntary transfer and shall specify the number of shares of Stock to be
acquired. If the Company exercises its option under this Section 16.4, then the
purchase price to be paid by the Company for all of the Stock purchased by it
upon exercise of the option shall be equal to the lesser of (i) the fair market
value of the Stock on the purchase date or (ii) the original Option exercise
price paid by Optionee. The price shall be paid in full by cash or Company check
on the purchase date.
17. Escrow. In order to enforce the restrictions imposed upon shares
of Stock under this Plan, the Board may require an Optionee to enter into an
Escrow Agreement with an escrow agent designated by the Company providing for
the certificate(s) representing shares of Stock issued pursuant to this Plan to
remain in the physical custody of the escrow agent until any or all of such
restrictions have terminated.
18. Application of Funds. All proceeds received by the Company from
the exercise of Options shall be paid into its treasury and shall be used for
general corporate purposes.
19. Optionee's Rights as a Holder of Shares.
----------------------------------------
19.1 Prior to Exercise. No Optionee or his legal
representatives, legatees or distributees, as the case may be, will be, or will
be deemed to be, a holder of any share of Stock subject to an Option unless and
until stock certificates representing such shares of Stock are issued to such
person or persons pursuant to the terms of this Plan. Except as otherwise
provided in Article 13 of this Plan, no adjustment shall be made for dividends
or other rights for which the record date occurs prior to the date such stock
certificate is issued.
19.2 Dividends After Exercise. Purchasers of Stock pursuant to
this Plan will be entitled, after issuance of their stock certificates, to any
dividends that may be declared and paid on the shares of Stock registered in
their names. A stock certificate representing dividends declared and paid in
shares of Stock shall be issued and delivered to the purchaser after such shares
have been registered in the purchaser's name. Such stock certificate shall bear
the legends set forth above and shall be subject to the provisions of this Plan,
the Option Grant and any escrow arrangement.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 11
<PAGE>
19.3 Voting Rights. Purchasers of shares of the Stock shall be
entitled to receive all notices of meetings and exercise all voting rights of a
Shareholder with respect to the shares of Stock purchased.
20. Amendment and Termination of the Plan.
--------------------------------------
20.1 Discretion of the Board. The Board may amend or terminate
this Plan at any time; provided, however, that (i) any such amendment or
termination shall not adversely affect the rights of Optionees who were granted
Options prior thereto, (ii) any such amendment shall not result in a
"modification" of any Option within the meaning of Section 425(h) of the Code,
and (iii) any amendment which increases the total number of shares of Stock
covered by this Plan shall be subject to obtaining the approval of the
Shareholders.
20.2 Automatic Termination. This Plan shall terminate ten (10)
years after its effective date, unless the Board shall, in its discretion, elect
to terminate this Plan at an earlier date. Options may be granted under this
Plan at any time and from time to time prior to termination of the Plan under
this Section 20.2. Any Option outstanding at the time the Plan is terminated
under this Section 20.2 shall remain in effect until the Option is exercised or
expires.
21. Miscellaneous.
21.1 Notices. All notices and elections by an Optionee shall be
in writing and delivered in person, by certified mail or nationally recognized
courier service, to the President or Secretary of the Company at the principal
office of the Company.
21.2 Effective Date of the Plan. The effective date of this Plan
shall be the date on which the Board adopts the Plan.
21.3 Employment. Nothing in the Plan or in any Option granted
hereunder, or in any Option Grant relating thereto, shall confer upon any
employee of the Company or any Subsidiary or any successor thereof the right to
continue in the employ of the Company or any Subsidiary or any successor
thereof.
21.4 Plan Binding. The Plan shall be binding upon the successors
and assigns of the Company.
21.5 Gender. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.
21.6 Headings. Captioned headings of paragraphs and subparagraphs
hereof are inserted for convenience and reference and constitute no part of the
Plan.
21.7 Applicable Law. The validity, interpretation, and
enforcement of this Plan are governed in all respects by the laws of the State
of Florida and the United States of America.
22. Indemnification. Each director of the Company ("Indemnified
Party") shall be indemnified by the Company against all costs and reasonable
expenses, including reasonable attorneys' fees, incurred by him in connection
with any action, suit, or proceeding, or in connection with any appeal
therefrom, to which he may be a party by reason of any action taken or failure
to act under or in connection with this Plan or any Option granted hereunder,
and against all amounts paid by such Indemnified Party in settlement thereof
(provided such settlement is approved in advance by legal counsel selected by
the Company) or paid by such
FutureTrak International, Inc.
1998 Stock Option Plan
Page 12
<PAGE>
Indemnified Party in satisfaction of a judgment in any such action, suit, or
proceeding; provided, however, that, within sixty (60) days after institution of
such action, suit, or proceeding, such Indemnified Party shall in writing offer
the Company the opportunity, at its own expense, to defend the same; and
provided, further, however, that anything contained in this Plan to the contrary
notwithstanding, there shall be no indemnification of an Indemnified Party who
is finally adjudged by a court of competent jurisdiction to be guilty of, or
liable for, willful misconduct, gross neglect of duty, or criminal actions in
connection with this Plan or an Option granted hereunder. The foregoing rights
of indemnification shall be in addition to any other rights of indemnification
that an Indemnified Party may have as a Director or officer of the Company.
FUTURETRAK INTERNATIONAL, INC.
By: /s/ Steve Remondini
------------------------------
Steve Remondini, President
Effective Date of Plan: March 1, 1998.
FutureTrak International, Inc.
1998 Stock Option Plan
Page 13
Subsidiaries of WorldCast Interactive, Inc.
STI Group, Inc.
FutureTrak, Inc.
Maxwell Technologies, Inc.
We have issued our report dated February 26, 1999 (except for Note M, as to
which the date is March 15, 1999), accompanying the December 31, 1998 financial
statements of WorldCast Interactive, Inc. contained in the Registration
Statement on Form 10SB. We consent to the use of the aforementioned report in
the Registration Statement on Form 10SB.
/s/ Grant Thornton LLP
Weston, Florida
December 29, 1999
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