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SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
SATX, INC.
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(Name of Small Business Issuer in Its Charter)
NEVADA 87-0293479
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
4710 EISENHOWER BOULEVARD, SUITE E-1
TAMPA, FLORIDA 33634
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(Address of Principal Executive Offices) (Zip Code)
(813) 290-0911
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(Registrant's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001
- --------------------------------------------------------------------------------
(Title of Class)
- --------------------------------------------------------------------------------
(Title of Class)
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
The discussion contained in this Form 10-SB under the Securities Exchange Act of
1934, as amended, contains forward-looking statements that involve risks and
uncertainties (this "Form 10"). The issuer's actual results could differ
significantly from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in "Item 1. Description of Business" and "Item 7. Management's Discussion and
Analysis or Plan of Operation" as well as those discussed elsewhere in this Form
10. Statements contained in this Form 10 that are not historical facts are
forward-looking statements that are subject to the "safe harbor" created by the
Private Securities Litigation Reform Act of 1995. In connection with the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995, the
Company has filed Exhibit 12 which outlines cautionary statements and identifies
important factors that could cause the Company's actual results to differ
materially from those projected in forward-looking statements made by, or on
behalf of, the Company. Any forward-looking statement made within this Form 10
should be considered in conjunction with the aforementioned Exhibit 12.
[REMAINDER OF PAGE INTENTIONALLY BLANK.]
(i)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
HISTORICAL OVERVIEW OF THE COMPANY
The Company was originally incorporated in June, 1972 as Growth, Inc.,
a Utah corporation engaged in the business of corporate development. The Company
later changed its name to Westland Resources, Inc. and began functioning as a
shell corporation for acquisitions. Westland subsequently reincorporated in
Nevada, in September, 1995, as PageStar, Inc. via a reverse merger in order for
the initiated GPS locating and tracking business to be in a public environment.
In September, 1996, PageStar acquired Satellite Control Technologies,
Inc., a privately held Delaware corporation, and its wholly-owned subsidiary,
J.F.A. Tech, Inc., a California corporation. As a part of this acquisition
transaction, J.F.A. Tech assigned to PageStar all of its proprietary technology
rights and patents (including, at the time, a pending patent, now issued). As a
result of these acquisitions, the Company presently owns two patents related to
switching electrical devices remotely via pager signals, and communicating the
result back to the source of the original action/signal. These patented devices
underlie the Company's AlphaTrak Systems. Shortly after the September
acquisitions, in April, 1997, PageStar changed its name to Satellite Control
Technologies, Inc.
The Company was engaged in the research and development of tracking
systems until May, 1998, at which time it ceased operations due to lack of
funds. At such time, the Company's only assets consisted of the two patents
relating to its tracking systems. The Company was re-activated in May, 1999 with
the acquisition of DebitFone International, Inc., a Florida corporation engaged
in the prepaid cellular phone industry. From its incorporation in October, 1996
until May, 1999, DebitFone was a privately held research and development company
with no revenues. Merritt Jesson was the sole shareholder of DebitFone before it
was acquired by the Company. As a result of the acquisition, DebitFone is now a
wholly-owned subsidiary of the Company.
The Company recently changed its name to SATX, Inc. as a name alignment
with its existing public stock symbol and as a market identification
enhancement. The Company's offices and operations were moved to Tampa, Florida,
in order to consolidate facilities. DebitFone's management was appointed to
manage the Company, with Mr. Jesson as its President and Chief Executive
Officer. In addition to the continuation of DebitFone's pre-paid cellular
operations, new management made the decision to re-pursue products and markets
related to the Company's patents. Since May, 1999 the Company has concentrated
its efforts on the continued development of the GPS-based tracking system and
the DebitFone software management system. The Company has recently developed a
prototype of an updated tracking system, has other pager-based solutions under
development, and in December, 1999, initiated the sale of DebitFone products.
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THE COMPANY'S ALPHATRAK SYSTEM
ALPHATRAK PRODUCTS
The first product the Company has developed using its patented
technology , is a device that has applications for the automotive market.
Utilizing the Company's one-way-paging patent, the primary function of the
low-end market solution is to unlock/lock car doors and to disable a motor
vehicle in the event of theft. To unlock or lock the car doors the owner simply
calls a 1-800 number and, upon entering a security and action code, the
AlphaTrak system will unlock, or lock, the car doors by using its patented
one-way-paging process. In the case of auto theft, the owner makes a 1-800 call
and, upon entering a security code, requests the AlphaTrak unit to disable the
motor vehicle through a process of shutting down the engine in a safe manner.
A second AlphaTrak product line will be used primarily in the TRACKING
of stolen or lost vehicles or cargo. Using the Company's two-way-paging patent,
along with a Global Positioning Satellite unit ("GPS"), AlphaTrak is able to
locate a vehicle or cargo anywhere the system is deployed. By installing the
AlphaTrak unit on any type of vehicle or cargo, and wiring sensors to a door,
for example, AlphaTrak can not only locate the target, it can detect whether the
security has been breached by the opening of the monitored door. Other such
sensors can be utilized to monitor and report upon any other critical functions
that can be quantitatively measured.
ALPHATRAK MARKETS
The market for AlphaTrak products includes a broad spectrum of
potential users in varied industries including the automotive, motorcycle,
agricultural, and cargo shipping industries, as well as a variety of industrial
security markets. The market size and opportunity for AlphaTrak products in each
of such markets is anticipated to include the following:
AUTOMOTIVE MARKET
The Company will initially target the billion dollar anti-theft
automotive industry to benefit from its AlphaTrak technology. In the automotive
industry a person using AlphaTrak products will be able to stop or start a car,
locate a stolen vehicle, lock or unlock doors, open or close windows, arm or
disarm the security system, open the trunk or other electrically controlled
switching functions.
In 1996 there were 1.5 million automotive thefts in the United States,
with an estimated value of $7.6 billion. Nationwide, an estimated one out of
every 130 registered motor vehicles was stolen. In California alone, there is an
automobile stolen every two minutes. Concurrently, it is estimated that by the
year 2005, GPS products and services will generate $13.5 Billion in revenues in
the U.S. market to help alleviate this problem and to provide new related
services. A similar market also exists in the international arena.
MOTORCYCLE MARKET
In 1993 there were 3.9 million motorcycles registered in the U.S. With
no anti-theft recovery system currently in place for the motorcycle industry,
AlphaTrak management is optimistic that with well-placed advertising and
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promotion, a large portion of this market could be captured in a short period of
time with a custom compact solution.
AGRICULTURE MARKET
In the past farmers had to travel to the fields to take corrective
irrigation measures for changes in weather conditions. With the Company's remote
switching devices in place, this activity could be monitored, initiated and
terminated from the farmer's house.
In 1993, there were reported 2,068,000 farms in the United States,
totaling over 978 million acres. Approximately 24% of this acreage requires
irrigation. Through education and promotion, AlphaTrak management believes that
this market segment could be a source of opportunity for considerable revenues
and profits by utilizing pager-driven controls to remotely initiate and
terminate irrigation devices.
CARGO SHIPPING MARKETs
The Company will also market its AlphaTrak products to the
multi-billion dollar anti-theft industry for a variety of cargo shipping markets
including boats, trucks, and railways. The Company's AlphaTrak products can
notify the shipper if critical security functions have been breached, and
provide reports on past and present locations of such trucks, railroad cars or
ocean containers. They can also monitor key performance parameters.
In 1993 there were 43.6 million trucks registered in the United States.
Over 38 million were light duty trucks, 1.2 million were truck/tractors, and the
balance were either family or government owned. In 1993 new truck registration
was 5.5 million. The major truck/tractor (18-wheeler) commercial owners drive
across the country moving billions of dollars of merchandise, regardless of
weather conditions. The market for security systems in the trucking industry is
increasing significantly. The AlphaTrak devices for trucks will include both
security and convenience accessories such as remote door unlock and engine start
functions. Similar opportunities exist in support of the rail transport industry
and in support of ocean vessel cargo.
ALPHATRAK SALES AND MARKETING STRATEGIES
Management's objective is to strategically select and initially
contract with only 8 out of approximately 120 existing Master Agents for
automotive products, nationwide, with each selecting approximately 50 of their
top new car dealers. This start-up will provide the Company with a total of 400
dealers out of more than 25,000 new car dealers nationwide. Management expects
to significantly expand the distribution to mobile electronics dealers, and then
to the aftermarket mass merchandisers such as Pep Boys, Trak Auto, Chief, and
Western Auto within a short period time. The long term strategy of the Company
is to build a family of premium wireless products using its AlphaTrak patented
paging devices in order to achieve sales exceeding $200 million annually.
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PAGER SERVICES
The Company is dependent upon pager service companies for the operation
of its AlphaTrak products, since the devices are based upon one-way-paging and
two-way- paging communications. Each tracking unit that the Company installs in
an automobile, tractor/trailer, etc., will need to have a pager number to enable
the owner to "call" the tracking unit and electronically signal the unit to do
some switching activity, such as locking the doors or turning off the motor, and
to signal back to the monitoring center that the unit performed the activity it
was paged to accomplish. Accordingly, the Company intends to form an alliance
with one or more national paging service companies, such as SkyTel and PageNet,
for the provision of the paging services necessary to operate the Company's
AlphaTrak products. The Company does not anticipate any difficulties in reaching
such alliances in the near future, given the additional business provided to an
industry being impacted by cellular expansion.
ALPHATRAK COMPETITION
Because car-jacking and vehicle thefts have become a serious problem in
the past few years, there are many theft-prevention systems for automobiles,
trucks, motorcycles, etc. These systems fall into three general classes:
physical locking devices, alarm systems, and systems for locating and shutting
down the vehicle. All of these systems must be considered "competition" to the
extent they compete for the same disposable dollar. Competitive factors include
price, ease of operation, reliability, effectiveness, and optional features. Key
competitors are LoJack, Teletrac, Posse, and Telealarm. In most cases,
management believes that the AlphaTrak system is a formidable competitor.
THE COMPANY'S PREPAID CELLULAR PHONES AND VENDING MACHINES - DEBITFONE
DEBITFONE PRODUCTS
The "Intelligent" Debit System is a unique method for providing
cellular service and hardware, which management believes is superior in many
ways to traditional cellular practices. Specifically, the debit functionality is
built completely into the phone, and through the use of a unique proprietary
software system written for DebitFone, time is loaded into the phone through the
keypad. The "Intelligent" system provides a means for all cellular calls to be
prepaid. The handset manages the process and eliminates billing risks.
The "Intelligent" product consists of the JRC PTR-870 analog cellular
phone as the initial primary platform. Subsequent product evolution will become
available through the Company's strategic partnerships to provide new analog
solutions in addition to a dual mode Analog/TDMA product, an Analog/CDMA
product, and a GSM-derivative product. Current plans are to launch the
second-generation DebitFone in the Second Quarter of 2000 using a modified
Motorola Star-Tac with DebitFone's proprietary software installed.
Through the use of DebitFone software an end-user can purchase as much
or as little cellular airtime as needed, from expanded retail channels such as
convenience stores, electronics shops, retail outlets, college bookstores and
others. Currently, when using the DebitFone software, there are three (3)
methods to add airtime to the cellular phone. The following is a summary of the
three methods.
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CELLULAR AIRTIME CARDS
The end-user purchases an airtime card from a retail location vending
machine and simply dials the 800-number on the card, which accesses an
Integrated Voice Response System (IVR). The customer then enters his or her
cellular number (MIN) and the authorization code on the card into the IVR when
prompted by voice commands. The IVR system will verify that the end-user is
valid (ESN match) and that the authorization code entered is valid. The IVR then
gives the customer a five-digit number to enter into the cellular phone, thus
increasing the available minutes for immediate use.
CUSTOMER'S PERSONAL CREDIT CARD
The end-user puts a credit card number on file with DebitFone. The
customer can then call the 800-number twenty-four (24) hours per day and add
airtime to the phone by following the voice prompts. DebitFone's unique software
takes the request for time and processes the credit card on-line through a
clearinghouse. Upon verification of funds, the software system issues a
five-digit code to the customer to add additional time to the phone as
requested. DebitFone receives payment for the additional airtime at that moment,
via processing the credit transaction.
CUSTOMER'S CHECKING ACCOUNT
The phone subscriber puts a checking account number on file with
DebitFone. The end-user can call the 800-number twenty-four (24) hours per day
and add airtime to a phone by following the voice prompts. DebitFone's unique
software takes the request for airtime and processes the transaction. Upon
finishing this process the software issues a five-digit code to the end-user to
add additional airtime to the phone as requested, and DebitFone will receive its
money from the end-user's checking account in an overnight transaction that is
transparent to the customer.
DEBITFONE MARKETS
The primary marketing objectives for DebitFone are to provide a turnkey
prepaid cellular coverage system to retailers and dealers, to market DebitFone
products into expanded distribution channels, and to obtain recurring revenues
for the Company. Achieving these objectives is expected to provide DebitFone
with formidable customer alliances and establish a continuous revenue stream
from incremental airtime renewal. Cellular Telecommunications Industry
Association predicts that Prepaid wireless international phone service will
reach more than 120 million users by the year 2006. As an Analog product, the
window of opportunity for DebitFone will be similar to that of traditional
Analog cellular phones in general. Eventually, DebitFone will need to migrate
towards digital products to remain competitive and improve the economics to the
Company and subscriber.
DEBITFONE CUSTOMERS
CASH-RICH, CREDIT-POOR
One of the cellular industry's primary concerns is credit risk
regarding cash-rich, credit-poor customers. Carriers within the US are forced to
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turn away over 40% of all cellular phone customers due to questionable or
non-existent credit histories. DebitFone 's program eliminates this problem, as
the end-user is not required to pass credit-scoring criteria, and does not
interface with the carrier.
EXPENSE CONTROL
Another segment of DebitFone 's customers will consist of the "typical"
cellular phone user who wishes to control expenses. By "counting down" the
amount of available funds left for airtime, the phone keeps the end-user mindful
of expenses. Focus-group research indicates that this is a very attractive
feature for cellular phone users, no longer fooled by "free phones" through
cellular airtime "bundling" practices. Further research indicates that
corporations feel that a prepaid product is much more advantageous to their
budgetary controls. They can give their employees $100 worth of airtime monthly
and all excess time used is paid by the employee.
ACTIVATION AND SERVICE PROVIDERS
The Company is currently finalizing a two-year, renewable, Private
Label Reseller Agreement with Shared Technologies Cellular, Inc. ("STC") to
provide the Company's customers with national cellular phone capability. STC is
the largest national activator of cellular phones today.
It is presently anticipated that STC will be the primary provider of
mobile identification numbers, which are the equivalent of phone numbers
("MINs") for the cellular phones sold by the Company. Following the purchase of
a cellular phone, a customer will need to call STC's interactive voice response
system ("IVR") and provide the phone's electronic serial number ("ESN") and the
customer's local zip code and area code , in order to activate the product.
Activation is the process by which a cellular phone becomes initially operable.
STC's IVR system operates 24 hours a day, 7 days a week, and electronically
interfaces with DebitFone's IVR system to ensure compatible and controlled data,
and to request and extract time renewal codes for handset input.
In addition to activation services, STC will also be responsible for
maintaining agreements with national cellular carriers, such as GTE Wireless,
for the provision of local, long-distance and roaming services. STC will resell
such local, long-distance, and roaming services to the Company for its cellular
phone customers. Therefore, STC is the customer of record with the cellular
carrier and the cellular carrier bills STC for such services, not the end-user.
The ultimate goal of the Company is to internally activate and carry
the traffic for all of the phones that it sells, thus providing a long-term
customer base and generating residual income for recurring airtime margin.
DEBITFONE SALES
DebitFone is renegotiating and redeveloping a contract with On-Point
Technologies, one of the top manufacturers of vending machines to provide the
Company with its requirement for dispensing product. DebitFone will be offering
a business opportunity for vending machine routes dispensing DebitFones, and has
over 900 machines tentatively committed. DebitFone is currently evaluating
various other distribution channel requests.
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FULFILLMENT SERVICES
DebitFone will program and ship each phone it sells and will receive
compensation for this service, thus providing another minor revenue stream to
the Company.
AIRTIME CODE REDEMPTION
DebitFone currently has the computer system for code redemption
services to provide the end-user with additional airtime. DebitFone will receive
a residual on every minute used, thus providing another revenue stream.
DIRECT END-USER SALES
DebitFone currently has programs under way providing direct sales. The
Company plans to expand its direct sales approach to maximize the profit
potential in each market segment. DebitFone currently has over 200 national
sales representatives recruited.
ACCESSORIES
DebitFone will carry a full line of accessories for the phones that it
handles, and will encourage its customers to buy cellular phone accessories from
the Company so long as the Company is competitive in the marketplace.
DEBITFONE COMPETITION
With the development of the "Intelligent" platform by DebitFone, along
with an activation and fulfillment capability, management believes DebitFone
will have competitive advantages in the marketplace. However, these competitive
advantages do not eliminate significant barriers to market entry. Timing is very
critical in this niche arena. As the market expands over time, additional
competitors will emerge in the marketplace. There are three (3) primary
competitors with comparable technology and capability in the marketplace today.
THE COMPANY'S EXPANSION ACTIVITIES
DEBITFONE INTERNATIONAL, INC.
In May, 1999, the Company completed an arms-length acquisition of
DebitFone International, Inc., a Florida corporation, privately held by Merritt
W. Jesson. In the stock-for-stock transaction, the Company issued to Mr. Jesson
2,900,000 shares of its Common Stock, valued at a fair market value of
approximately $.04 per share, in exchange for all of the issued and outstanding
shares of DebitFone.
DIGITAL TELECOMMUNICATIONS, INC.
In May, 1999, the Company signed a Letter of Intent to invest in the
expansion of Digital Telecommunications, Inc., a privately held Oklahoma
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corporation, engaged in the telecommunications business in the African region
island Country of Madagascar. The Company's current investment of $150,000 in
Digital, represents less than a five percent (5%) ownership interest in Digital.
PARADIGM MANUFACTURING, INC.
In October, 1999, the Company entered into a stock purchase agreement
with Paradigm Manufacturing, Inc., which called for the Company to acquire all
the shares of Paradigm. As part of the original agreement, the Company loaned
Paradigm $256,491. In March, 2000, the parties agreed to terminate the original
agreement and enter into a new agreement which outlines the parties concurrence
to finish the development and tooling of a prepaid phone for the Company, and
it provides for the repayment of Paradigm's indebtedness under the October
agreement (the "Note"). The Note provides for periodic payments commencing
April 1, 2000, with interest payable at ten percent (10%) per annum. The Note
is due in full November 1, 2000.
STOVEACT, INC.
In October 1999, the Company entered into a Memorandum of Understanding
with Stoveact, Inc., to acquire all the outstanding shares of Stoveact, Inc., a
privately held California corporation in a stock-for stock exchange. Stoveact
has developed a vehicle location and disabling product which management
considers to be compatible with the Company's AlphaTrak Systems. The parties are
extending the Memorandum of Understanding to allow time to complete the
necessary due diligence to determine if they will complete the stock purchase or
if they will define a licensing basis to proceed with mutually beneficial
objectives.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Company, although several years in existence, is just now emerging
from its development stage for both prepaid cellular and GPS/tracking products.
They have both been in an in-plant and field test mode since the third quarter
of 1999 to ensure that the end-user products and the Company's customer service
systems were sufficiently mature and reliable to function satisfactorily in the
public marketplace. At the same time the Company has been researching and
"testing" the marketplace and marketing methodologies available to optimize
entry into very competitive arenas across both product lines. These processes
are anticipated to evolve, mature, and stabilize over the first half of 2000 as
product sales escalate.
During the up-coming year limited R&D will continue. The Company's core
businesses are in the rapidly evolving technologies of communications and the
"service" areas that typically attach to communications ventures. As such, it is
imperative that the Company stay abreast of, and prepare products to compete in,
leading-edge communications solutions. For example, in the prepaid cellular
product line the Company is presently funding a research project to evaluate the
prepaid implications in digital cellular call-processing and to develop detailed
specifications for a next-generation debit phone built around digital protocols.
In the tracking systems product line, the Company is investigating such
long-term solutions as standardized location and tracking devices for all
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automobiles installed by OEM manufacturers, in addition to the technical and
economic practicality of additional functionality within the installed device,
whether for automobiles (one product application) or cargo carriers (a much
broader application covering such things as tractor-trailers, train cars, or
ocean containers). As an example, the Company is investigating whether there are
market requirements, and, if so, whether is there a solution for integrated
sensors to monitor such items as motion, weight, collision, and temperature.
The natural planned capture of market share and the research for any
expansion into new venues will likely require an increase in facilities,
equipment and employees. All are directly scalable to volume demands and will be
constantly evaluated as Company business proceeds. At the same time Company
management will finalize make-buy decisions as the existing circumstances
dictate. In most cases the return-on-investment data will heavily determine
whether expansion or purchase is most desirable. Past and existing products are
purchased outside; thus, Plant and Equipment requirements are minimal. To the
extent that new products are brought "internal" to the Company in Paradigm's
facility and their electronic contract manufacturing capability (if the
acquisition by SATX is determined to be in the best interests of the parties,
and it is finalized), the baseline business plan would require a significant
increase in manufacturing and test equipment, including assembly tools, for
which the overall Company would be responsible. Facility expansion is not likely
since excess space currently exists in all facilities, but One Million Dollars
($1,000,000) has been identified in the plan for possible expansion.
As growth occurs, there will be a normal increase in personnel to
support the Company's infrastructure, marketing, and production. However, the
business is not people intensive. It is currently procurement and computer
support intensive due to its overall service nature. Excluding the internal
manufacturing of product (which is material and machine-processing intensive)
required to meet sales growth, the personnel expansion is planned to be less
than one hundred (100) new employees spread over the entire year and is not
anticipated to be a problem within the local labor market.
Clearly, the planned growth in activity levels over the next year to
invest in technology, capability, product and sales will require cash infusion
in excess of, and in advance of, amounts generated out of normal sales margins.
To meet the needs, as they mature, the Company has been pursuing, and will
continue to pursue, two courses of action. A line of credit is being negotiated
through a USA investment entity and bank letter of credit to provide a two-year
credit line well in excess of planned Company needs at predicted growth rates.
In addition, it is possible to continue to utilize private placements for
acquisitions.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company leases 11,192 square feet of office and warehouse space
having a mailing address of 4710 Eisenhower Boulevard, Suite E-1, Tampa, Florida
33634, which office and warehouse space is located in a building located in an
industrial park known as "Eisenhower Technology Park." The leased premises carry
a base rent of approximately $81,000 per annum in the current year, and $85,000
and $89,000 per annum , excluding tax and utilities, in each of the remaining
two years. The lease expires on June 30, 2002. During the term of the lease, the
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Company is required to maintain an insurance policy for public liability and
property damage, in which the limits of liability shall not be less than one
million dollars and five hundred thousand dollars respectively. Excess space
currently exists in the Company's facilities, and management believes that the
space and condition of its present facilities in Eisenhower Technology Park are
adequate in for its current needs and those of the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of January 26, 2000 by (i)
each person known to own beneficially more than 5% of the Company's Common
Stock, (ii) each Director and Officer of the Company, and (iii) all Directors
and Officers as a group. As of January 26, 2000 there were 52,008,286 common
shares issued and outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OF
OF BENEFICIAL OWNER OWNER (1) CLASS
------------------- --------- -----
<S> <C> <C>
Kosti Shirvanian (2)(5)........................................... 15,200,000 29.2%
23 Corporate Plaza, Suite 247
Newport Beach, California 92660
John Hartunian (3)(6)............................................. 14,266,000 27.4%
27 Ocean Vista
Newport Beach, California 92660
Merritt W. Jesson (4)............................................. 1,450,000 2.8%
Khoren Shaginian (5) ............................................. 500,000 1%
Dennis Katangian (6).............................................. 130,000 *
Robert W. Ellis (7)............................................... 155,000 *
All Directors and Executive Officers as a group (4 persons) ...... 2,235,000 4.3%
</TABLE>
- -------------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. To our knowledge, the persons named in
this table have sole voting and investment power with respect to all shares
of Common Stock shown as owned by them, subject to community property laws
where applicable and except as indicated in the other footnotes to this
table. The business address of each of the Company's directors and officers
named above is: c/o SATX, Inc. 4710 Eisenhower Boulevard, Suite E-1, Tampa,
Florida 33634.
(2) Represents all of the shares held of record by the Shirvanian Family
Investment Trust, which Mr. Shirvanian is the trustee thereof. Mr.
Shirvanian shares voting and dispositive power of the trust shares with
Marian Shirvanian, his spouse and co-trustee.
(3) Represents all of the shares held of record by the Hartunian Family Trust,
which Mr. Hartunian is the trustee thereof. Mr. Hartunian shares voting and
dispositive power of the trust shares with Marge Hartunian, his spouse and
co-trustee. Excludes (i) 600,000 shares held of record by Christine
Hartunian, his daughter of majority age; and (ii) 20,000 shares held of
record by Arthur & Hazel Hartunian, Mr. Hartunian's brother and
sister-in-law.
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(4) Includes 500,000 shares held of record by Jeri Jesson, Mr. Jesson's spouse,
with whom he shares voting and dispositive power with respect to such
500,000 shares. Also includes 100,000 shares held of record by Taylor
Jesson, Mr. Jesson's minor child.
(5) Includes (i) 10,000 shares held of record by Dennis M. Katangian II; (ii)
10,000 shares held of record by Jack M. Katangian; and (iii) 10,000 shares
held of record by Kay Katangian, his minor children. Excludes 25,000 shares
held of record by Roxie Katangian, Mr. Katangian's mother. Dennis Katangian
is the nephew of Mr. Hartunian.
(6) Mr. Shaginian is the Chief Financial Officer of, and holds other executive
offices with, a holding company for several businesses controlled by Mr.
Shirvanian.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS.
The following table sets forth information for each director and
executive officer of the Company.
NAME AGE POSITION
- ---- --- --------
Merritt W. Jesson 55 Chairman of the Board, Chief Executive
Officer and President
Khoren Shaginian 38 Director, Chief Financial Officer,
Secretary and Treasurer
Dennis Katangian 46 Director
Robert W. Ellis 58 Chief Operating Officer
Pursuant to the Company's bylaws, each director of the Company serves
as a director for a term of one (1) year and until his successor is duly elected
and qualified. Officers shall be appointed annually by the Board of Directors,
at its annual meeting, to hold such office until an officer's successor shall
have been duly appointed and qualified, unless an officer sooner dies, resigns
or is removed by the Board.
Set forth below is the business experience and other biographical
information regarding our directors, executive officers, and other key
employees.
MERRITT W. JESSON was the President, Chief Executive Officer and one of
the founders of DebitFone since its inception in October, 1996 until its
acquisition by the Company in May, 1999 when he assumed his current positions
with SATX. From 1993 to May, 1996, Mr. Jesson worked independently to develop
both the "Switch Based" and the "Intelligent" debit phones. From 1991 to 1993,
Mr. Jesson was President, Chief Executive Officer, and the founder of Connect
One Telecommunications, Inc., the nation's second prepaid calling card company.
Prior to 1991, Mr. Jesson was a General Contractor for over 20 years, a
production supervisor for General Motors Corporation, and a hydraulic specialist
for the United States Air Force.
ROBERT W. ELLIS before becoming the Company's Chief Operating Officer
in May, 1999, served as Chief Operating Officer and Chief Financial Officer of
DebitFone from April, 1998 to May, 1999. Among other things, Mr. Ellis was
11
<PAGE> 14
responsible for conducting technical and business evaluations of new products
and initiatives, including international ventures, raising equity funding to
support DebitFone's growth, and expanding into new prepaid cellular product
offerings and digital protocols. From July, 1995 to September, 1996, Mr. Ellis
served as President, Chief Operating Officer, and Chief Financial Officer of
Omni Telecommunications, Inc., a full service, international cellular telephone
company in the business of technology advancement, engineering design,
production support, distribution, and marketing of prepaid airtime cellular
phones and accessories and similar related positions for its successor company,
IMI Telecommunications, Inc. from March, 1997 until April 1998. From April, 1993
to July, 1995, Mr. Ellis was the Chief Financial and Administrative Officer of
Tiernay Turbine, an Arizona defense contractor engaged in the development and
production of auxiliary power generation units for a variety of domestic and
foreign customers. During the nearly thirty years prior to 1993, Mr. Ellis has
served in a variety of capacities including Group Controller, Barnes Aerospace
Company in Connecticut; Director of Finance and Administration at Philips
Circuit Assemblies of Tampa, Florida; Director of Finance at Martin Marietta
Aerospace in Orlando, Florida; Controller, Honeywell, Inc. in Clearwater,
Florida and Minneapolis, Minnesota; and Cost Supervisor, International
Harvester, Fort Wayne, Indiana. Mr. Ellis has a Bachelor of Science in
Accountancy from the University of Illinois, and he is a CPA.
KHOREN SHAGINIAN has served as a director and as the Company's Chief
Financial Officer since May, 1999. Prior to joining the Company, Mr. Shaginian
Gained a broad range of experience in finance and project development in such
industries as real estate, environmental services, and waste management. From
October, 1997 until the present, he has served as the Chief Financial Officer
and Executive Vice President of Komar Investments, LLC, a multi-million dollar
holding company engaged in a wide variety of public and private investments.
Komar Investments manages the Shirvanian Family Investment Trust, which is a
principal shareholder of the Company's Common Stock. Kosti Shirvanian, together
with his spouse, is the trustee of the Shirvanian Family Investment Trust and
the Chief Executive Officer of Komar Investments. From January 1995 until
joining Komar in 1997, Mr. Shaginian was a partner in Shaginian & Agliarini, a
CPA firm in Glendale, California. Mr. Shaginian has a Bachelor of Science in
Accountancy from California State University at Los Angeles, and he is a CPA.
Mr. Shaginian began his career in the mid-1980's at Coopers & Lybrand, the
public accounting firm now organized as PriceWaterhouse Coopers, LLP.
DENNIS KATANGIAN has served as a director of the Company since May,
1999. Throughout his career, Mr. Katangian has been involved in numerous real
estate development and management enterprises. Mr. Katangian is the nephew of
John Hartunian, trustee of the Hartunian Family Trust, a principal shareholder
of the Company's Common Stock.
KEY EMPLOYEES
LARRY BISGROVE has served as the Company's Vice President of Operations
since May, 1999. Mr. Bisgrove had been Vice President of Operations for
DebitFone, from September 1995 until its acquisition by the Company in May 1999.
Mr. Bisgrove manages all activities related to the Company's prepaid cellular
business, including directing product functionality, engineering development,
development of encryption algorithms, database management systems, technical
support and product fulfillment.
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<PAGE> 15
DONNA K. SKELL became a Company Vice President of Sales and Marketing
in October, 1999. Before joining SATX, Ms. Skell served as a Vice President,
Direct Marketing for Solutioneering, Inc., where she was responsible for
creating sales agent network marketing materials, administration systems, and
training programs. From 1991 to 1997, Ms. Skell was a Regional Vice President
for World Telecom Group.
ANTON J. SKELL became a Company Vice President of Sales and Marketing
in October, 1999. Mr. Skell is Donna Skell's spouse. Before joining SATX, Mr.
Skell also served as a Vice President, Direct Marketing for Solutioneering, Inc.
Mr. Skell was responsible for designing and implementing a national sales agent
program for telecom products. From 1991 to 1997, Mr. Skell was a Regional Vice
President for World Telecom Group.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board intends to establish an Audit Committee in the year 2000.
The Audit Committee will be responsible for reviewing the Company's auditing
programs, overseeing the quarterly regulatory reporting process, overseeing
internal audits as necessary, receiving and reviewing the results of each
external audit, and reviewing management's response to auditor's
recommendations.
COMPENSATION OF DIRECTORS
Presently, our directors do not receive any compensation for their
services to the Company as a director. However, it is currently anticipated that
the Board of Directors will approve compensation for our non-employee directors
for each meeting of the Board of Directors that they attend, plus reimbursement
of their reasonable out-of-pocket expenses incurred in connection with such
meetings, and an additional fee for each committee meeting that he or she
attends. It is also anticipated that our directors will be eligible to receive
stock options under stock option plans that the Board of Directors anticipates
approving in the near future.
ITEM 6. EXECUTIVE COMPENSATION.
The following summary compensation table sets forth all cash and/or
non-cash compensation paid to or accrued for the past three (3) fiscal years for
the Company's Chief Executive Officer and other highly compensated officers.
Except as listed below, there are no officers or other individuals whose
compensation from the Company exceeded $100,000 in any of the past three (3)
fiscal years.
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<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
NAME AND PRINCIPAL POSITION DECEMBER 31 (1) SALARY
- --------------------------- --------------- ------
<S> <C> <C>
Steve Lipman, Chief Executive Officer (2) 1997 $38,000
Jeff Sherman, Chief Executive Officer (3) 1997 $30,000
Merritt W. Jesson, Chief Executive Officer (4) 1999 $57,577
</TABLE>
- ----------------------------
(1) The Company did not have a Chief Executive Officer from mid-July 1997 until
May 1999.
(2) Mr. Lipman served as the Company's CEO from September 4, 1996 through April
30, 1977.
(3) Mr. Sherman served as the Company's CEO from May 1, 1997 until he resigned
on or about July 15, 1997.
(4) In May, 1999, Merritt Jesson was appointed CEO, in connection with the
Company's acquisition of DebitFone.
EMPLOYMENT AGREEMENTS
In connection with the Company's acquisition of DebitFone, Messrs.
Jesson, Ellis, Bisgrove and McHenry converted their existing employment from
DebitFone to SATX. The Company entered into the following employment agreements,
summarized below, in the fiscal year ended December 31, 1999.
MERRITT W. JESSON - Mr. Jesson's employment agreement commenced on June
1, 1999 and shall remain in effect for a period of five (5) years, unless sooner
terminated. During the term of his agreement, Mr. Jesson will serve as the
Company's President and Chief Executive Officer. Mr. Jesson's employment
agreement provides for an annual base salary of $104,000, plus a quarterly
performance bonus. Generally, quarterly performance bonuses will be equal to a
range of 30% to 50% of his base salary, upon the Company's achievement of 80% to
120% of its projected pre-tax profit. The Company has the option to pay
quarterly performance bonuses in cash or Common Stock. If paid in Common Stock,
the number of shares issued to Mr. Jesson will be based upon 90% of the average
market price of the Common Stock over the 30 days preceding issuance. Commencing
June, 2000, Mr. Jesson will be eligible to receive an annual stock option to
purchase up to 500,000 shares of Common Stock. The exercise price of the annual
stock option shall be $.50 in the first year, and 60%, 70%, 80%, and 90% of the
market price of the Common Stock on the date of grant in years 2, 3, 4, and 5,
respectively. The actual number of shares to be granted in an annual stock
option is directly related to the extent to which the Company attains its
projected pre-tax profit for the given year. Annual stock options will be fully
vested on the date of grant and shall expire if not exercised within five (5)
years of the date of grant. Mr. Jesson's employment agreement may be terminated
for cause, however, in the event it is terminated without cause, Mr. Jesson will
be entitled to receive his base salary for a period of one (1) year from the
date of termination. The agreement also contains standard covenants relating to
non-competition, non-disclosure, and the assignment of intellectual property
rights.
ROBERT W. ELLIS - Mr. Ellis' employment agreement commenced on June 1,
1999 and shall remain in effect for a period of three (3) years, unless sooner
terminated. During the term of his agreement, Mr. Ellis will serve as the
Company's Chief Operating Officer and Chief Financial Officer. (Mr. Ellis has
14
<PAGE> 17
not formally assumed office as the Company's CFO, the position is currently held
by Khoren Shaginian.) Mr. Ellis' employment agreement provided for a signing
bonus of 100,000 shares of Common Stock. The agreement also provides for an
annual base salary of $96,000, plus a quarterly performance bonus. Generally,
quarterly performance bonuses will be equal to a range of 20% to 40% of his base
salary, upon the Company's achievement of 80% to 120% of its projected pre-tax
profit. The Company has the option to pay quarterly performance bonuses in cash
or Common Stock. If paid in Common Stock, the number of shares issued to Mr.
Ellis will be based upon 80% of the average market price of the Common Stock
over the 30 days preceding issuance. Commencing June, 2000, Mr. Ellis will be
eligible to receive an annual stock option to purchase up to 100,000 shares of
Common Stock. The exercise price of the annual stock option shall be $.50 in the
first year, and 60% and 70% of the market price of the Common Stock on the date
of grant in years 2 and 3, respectively. The actual number of shares to be
granted in an annual stock option is directly related to the extent to which the
Company attains its projected pre-tax profit for the given year. Annual stock
options will be fully vested on the date of grant and shall expire if not
exercised within five (5) years of the date of grant. Mr. Ellis' employment
agreement may be terminated for cause, however, in the event it is terminated
without cause, Mr. Ellis will be entitled to receive his base salary, quarterly
performance bonus and annual stock option through the original term of the
employment agreement. The agreement also contains standard covenants relating to
non-competition, non-disclosure, and the assignment of intellectual property
rights.
LARRY BISGROVE - Mr. Bisgrove's employment agreement commenced on June
1, 1999 and shall remain in effect for a period of three (3) years, unless
sooner terminated. During the term of his agreement, Mr. Bisgrove will serve as
the Company's Vice President of Operations. Mr. Bisgrove's employment agreement
provided for a signing bonus of 50,000 shares of Common Stock. The agreement
also provides for an annual base salary of $88,000, plus a quarterly performance
bonus. Generally, quarterly performance bonuses will be equal to a range of 20%
to 40% of his base salary, upon the Company's achievement of 80% to 120% of its
projected pre-tax profit. The Company has the option to pay quarterly
performance bonuses in cash or Common Stock. If paid in Common Stock, the number
of shares issued to Mr. Bisgrove will be based upon 80% of the average market
price of the Common Stock over the 30 days preceding issuance. Commencing June,
2000, Mr. Bisgrove will be eligible to receive an annual stock option to
purchase up to 50,000 shares of Common Stock. The exercise price of the annual
stock option shall be $.50 in the first year, and 60% and 70% of the market
price of the Common Stock on the date of grant in years 2 and 3, respectively.
The actual number of shares to be granted in an annual stock option is directly
related to the extent to which the Company attains its projected pre-tax profit
for the given year. Annual stock options will be fully vested on the date of
grant and shall expire if not exercised within five (5) years of the date of
grant. Mr. Bisgrove's employment agreement may be terminated for cause, however,
in the event it is terminated without cause, Mr. Bisgrove will be entitled to
receive his base salary, quarterly performance bonus and annual stock option
through the original term of the employment agreement. The agreement also
contains standard covenants relating to non-competition, non-disclosure, and the
assignment of intellectual property rights.
15
<PAGE> 18
DONNA SKELL - Ms. Skell's employment agreement commenced on October 1,
1999 and shall remain in effect for a period of three (3) years, unless sooner
terminated. During the term of her agreement, Ms. Skell will serve as a Company
Vice President of Sales and Marketing. Ms. Skell's employment agreement provided
for a signing bonus of 100,000 shares of Common Stock. The agreement also
provides for an annual base salary of $70,000, plus a quarterly performance
bonus. Generally, quarterly performance bonuses will be equal to a range of 20%
to 40% of her base salary, upon the Company's achievement of 80% to 120% of its
projected pre-tax profit. The Company has the option to pay quarterly
performance bonuses in cash or Common Stock. If paid in Common Stock, the number
of shares issued to Ms. Skell will be based upon 90% of the average market price
of the Common Stock over the 30 days preceding issuance. Commencing October,
2000, Ms. Skell will be eligible to receive an annual stock option to purchase
up to 50,000 shares of Common Stock. The exercise price of the annual stock
option shall be $.50 in the first year, and 60% and 70% of the market price of
the Common Stock on the date of grant in years 2 and 3, respectively. The actual
number of shares to be granted in an annual stock option is directly related to
the extent to which the Company attains its projected pre-tax profit for the
given year. Annual stock options will be fully vested on the date of grant and
shall expire if not exercised within three (3) years of the date of grant. Ms.
Skell's employment agreement may be terminated for cause, however, in the event
it is terminated without cause, Ms. Skell will be entitled to receive her base
salary through the original term of the employment agreement. The agreement also
contains standard covenants relating to non-competition, non-disclosure, and the
assignment of intellectual property rights.
ANTON SKELL - Mr. Skell's employment agreement commenced on October 1,
1999 and shall remain in effect for a period of three (3) years, unless sooner
terminated. During the term of his agreement, Mr. Skell will serve as a Company
Vice President of Sales and Marketing. Mr. Skell's employment agreement provided
for a signing bonus of 100,000 shares of Common Stock. The agreement also
provides for an annual base salary of $70,000, plus a quarterly performance
bonus. Generally, quarterly performance bonuses will be equal to a range of 20%
to 40% of his base salary, upon the Company's achievement of 80% to 120% of its
projected pre-tax profit. The Company has the option to pay quarterly
performance bonuses in cash or Common Stock. If paid in Common Stock, the number
of shares issued to Mr. Skell will be based upon 90% of the average market price
of the Common Stock over the 30 days preceding issuance. Commencing October
2000, Mr. Skell will be eligible to receive an annual stock option to purchase
up to 50,000 shares of Common Stock. The exercise price of the annual stock
16
<PAGE> 19
option shall be $.50 in the first year, and 60% and 70% of the market price of
the Common Stock on the date of grant in years 2 and 3, respectively. The actual
number of shares to be granted in an annual stock option is directly related to
the extent to which the Company attains its projected pre-tax profit for the
given year. Annual stock options will be fully vested on the date of grant and
shall expire if not exercised within three (3) years of the date of grant. Mr.
Skell's employment agreement may be terminated for cause, however, in the event
it is terminated without cause, Mr. Skell will be entitled to receive his base
salary through the original term of the employment agreement. The agreement also
contains standard covenants relating to non-competition, non-disclosure, and the
assignment of intellectual property rights.
STOCK OPTION PLANS
The Company does not presently have any stock option plans providing
for the granting of either incentive stock options (as defined in Section 422 of
the Internal Revenue Code) or non-statutory stock options. The Board of
Directors anticipates approving stock option plans for its employees and
directors in the near future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
KOSTI SHIRVANIAN
RESTATEMENT OF PROMISSORY NOTE DATED JUNE 21, 1999 - This note, in the
amount of $400,000, is payable to Komar Investments, LLC, ("Komar"), a limited
liability company controlled by Mr. Shirvanian. Komar advanced the funds for
operating capital, after the Company was unable to secure a loan with an
unaffiliated third party. The principal amount of said note bears interest at
ten percent (10%) per annum from June 21, 1999 (the date of the original note),
and is due and payable April 12, 2000.
SECURED PROMISSORY NOTE DATED MAY 14, 1999, AS AMENDED - This note, in
the amount of $160,000, is payable to Komar. Komar advanced the funds for
operating capital, after the Company was unable to secure a loan with an
unaffiliated third party. The principal amount of said note bears interest at
twelve percent (12%) per annum, and provides for monthly interest payments of
$1,600 commencing January 1, 2000. The note is due January 12, 2001.
RESTATEMENT OF PROMISSORY NOTE DATED JUNE 20, 1997 - This note, in the
amount of $100,000, is payable to the Shirvanian Family Investment Trust, Inc.
The Trust advanced the funds for operating capital, after the Company was
unable to secure a loan with an unaffiliated third party. The principal amount
of said note bears interest at ten percent (10%) per annum from June 20, 1997
(the date of the original note), and is due and payable April 12, 2000.
17
<PAGE> 20
UNSECURED LOAN - In July, 1999, Mr. Shirvanian advanced the funds
$50,000 to the Company in connection with the Company's investment in Digital
Telecommunications, Inc. The loan bears interest at twelve percent (12%) per
annum, and is due and payable on demand anytime after one year.
JOHN HARTUNIAN
RESTATEMENT OF PROMISSORY NOTE DATED JUNE 20, 1997 - This note, in the
amount of $100,000, is payable to John Hartunian, a principal shareholder of
the Company. Mr. Hartunian advanced the funds for operating capital, after the
Company was unable to secure a loan with an unaffiliated third party. The
principal amount of said note bears interest at ten percent (10%) per annum
from June 20, 1997 (the date of the original note), and is due and payable
April 12, 2000.
MERRITT JESSON
UNSECURED LOANS - Mr. Jesson, the Company's Chief Executive Officer and
President, advanced the funds for operating capital, after the Company was
unable to obtain a loan with an unaffiliated third party. As of October 31,
1999, the aggregate amount outstanding of such loan is $271,619. The loan bears
interest at twelve percent (12%) per annum, and is due and payable on demand.
POLICY REGARDING LOANS AND OTHER AFFILIATED TRANSACTIONS
The Company currently intends to elect and maintain at least two (2)
independent directors on the Board of Directors. It is the policy of the Company
that all future material affiliated transactions, loans and loan guarantees with
its officers, directors, 5% shareholders, or their respective affiliates, will
be on terms that are as favorable to the Company as those generally available
from unaffiliated third parties; and all such transactions and loans, and any
forgiveness of such loans, shall be approved or ratified by a majority of the
independent directors who do not have an interest in the transactions and who
will have access, at the Company's expense to its or independent legal counsel.
Further, the Company does not intend to make any loans to or guarantee loans on
behalf of its officers, directors and employees, other than: (i) advances for
travel, business expense, and similar ordinary operating expenditures; (ii)
loans or loan guarantees made for the purchase of the Company's securities, and
(iii) loans for relocation.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company is authorized to issue up to One Hundred Million
(100,000,000)shares of Common Stock, par value $.001 per share, and Twenty
Million (20,000,000) shares of preferred stock, par value $.001 per share, and
no other class of stock may be authorized. Presently, there are no issued and
outstanding shares of the Company's preferred stock. The following description
of the Company's Common Stock is not complete and is qualified in its entirety
18
<PAGE> 21
by reference to the Company's articles of incorporation and bylaws, both of
which are included as exhibits to this Form 10, and applicable Nevada laws.
As of January 26, 2000, there were 52,008,286 shares of Common Stock
outstanding held by 244 shareholders of record. Subject to preferences that may
be applicable to any outstanding shares of preferred stock, the Company's Board
of Directors may declare a dividend out of funds legally available and the
holders of Common Stock are entitled to receive ratably any such dividends. In
the event of liquidation, dissolution or winding up of the Company, holders of
our Common Stock are entitled to share ratably in all of the Company's assets
remaining after payment of the Company's liabilities and liquidation preferences
of any outstanding shares of preferred stock. Holders of Common Stock have no
preemptive rights or other subscription rights to convert their shares into any
other securities. There are no redemption or sinking fund provisions applicable
to the Common Stock.
The registrar and transfer agent for the Company's stock is General
Securities Transfer Agency, Inc. The transfer agent's address is 3614 Calle del
Sol, NE, Albuquerque, New Mexico 87110-6112, and the telephone number is (505)
265-6658.
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<PAGE> 22
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER RELATED STOCKHOLDER MATTERS.
MARKET PRICE OF COMMON STOCK
Our Common Stock has been quoted on the OTC Electronic Bulletin Board
and traded under the symbol "SATX" since 1995. As of January 26, 2000, there
were 244 shareholders of record of the Common Stock. Prior to May 1999, there
was no trading market for our Common Stock. During 1997 and 1998, there was
little consistent activity. Trading generally ranged from zero to a few thousand
shares per day. However, from May 1999 to the present, there were a total of
approximately 100,000 to 1,300,000 trades per day reported for our Common Stock
on the OTC Electronic Bulletin Board. During such period, the high ask and the
low bid information as reported ranged from $0.03 per share to $2.50 per share.
On February 24, 2000, the last reported sale price of the Common Stock on the
OTC Electronic Bulletin Board was $1.15 per share. Due to the limited and
sporadic trading in our Common Stock, the Company believes that the trading
prices are not indicative of a true market price for our shares.
NUMBER OF BENEFICIAL OWNERS OF COMMON STOCK
As of December 31, 1999 the approximate number of beneficial holders of
Common Stock of the Company was approximately 250.
DIVIDENDS
The Company has paid no dividends to date and does not anticipate
paying any for the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
The Company is a defendant in a lawsuit styled NIGRO v.
SATELLITE CONTROL TECHNOLOGIES, INC.,ET AL., which is now pending in the Los
Angeles County Superior Court. This is a class action lawsuit filed by Nigro on
behalf of himself and others who owned SATX stock between September 26, 1996 and
October 7, 1997. Plaintiffs seek to recover damages for depreciation of their
stock due to alleged intentional and negligent misrepresentation of certain
former officers and directors of the Company. The alleged misrepresentations are
(i) the Company had substantial purchase orders for its AlphaTrak product line
and (ii) the AlphaTrak product line was viable and would be available on the
market in the first or second quarter of 1997. The case is currently in the very
early stages of discovery. Based on the documentary evidence currently in the
possession of the Company and interviews with former officers, directors,
employees, and outside engineers, it appears that the allegations are incorrect.
Based on the facts presently available to counsel, substantial recovery by
plaintiffs appears unlikely.
II-1
<PAGE> 23
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
FEBRUARY AND MARCH, 1997 - Pursuant to the Term Sheet dated October,
1996, the Company offered up to $1,000,000 of its Common Stock at an offering
price of $.50 per share. During February and March 1997, the Company sold a
total of 101,000 shares to three (3) investors pursuant to said offering. The
issuer relied on the exemption from registration provided by Rule 504 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"), with respect to this offering.
MARCH, 1997 PRIVATE PLACEMENT - Pursuant to the Term Sheet dated March
7,1997, the Company offered up to $1,000,000 of its Common Stock at an offering
price of $1.27 per share (equal to 70% of the average closing bid price of the
Company's Common Stock as reported by the OTC Electronic Bulletin Board for the
5 trading days immediately preceding the offer). An amended Term Sheet dated May
12, 1997 increased the total offering up to $2,000,000 of Common Stock , and
decreased the purchase price to $0.75 per share. The Company sold a total of
270,000 shares to seven (7) investors. The issuer relied on the exemption from
registration provided by Rule 505 of Regulation D promulgated under the Act with
respect to this offering.
JUNE, 1997 - The Company issued 200,000 shares to an individual upon
the full exercise of said individual's March 29, 1996 Warrant to purchase up to
200,000 shares of Common Stock at an exercise price of $0.25 per share. Said
Warrant expired on March 29, 1999. The issuer relied upon the exemption from
registration provided by Section 4(2) of the Act with respect to the shares sold
upon the exercise of the warrant.
SEPTEMBER, 1997 - The Company issued 200,000 shares to an individual
upon the partial exercise of said individual's March 29, 1996 Warrant to
purchase up to 200,000 shares of Common Stock at an exercise price of $0.25 per
share. Said Warrant expired on March 29, 1999. The issuer relied upon the
exemption from registration provided by Section 4(2) of the Act with respect to
the shares sold upon the exercise of the warrant.
JULY, 1998 - Pursuant to the authority granted in the July 8, 1999
Written Consent of the Board of Directors, the Company issued an aggregate of
30,000,000 shares of Common Stock to two (2) persons in connection with the
Stock Acquisition Agreements dated as of May 22, 1998 by and between the Company
and the two individuals, separately. The issuer relied upon the exemption from
registration provided by Section 4(2) of the Act with respect to this issuance.
MAY, 1999 - Pursuant to the May 14, 1999 Written Consent of the Board
of Directors, the Company authorized the issuance of 1,550,000 to one (1)
individual. The issuer relied upon the exemption from registration provided by
Section 4(2) of the Act with respect to this issuance.
JUNE, 1999 - Pursuant to the authority granted in the June 10, 1999
Written Consent of the Board of Directors, the Company issued an aggregate of
II-2
<PAGE> 24
800,000 shares of Common Stock to four (4) persons. The issuer relied upon the
exemption from registration provided by Section 4(2) of the Act with respect to
this issuance.
JULY, 1999
Pursuant to the authority granted in the May 3, 1999 Minutes of the
Board of Directors Meeting and the May 28, 1999 Stock Purchase Agreement for the
acquisition of DebitFone International, Inc., the Company issued 2,900,000
shares to the sole shareholder of DebitFone. The issuer relied upon the
exemption from registration provided by Section 4(2) of the Act with respect to
this issuance.
Pursuant to the authority granted in the May 3, 1999 Minutes, the
Company issued an aggregate of 150,000 shares to two (2) individuals in
connection with their employment agreements. The issuer relied upon the
exemption from registration provided by Section 4(2) of the Act with respect to
these issuances.
Pursuant to the authority granted in the July 14, 1999 Written Consent
of the Board of Directors Meeting, the Company authorized the issuance of an
aggregate of 95,000 shares to three (3) persons in satisfaction of pending legal
claims. The issuer relied upon the exemption from registration provided by
Section 4(2) of the Act with respect to this issuance.
SEPTEMBER, 1999 - Pursuant to the authority granted in the September
30, 1999 Written Consent of the Board of Directors, the Company issued an
aggregate of 200,000 shares of Common Stock to two (2) individuals in connection
with their employment agreements. The issuer relied upon the exemption from
registration provided by Section 4(2) of the Act with respect to these
issuances.
NOVEMBER, 1999
Pursuant to the authority granted in the November 4, 1999 Written
Consent of the Board of Directors, the Company privately placed an aggregate of
875,700 shares of Common Stock with fourteen (14) persons, at $0.50 per share.
The issuer relied upon the exemption from registration provided by Section 4(2)
of the Act with respect to this issuance.
Pursuant to the authority granted in the November 4, 1999 Written
Consent of the Board of Directors, the Company issued 210,000 shares of Common
Stock to three (3) persons, for services provided to the Company. The issuer
relied upon the exemption from registration provided by Section 4(2) of the Act
with respect to this issuance.
DECEMBER, 1999 - Pursuant to the authority granted in the December 27,
1999 Written Consent of the Board of Directors, the Company privately placed
770,416 shares of Common Stock with one (1) person, at $0.3245 per share. The
issuer relied upon the exemption from registration provided by Rule 504 of
Regulation D with respect to the shares sold.
II-3
<PAGE> 25
JANUARY, 2000
Pursuant to the authority granted in the January 25, 2000 Written
Consent of the Board of Directors, the Company privately placed an aggregate of
999,996 shares of Common Stock with two (2) persons, at $0.30 per share. The
issuer relied upon the exemption from registration provided by Rule 504 of
Regulation D with respect to the shares sold.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502 of the Nevada Revised Statutes permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond the indemnification specifically provided by the current law.
Article XI of our Bylaws provides for the indemnification of officers,
directors and third parties acting on our behalf if such person acted in good
faith and in a manner reasonably believed to be in, and not opposed to, our best
interest and, with respect to any criminal action or proceeding, the indemnified
party had no reason to believe his or her conduct was unlawful.
In addition to providing for indemnification in our Bylaws, the Company
may purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of his or her status as such. Further, we may enter into
indemnification agreements with our directors and executive officers in the
future.
II-4
<PAGE> 26
PART F/S
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SATX, INC.
FINANCIAL STATEMENTS
PAGE
----
<S> <C>
Report of Robert L. White, CPA, Independent Auditor....................................................... F-2
Balance Sheet for December 31, 1999....................................................................... F-3
Statements of Operations for the Years Ended December 31, 1999 and 1998................................... F-4
Statements of Shareholders' Equity for the Years Ended December 31, 1999 and 1998......................... F-5
Statements of Cash Flows for the Years Ended December 31, 1999 and 1998.................................... F-6
Notes to the Financial Statements for December 31, 1999.................................................... F-7
</TABLE>
F-1
<PAGE> 27
ROBERT L. WHITE & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANT
988 OHIO PIKE, SUITE #2
CINCINNATI, OHIO 45245
PHONE (513) 943-1040
FAX (513) 943-7760
To the Stockholders and
Board of Directors of
SATX, Inc.
We have audited the accompanying balance sheet of SATX, Inc. (A Development
Stage Company) as of December 31, 1999, and the related statements of
operations, stockholders' equity (deficiency) and cash flows for the years ended
December 31, 1999 and 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SATX, Inc. as of December 31,
1999 and the results of its operations and its cash flows for each of the years
ended December 31, 1999 and 1998, in conformity with generally accepted
accounting principles.
Robert L. White, CPA
March 20, 2000
F-2
<PAGE> 28
SATX, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1999
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $ 98,826
Accounts Receivable, Less Allowance For
Doubtful Accounts of $1,110 for 1999 19,420
Inventory 406,393
Note Receivable (Note 4) 256,491
Employee Receivables 40,300
Prepaid Expenses 3,961
-----------
Total Current Assets 825,391
Property & Equipment, Net Of
Accumulated Depreciation of $10,184 43,055
Other Assets
Investments (Note 5) 165,000
-----------
Total Other Assets 165,000
-----------
Total Assets $ 1,033,446
===========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable & Accrued Expenses $ 592,294
Notes Payable, Current Portion (Note 6) 513,318
-----------
Total Current Liabilities 1,105,612
Long-Term Liabilities
Notes Payable (Note 6) 1,073,318
Less: Current Portion (513,318)
-----------
Total Long Term-Liabilities 560,000
-----------
Total Liabilities 1,665,612
Shareholders' Equity
Preferred Stock, $.001 par value, 20,000,000
Shares authorized, no shares issued or outstanding
Common Stock, $.001 par value, 100,000,000
Shares authorized, 52,008,286 issued and
outstanding at December 31, 1999 52,008
Paid In Capital 2,979,911
Deficit Accumulated In The
Development Stage (3,664,085)
-----------
Total Shareholders' (Deficit) (632,166)
-----------
Total Liabilities & Shareholders' Equity $ 1,033,446
===========
</TABLE>
(See accountant's report and accompanying notes.)
F-3
<PAGE> 29
SATX, Inc.
(A Development Stage Company)
Statements Of Operations
For The Years Ended December 31, 1999 And 1998
<TABLE>
<CAPTION>
Cumulative
From Inception
(June 28, 1972)
To December 31,
1999 1998 1999
----------- ---------- ---------------
<S> <C> <C> <C>
Revenues
Sales - Vending
Operations $ 13,020 $ -0- $ 13,020
Commission Income 9,188 -0- 9,188
----------- ---------- -----------
Total Revenues 22,208 -0- 22,208
Cost of Revenues
Vending Operations 15,944 -0- 15,944
----------- ---------- -----------
Cost of Revenues 15,944 -0- 15,944
----------- ---------- -----------
Gross Profit 6,264 -0- 6,264
Selling, General &
Administrative Expenses (1,300,386) 3,801 (3,670,349)
----------- ---------- -----------
Net (Loss)
Before Tax $(1,294,122) $ (3,801) $(3,664,085)
Provision For Taxes -0- -0- -0-
----------- ---------- -----------
Net (Loss) $(1,294,122) $ (3,801) $(3,664,085)
=========== ========== ===========
Basic & Diluted Income
(Loss) Per Common
Share $ (.03) $ (-0-)
=========== -=========
Weighted Average
Number of Common
Shares Outstanding 45,355,643 28,627,581
=========== ==========
</TABLE>
(See accountant's report and accompanying notes.)
F-4
<PAGE> 30
SATX, Inc.
(A Development Stage Company)
Statements Of Shareholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional Accumulated Total
----------------------------- Paid In Earnings Shareholder
Shares Amount Capital (Deficit) Equity (Deficit)
---------- ------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at
June 28, 1972 -0- $ -0- $ -0- $ -0- $ -0-
Issuance of
Common Stock 14,737,170 $ 14,737 $ 2,069,213 -0- $ 2,083,950
Net Loss From
Inception To
December 31, 1997 -0- -0- -0- (2,366,162) (2,366,162)
---------- ------------ ------------ ----------- -----------
Balance at
December 31, 1997 14,737,170 14,737 2,069,213 ( (2,366,162) (282,212)
Stock Issued
For Cash 30,000,000 30,000 30,000
Net (Loss) For
The Year Ended
December 31, 1998 (3,801) (3,801)
---------- ------------ ------------ ----------- -----------
Balance at
December 31, 1998 44,737,170 44,737 2,069,213 (2,369,963) (256,013)
Stock Issued
For Cash 1,876,116 1,876 700,293 702,169
Stock Issued For
Services (Note 7) 2,495,000 2,495 97,305 99,800
Stock Issued For
Acquisition (Note 3) 2,900,000 2,900 113,100 116,000
Net (Loss) For The
Year Ended
December 31, 1999 (1,294,122) (1,294,122)
---------- ------------ ------------ ----------- -----------
Balance at
December 31, 1999 52,008,286 $ 52,008 $ 2,979,911 $(3,664,085) $ (632,166)
========== ============ ============ =========== ===========
</TABLE>
(See accountant's report and accompanying notes.)
F-5
<PAGE> 31
SATX, Inc.
(A Development Stage Company)
Statements Of Cash Flow
For The Years Ended December 31, 1999 And 1998
<TABLE>
<CAPTION>
Cumulative
From Inception
(June 28, 1972) To
December 31,
1999 1998 1999
----------- ---------- ------------------
<S> <C> <C> <C>
Statement of Cash (Used) Provided:
Cash Flow From Operating Activities
Net Loss For The Period $(1,294,122) $ (3,801) $(3,664,085)
Non-Cash Expenses
Depreciation & Amortization 2,763 -0- 58,206
Loss On Abandoned Assets -0- -0- 69,761
Stock Issued For Services (Note 7) 99,800 -0- 99,800
Stock Issued For Acquisition (Note 3) 116,000 -0- 116,000
(Increase) In Receivables (19,420) -0- (19,420)
(Increase) In Inventories (446,693) -0- (446,693)
(Increase) In Prepaid Expenses (3,961) -0- (3,961)
Increase (Decrease) In Accounts
Payable & Accrued Expenses 537,289 (26,400) 592,294
----------- -------- -----------
Net Cash (Used) In Operations (1,008,344) (30,201) (3,198,098)
Cash Flow From Investing Activities
Purchase of Property & Equipment (47,734) -0- (171,022)
Loan To Supplier (256,491) -0- (256,491)
Minority Investment In Private Stock (165,000) -0- (165,000)
----------- -------- -----------
Net Cash (Used) Provided
From Investing Activities (469,225) -0- (592,513)
Cash Flow From Financing Activities
Increase In Loans From
Shareholders & Affiliates 873,318 -0- 1,073,318
Issuance of Common Stock
For Cash 702,069 30,000 2,816,119
----------- -------- -----------
Net Cash (Used) Provided
From Financing 1,575,387 30,000 3,889,437
----------- -------- -----------
Net Increase (Decrease) In Cash 97,818 (201) 98,826
Beginning Cash 1,008 1,209 -0-
----------- -------- -----------
End-Of-Period Cash Balance $ 98,826 $ 1,008 $ 98,826
=========== ======== ===========
</TABLE>
(See accountant's report and accompanying notes.)
F-6
<PAGE> 32
SATX, Inc.
(A Development Stage Company)
Notes To The Financial Statements
December 31, 1999
NOTE 1 BUSINESS DESCRIPTION
SATX, Inc., the "Company" and its Subsidiary, DebitFone International, Inc., are
currently development stage enterprises under the provisions of Financial
Accounting Standards No. 7 ("SFAS No. 7"). The Company and its subsidiary are in
the communications technology business. The company was incorporated June 28,
1972, in the State of Utah, under the name Growth, Inc. After several subsequent
changes in corporate structure, the Company amended its Articles of
Incorporation to change its name to SATX, Inc. and changed its domicile to
Nevada.
The Company currently markets, both domestically and internationally, prepaid
cellular phones and global tracking devices.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements, at December 31, 1999, include the
accounts of SATX, Inc. and its wholly-owned Subsidiary, DebitFone International,
Inc. (See Note 3) All material inter- company accounts and transactions have
been eliminated in consolidation.
Principles of Presentation
The financial statements have been prepared in accordance with generally
accepted accounting principles.
Method of Accounting
The Company uses the accrual method of accounting for financial statement
reporting. Under this method, revenue is recognized when earned and expenses are
recognized when incurred. Revenue is considered earned when all conditions of
the sale are met and the buyer is obligated to the seller for payment.
Accounts Receivable
The Company is primarily in the prepaid business for its cellular accounts, but
in the credit extension environment for tracking device customers. In instances
where credit is extended to customers, an allowance for uncollectible accounts
will be used based on the Company's analysis of economic conditions and life of
individual accounts.
Inventory
Inventory is valued at the lower of cost or market, using the first-in -
first-out method.
F-7
<PAGE> 33
SATX, Inc.
(A Development Stage Company)
Notes To The Financial Statements
December 31, 1999
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONT'D)
Property & Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is computed on a straight-line basis, generally over the estimated
useful lives of the asset or, when applicable, the life of the capital lease,
whichever is shorter. These lives are generally three (3) years for computers
and software and seven (7) years for furniture, fixtures and production
equipment.
Net Income (Loss) Per Share
The Company computes net income or loss per share in accordance with SFAS No.
128, "Earnings per Share" which requires dual presentation of basic earnings per
share ("EPS") and diluted EPS.
Basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of common shares and potentially dilutive
shares outstanding during the period.
There are presently no dilutive shares outstanding.
Business Risk
Business risks include the following:
Competition - Several of the Company's current and potential competitors have
longer operating histories, larger customer bases and greater financial,
marketing and other resources than the Company. Increased competition may result
in reducing operating margins and impact market share.
Risks Associated with Business Development - The Company intends to continue to
pursue an aggressive growth strategy, which will include significant marketing,
advertising, promotional programs and public relations activities, which will
require significant expenditures. These expenditures may not result in a
sufficient increase in revenues to cover such advertising and promotions
expenses.
F-8
<PAGE> 34
SATX, Inc.
(A Development Stage Company)
Notes To The Financial Statements
December 31, 1999
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONT'D)
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of
credit risk are principally bank deposits and accounts receivable. Cash and cash
equivalents and bank deposits are deposited with high credit quality financial
institutions. Accounts receivable typically represent credit card purchases and
are derived from the revenues earned from customers in the US and are
denominated in US dollars. Accounts receivable balances are typically settled
through customer credit cards and, as a result, the majority of accounts
receivable are collected upon processing of credit card transactions. The
Company maintains an allowance for uncollectible accounts based upon the
expected collectibility of accounts receivable.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes", which requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
temporary difference between the financial statement and tax basis of assets and
liabilities using presently enacted tax rates in effect. Valuation allowances
are established when necessary to reduce deferred tax assets to the amount
expected to be realized.
The Company presently has operating losses of approximately $3,664,085 available
to be carried forward to offset future earnings which could result in the
reduction of future taxes.
However, since the Company has not yet had any recorded earnings, we did not
compute a tax benefit in these statements.
NOTE 3 BUSINESS COMBINATION
In May, 1999, SATX, Inc. completed the acquisition of all of the stock of its
wholly-owned Subsidiary, DebitFone International, Inc. It traded 2,900,000
shares of Company stock for all of DebitFone's stock, valued at fair market
value of approximately $.04 per share of the Company's common stock. The Company
has recorded the acquisition using the purchase method of accounting as follows:
<TABLE>
<S> <C>
Assets acquired $ 116,000
Liabilities Assumed -0-
---------
Acquisition Price Of Assets $ 116,000
=========
</TABLE>
The assets purchased included $92,353 of software development costs which were
subsequently expensed as period costs during the remainder of 1999.
F-9
<PAGE> 35
SATX, Inc.
(A Development Stage Company)
Notes To The Financial Statements
December 31, 1999
NOTE 3 BUSINESS COMBINATION
(CONT'D)
The operations of DebitFone International, Inc. have been reflected herein on a
consolidated basis for the period since acquisition, which includes the period
of June 1, 1999, through December 31, 1999.
The following unaudited pro forma data summarizes the results of operations of
the Company for the years ended December 31, 1999 and 1998, as if the
acquisition has been completed on January 1, 1998. The pro forma data gives
effect to the actual operating results prior to acquisition. The pro forma
results do not purport to be indicative of the results that would have actually
been achieved if the acquisition had occurred on January 1, 1998, or that may
be achieved in the future.
<TABLE>
<CAPTION>
The Years Ended:
December 31, 1998 December 31, 1999
<S> <C> <C>
Sales $ -0- $ -0-
Net Loss ( 162,961) ( 1,407,587)
Basic Net Loss Per share ( .01) ( .03)
</TABLE>
NOTE 4 POTENTIAL ACQUISITIONS
In October, 1999, SATX, Inc. entered into a stock purchase agreement with
Paradigm Manufacturing, Inc., which called for SATX, Inc. to acquire all the
shares of Paradigm. Although this agreement was signed by both parties, there
were still conditions to be met before becoming final.
In an agreement, dated March 3, 2000, and a supplemental agreement, dated March
3, 2000, the parties mutually agreed to rescind the stock purchase agreement
and consider it null and void. The agreement also outlined the parties
concurrance to finish the development and tooling of a prepaid phone for SATX,
Inc.
As part of the original agreement, SATX, Inc. loaned Paradigm Manufacturing,
Inc. $256,491. The supplemental agreement includes a promissory note that calls
for periodic repayment beginning April 1, 2000, with the final payment by
November 1, 2000. Interest is payable at 10% per annum.
Additionally, SATX, Inc. entered into a Memorandum of Understanding with
Stoveact, Inc., wherein the parties are considering a stock purchase agreement
that would call for SATX, Inc. to acquire all the shares of Stoveact, Inc., a
private California based corporation. Stoveact, Inc. has developed a vehicle
location and disabling product intended to significantly reduce vehicle theft
and the resulting impact on property and lives. This product is considered
compatible with SATX, Inc.'s cellular/paging-based location and tracking
product.
F-10
<PAGE> 36
SATX, Inc.
(A Development Stage Company)
Notes To The Financial Statements
December 31, 1999
NOTE 5 INVESTMENT
In May, 1999, SATX, Inc. signed a Letter Of Intent to invest in the expansion
of Digital Telecommunications, Inc. (Digitel), a private Oklahoma corporation,
doing telecommunications business in the African region island Country of
Madagascar. The investment of $165,000 represents a minor percentage of Digital
(under 5%) and is reflected in these statements at cost, which is lower than
the market value estimated by third party experts.
NOTE 6 NOTES PAYABLE
<TABLE>
<CAPTION>
December 31, 1999
-----------------
<S> <C>
Notes Payable to Shareholders due April 12,
2000. Interest accrued at 10% per annum,
is also payable at that date. $ 200,000
Notes Payable to Shareholders
and affiliates dated May 14, 1999.
Interest is payable at 10% per
annum with both interest and
principle due January 15, 2001. 160,000
Notes Payable to Shareholder
affiliates dated June 21, 1999.
Interest is payable at 10% per
annum with both interest and
principal due January 15, 2001. 400,000
Notes Payable to Shareholders
for monies advanced for operating
capital. Interest is payable at 10%
per annum and is payable upon
demand. $ 313.318
----------
1,073,318
Less: Current Portion 513.318
----------
Long-Term Notes Payable $ 560,000
==========
</TABLE>
F-11
<PAGE> 37
SATX, Inc.
(A Development Stage Company)
Notes To The Financial Statements
December 31, 1999
NOTE 7 ISSUANCE OF STOCK FOR SERVICES
In June, 1999, the Company's directors issued 2,495,000 shares of common stock
to various individuals in exchange for consulting services. This resulted in
$99,800 additional expense in the year ended December 31, 1999.
NOTE 8 COMMITMENTS FOR FUTURE MINIMUM LEASE PAYMENTS
The Company is obligated under a lease for office and warehouse space for the
following amounts:
<TABLE>
<CAPTION>
Estimated Operating
Base Rent Expense & Sales Tax Total
--------- ------------------- -----
<S> <C> <C> <C>
Year 2000 $ 83,113 $ 20,400 $ 103,513
Year 2001 87,269 21,000 108,269
Year 2002 44,699 10,800 55,499
(Through June 30, 2002)
</TABLE>
F-12
<PAGE> 38
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<TABLE>
<CAPTION>
<S> <C>
2.1 Articles of Incorporation, as amended
2.2 By-laws
3.1 See Exhibits 2.1 and 2.2 for provisions of the Articles of Incorporation and Bylaws of the Company defining right of
holders of the Company's Common Stock
3.2 Specimen of Stock Certificate
6.1 Lease Agreement dated June 19, 1998, by and between ARA Properties No. 1, Ltd., doing business as Eisenhower Technology
Park, as Lessor, and DebitFone International, Inc., as Lessee, and Addendum to Lease dated January 29, 1999
6.2 Employment Agreement dated May 28, 1999, between DebitFone International, Inc., Satellite Control Technologies, Inc.,
and Merritt W. Jesson
6.3 Employment Agreement dated June 1, 1999, between DebitFone International, Inc., Satellite Control Technologies, Inc.,
and Robert Ellis
6.4 Employment Agreement dated June 1, 1999, between DebitFone International, Inc., Satellite Control Technologies, Inc.,
and Larry Bisgrove
6.5 Employment Agreement dated October 1, 1999, between DebitFone International, Inc., Satellite Control Technologies,
Inc., and Donna Skell
6.6 Employment Agreement dated October 1, 1999, between DebitFone International, Inc., Satellite Control Technologies,
Inc., and Anton Skell
6.7 Term Sheet for Restatement of Promissory Note dated June 21, 1999, by and between Komar Investments, LLC and SATX,
Inc.
6.8 Secured Promissory Note dated May 14, 1999, by and between Komar Investments, LLC and Satellite Control Technologies,
Inc., as amended
6.9 Term Sheet for Restatement of Promissory Note dated June 20, 1997, by and between SATX, Inc. and the Shirvanian Family
Investment Trust
6.10 Term Sheet for Promissory Note dated June 20, 1997, by and between SATX, Inc. and John Hartunian
8.1 Stock Purchase Agreement dated May 28, 1999, by and among Merritt Jesson and Satellite Control Technologies, Inc.
8.2 Letter of Intent dated May 15, 1999, by and between SATX, Inc. and Digital Telecommunications, Inc.
8.3 Memorandum of Understanding dated October 28, 1999 by and between SATX, Inc., and Stoveact, Inc.
8.4 Supplemental Agreement by SATX, Inc. and Paradigm Manufacturing, Inc. dated March 3, 2000
10 Consent of Independent Auditor
12 Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of
1995
</TABLE>
III-1
<PAGE> 39
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 24, 2000
SATX, INC.
(Registrant)
By: /s/ MERRITT W. JESSON
-----------------------------------------
Merritt W. Jesson, Chairman of the Board,
Chief Executive Officer and President
III-2
<PAGE> 1
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
SEP 25 1995
No. 16545-95
/s/ Dean HELLER
DEAN HELLER SECRETARY OF STATE
EXHIBIT 2.1
ARTICLE OF INCORPORATION
OF
PAGESTAR, INC.
FIRST. The name of corporation is:
PAGESTAR, INC.
SECOND. Its registered office in the State of Nevada is located at 2533
North Carson Street, Carson City, Nevada 89706 that this Corporation may
maintain an office, or offices, in such other place within or without the State
of Nevada as may be from time to time designated by the Board of Directors, or
by the By-Laws of said Corporation, and that this Corporation may conduct all
Corporation business of every kind and nature, including the holding of all
meetings of Directors and Stockholders, outside the State of Nevada as well as
within the State of Nevada.
THIRD. The objects for which this Corporation is formed are: To engage
in any lawful activity, including, but not limited to the following:
(A) Shall have such rights, privileges and powers as may be conferred upon
corporations by any existing law.
(B) May at any time exercise such rights, privileges and powers, when not
inconsistent with the purposes and objects for which this corporation is
organized.
1
<PAGE> 2
(C) Shall have power to have succession by its corporate name for the
period limited in its certificate or articles of incorporation, and when no
period is limited, perpetually, or until dissolved and its affairs wound up
according to law.
(D) Shall have power to sue and be sued in any court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and personal estate
and to mortgage or lease any such real and personal estate with its franchises.
The power to hold real and personal estate shall include the power to take the
same by devise or bequest in the State of Nevada, or in any other state,
territory or country.
(G) Shall have power to appoint such officers and agents as the affairs of
the corporation shall require, and to allow them suitable compensation.
(H) Shall have power to make By-Laws not inconsistent with the
constitution or laws of the United States, or of the State of Nevada, for the
management, regulation and government of its affairs and property, the transfer
of its stock, the transaction of its business, and the calling and holding of
meetings of its stockholders.
(I) Shall have power to wind up and dissolve itself, or be wound up or
dissolved.
(J) Shall have power to adopt and use a common seal or stamp, and alter
the same at pleasure. The use of a seal or stamp by the corporation on any
corporate documents is not necessary. The corporation may use a seal or stamp,
if it desires, but such use or nonuse shall not in any way affect the legality
of the document.
(K) Shall have power to borrow money and contract debts when necessary for
the transaction of its business, or for the exercise of its corporate rights,
privileges or franchises,
2
<PAGE> 3
or for any other lawful purpose of its incorporation; to issue bonds, promissory
notes, bills of exchange, debentures, and other obligations and evidences of
indebtedness, payable at a specified time or times, or payable upon the
happening of a specified event or events, whether secured by mortgage, pledge or
otherwise, or unsecured, for money borrowed, or in payment for property
purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell, assign, transfer,
mortgage, pledge or otherwise dispose of the shares of the capital stock of, or
any bonds, securities or evidences of the indebtedness created by, any other
corporation or corporations of the State of Nevada, or any other state or
government, and, while owners of such stock, bonds, securities or evidences of
indebtedness, to exercise all the rights, powers and privileges of ownership,
including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer shares of its own
capital stock, and use therefor its capital, capital surplus, surplus, or other
property or fund.
(N) Shall have power to conduct business, have one or more offices, and
hold, purchase, mortgage and convey real and personal property in the State of
Nevada, and in any of the several states, territories, possessions and
dependencies of the United States, the District of Columbia, and any foreign
countries.
(O) Shall have power to do all and everything necessary and proper for the
accomplishment of the objects enumerated in its certificate or articles of
incorporation, or any amendment thereof, or necessary or incidental to the
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the assignment of the
3
<PAGE> 4
objects of the corporation, whether or not such business is similar in nature to
the objects set forth in the certificate or articles of incorporation of the
corporation, or any amendment thereof.
(P) Shall have power to make donations for the public welfare or for
charitable, scientific or educational purposes.
(Q) Shall have power to enter into partnerships, general or limited, or
joint ventures, in connection with any lawful activities, as may be allowed by
law.
FOURTH. That the total number of stock authorized that may be issued by
the Corporation is ONE HUNDRED TWENTY MILLION (120,000,000) shares as follows:
ONE HUNDRED MILLION (100,000,000) shares of common stock @ $.001 par value and
TWENTY MILLION (20,000,000) shares of preferred stock @ $.001 par value and no
other class of stock shall be authorized. Said shares may be issued by the
corporation from time to time for such considerations as may be fixed by the
Board of Directors.
FIFTH. The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the By-Laws of this
Corporation, providing that the number of directors shall not be reduced to
fewer than one (1).
The name and post office address of the first board of Directors shall be
one (1) in number and listed as follows:
NAME POST OFFICE ADDRESS
---- -------------------
Cheryl Mall 2533 North Carson Street
Carson City, Nevada 89706
4
<PAGE> 5
SIXTH. The capital stock, after the amount of the subscription price,
or par value, has been paid in, shall not be subject to assessment to pay the
debts of the corporation.
SEVENTH. The name and post office address of the Incorporator signing
the Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
---- -------------------
Cheryl Mall 2533 North Carson Street
Carson City, Nevada 89706
EIGHTH. the resident agent for this corporation shall be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered or statutory address of this
corporation in the state of Nevada, shall be:
2533 North Carson Street
Carson City, Nevada 89706
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the Stockholders, to make,
alter or amend the By-Laws of the Corporation.
To fix the amount to be reserved as working capital over and above its
capital stock paid in; to authorize and cause to be executed, mortgages and
liens upon the real and personal property of this Corporation.
By resolution passed by a majority of the whole Board, to designate one (1)
or more
5
<PAGE> 6
committees, each committee to consist of one or more of the Directors of the
Corporation, which, to the extent provided in the resolution, or in the By-Laws
of the Corporation, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation. Such
committee, or committees, shall have such name, or names, as may be stated in
the By-Laws of the Corporation, or as may be determined from time to time by
resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the Stockholders
holding stock entitling them to exercise at least a majority of the voting
power given at a Stockholders meeting called for that purpose, or when
authorized by the written consent of the holders of at least a majority of the
voting stock issued and outstanding, the Board of Directors shall have power and
authority at any meeting to sell, lease or exchange all of the property and
assets of the Corporation, including its good will and its corporate franchises,
upon such terms and conditions as its board of Directors deems expedient and for
the best interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter of right to
subscribe for or receive additional shares of any class of stock of the
Corporation, whether now or hereafter authorized, or any bonds, debentures or
securities convertible into stock, but such additional shares of stock or other
securities convertible into stock may be issued or disposed of by the Board of
Directors to such persons and on such terms as in its discretion it shall deem
advisable.
TWELFTH. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission of any
such director or officer; provided,
6
<PAGE> 7
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer (i) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
THIRTEENTH. This Corporation reserves the right to amend, alter, change
or repeal any provision contained in the Articles of Incorporation, in the
manner now or hereafter prescribed by statute, or by the Articles of
Incorporation, and all rights conferred upon Stockholders herein are granted
subject to this reservation.
7
<PAGE> 8
I, THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a Corporation pursuant to the General Corporation Law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set my hand this 25th day of September, 1995.
/s/ Cheryl Mall
-----------------------------------
Cheryl Mall
STATE OF NEVADA )
) SS:
CARSON CITY )
On this 25th day of September, 1995, in Carson City, Nevada, before me, the
undersigned, a Notary Public in and for Carson City, State of Nevada, personally
appeared:
Cheryl Mall
Known to me to be the person whose name is subscribed to the foregoing document
and acknowledged to me that she executed the same.
MARK SHATAS /s/ MARK SHATAS
(NOTARY SEAL) NOTARY PUBLIC - NEVADA -------------------------
CARSON CITY Notary Public
My Appt. Expires March 12, 1996
I, Laughlin Associates, Inc. hereby accept as Resident Agent for the previously
named Corporation.
9/25/95 RECEIVED
SEP 25 1995
/s/ Cheryl Mall
- ----------------------------------------------------- Secretary of State
Date Service Coordinator
8
<PAGE> 9
ARTICLES OF MERGER
OF
FILED WESTLAND RESOURCES, INC.
IN THE OFFICE OF THE (A UTAH CORPORATION)
SECRETARY OF STATE OF THE
STATE OF NEVADA INTO
OCT X4 1995 PAGESTAR, INC.
(A NEVADA CORPORATION)
No. 16545-95
----------------
/s/ DEAN HELLER
DEAN HELLER, SECRETARY OF STATE
The undersigned officers, vice-president and secretary of Westland
Resources, Inc., a Utah corporation, and Pagestar, Inc., a Nevada corporation,
hereby certify that the Plan and Agreement of Merger attached as Exhibit 1
hereto and hereby made a part hereof (hereinafter the "Plan") was approved by
the board of directors of each corporation and by the shareholders of Westland
Resources, Inc., a Utah corporation, at a special shareholders' meeting which
was duly called and was held on September 26, 1995, after due notice had been
given to the shareholders, and was approved by the sole shareholder of Pagestar,
Inc., a Nevada corporation, by consent action.
The number of shares outstanding of each class of each corporation which
were entitled to vote on the Plan, and the number of shares of each class of
each corporation consenting and not consenting to the Plan, is as follows:
<TABLE>
<CAPTION>
Number of
Shares Number of Shares
Class Outstanding Consenting Not Consenting
----- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Westland Resources, Inc. common stock 4,806,350 4,425,000 -0-
(a Utah Corporation) ($.001 par)
Pagestar, Inc. common stock 10 10 -0-
(a Nevada Corporation) ($.00 par)
</TABLE>
The number of votes cast for the Plan was sufficient for approval of the
Plan.
All of the presently outstanding shares of Pagestar, Inc., a Nevada
corporation, are owned and held by Westland Resources, Inc., a Utah corporation.
The effective date of the merger shall be as set forth in Article II of the
Plan, which date complies with subsection 16-10a-1104 of the Utah Revised
Business Corporation Act.
The shareholders also voted upon and approved a one-for-five reverse stock
split of the outstanding common shares of Westland.
IN WITNESS WHEREOF, Westland Resources, Inc., a Utah corporation, and
Pagestar, Inc., a Nevada corporation, have caused these Articles of Merger to
be executed in their respective corporate names by their respective presidents
and their respective secretaries this 26th day of September 1995.
<PAGE> 10
Attest: Westland Resources, Inc.
A Utah Corporation
/s/ Carl T. Suter By /s/ William Marshall
- -------------------------- --------------------------------
Carl T. Suter, Secretary William Marshall, Vice-President
Attest: Pagestar, Inc.
A Nevada Corporation
/s/ Ronald N. Vance By /s/ Ronald N. Vance
- -------------------------- --------------------------------
Ronald N. Vance, Secretary Ronald N. Vance, President
State of Utah )
) ss.
County of Salt Lake )
On the 26th day of September 1995, personally appeared before me, the
undersigned Notary Public, each of the foregoing individuals who acknowledged
to me that each had executed the foregoing Articles of Merger in the capacity
set forth above.
/s/ Richard A. Lucas
------------------------------
NOTARY PUBLIC
Notary Public
RICHARD A. LUCAS
6255 Canyon Cove Ct
Salt Lake City, Utah 84121
My Commission Expires
May 3, 1998
State of Utah
-2-
<PAGE> 11
EXHIBIT 1
PLAN AND AGREEMENT OF MERGER
OF
WESTLAND RESOURCES, INC.
(A UTAH CORPORATION)
INTO
PAGESTAR, INC.
(A NEVADA CORPORATION)
Plan and Agreement of Merger (hereinafter called "Agreement of Merger")
dated this 26th day of September 1995, by and between Westland Resources, Inc.,
a corporation organized and existing under the laws of the state of Utah
(hereinafter sometimes referred to as "Westland") and Pagestar, Inc., a
corporation organized and existing under the laws of the state of Nevada
(hereinafter sometimes referred to as "Pagestar"). These two parties are herein
sometimes referred to collectively as the "merger corporations," witnesseth:
WHEREAS, Pagestar is the wholly owned subsidiary of Westland;
WHEREAS, Westland wishes to change the state of its domicile
by merging into Pagestar; and
WHEREAS, Section 78.461 of the NRS and Section 16-10a-1104 of the Utah
Revised Business Corporation Act each authorize the merger of Westland and
Pagestar;
NOW, THEREFORE, the merging corporations have agreed, and do hereby agree,
each with the other in consideration of the premises and the mutual agreements,
provisions, covenants and grants herein contained and in accordance with the
laws of the State of Nevada, and in accordance with the laws of the State of
Utah, that Westland and Pagestar be merged into a single corporation and that
Pagestar shall be the continuing and surviving corporation and do hereby agree
upon and prescribe that the terms and conditions of the merger hereby agreed
upon and the mode of carrying the same into effect and the manner of converting
the presently outstanding shares of each of the merging corporations into the
shares or Pagestar are and shall be hereinafter set forth:
Article I
---------
Manner of Conversion of Shares
1. The manner and basis of converting the shares of Westland into shares of
Pagestar are as follows: at the effective time of the merger, each share of
common stock of Westland shall thereupon be converted into one share of
Pagestar. Each holder of outstanding common stock of Westland upon surrender to
Pagestar of one or more certificates for such shares for cancellation shall be
entitled to receive one or more certificates for the number of shares of
common stock of Pagestar represented by the certificates of Westland so
surrendered for cancellation by such holder. Until so surrendered, each such
certificate representing outstanding shares of common stock of Westland shall
represent the ownership of a like number of shares of Pagestar for all corporate
and legal purposes.
2. As of the effective time of the merger, all of the outstanding shares of
common stock of Pagestar which shares are held by Westland, shall be redeemed by
Pagestar for the sum of one dollar ($1)
<PAGE> 12
and such redeemed shares shall be cancelled and returned to the status of
authorized and unissued shares. None of such redeemed shares shall be retained
by Pagestar as treasury shares and such shares shall be reissued in accordance
with paragraph 1 of this Article I.
Article II
----------
Effective Time
The effective time of the merger shall be upon the issuance of the
certificate of merger by the Division of Corporations of the State of Utah and
filing the agreement of merger in accordance with Section 78.458 NRS with the
Secretary of State of Nevada. Prior to said date, this plan and agreement of
merger shall (1) have been submitted to and approved by the board of directors
of each of the merging corporations; (2) have been approved by the stockholders
of each of the merging corporations in accordance with law.
Article III
-----------
Effect of Merger
When the merger shall have been effected:
(a) The merging corporations shall be a single corporation known as
Pagestar, Inc., a Nevada corporation.
(b) The separate existence of Westland shall cease.
(c) Pagestar shall have all rights, privileges, immunities and powers and
shall be subject to all the duties and liabilities of a corporation organized
under Nevada law.
(d) Pagestar shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of a public as well as of a private
nature of each of the merging corporations and all property, real, personal and
mixed, and all debts due on whatever account, including subscriptions to shares
and all other choses in action, and all and every other interest of and
belonging to or due to each of the merging corporations shall be taken and
deemed to be transferred to and vested in Pagestar without further act or deed,
and the title to any real estate or any interest therein vested in either of the
merging corporations shall not revert or be in any way impaired by reason of the
merger.
(e) Pagestar shall thenceforth be responsible and liable for all the
liabilities and obligations of each of the merging corporations and any claim
existing or action or proceeding pending by or against either of the merging
corporations may be prosecuted to judgment as if such merger had not taken
place, or Pagestar may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the merging corporations
shall be impaired by reason of the merger.
(f) After the effective time of the merger, the earned surplus of Pagestar
shall equal the aggregate of the earned surpluses of the merging corporations
immediately prior to the effective time of the merger. The earned surplus
determined as above provided shall continue to be available for payment of
dividends by Pagestar.
(g) The certificate of incorporation of Pagestar as in effect on the date
of the merger provided for in this agreement of merger, shall continue in full
force and effect as the certificate of incorporation of the corporation
surviving this merger.
-2-
<PAGE> 13
(h) The by-laws of Pagestar as they shall exist on the effective date of
this agreement of merger shall be and remain the by-laws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
(i) The directors and offices of Pagestar shall continue in office until
the next annual meeting of stockholders and until their successors shall have
been elected and qualified.
Article IV
----------
Service of Process; Rights of Dissenting Shareholders
Pagestar hereby agrees that it may be served with possess in the State of
Utah by any proceeding for enforcement of any obligation of Westland, and in
any proceeding for the enforcement of the rights of a dissenting shareholder of
Westland. Pagestar irrevocably appoints the director of the Division of
Corporations and Commercial Code as its agent to accept service of process in
any such proceeding. The address to which a copy of the process may be mailed is
57 West 200 South, Suite 310, Salt Lake City, Utah 84101. Pagestar will promptly
pay to the dissenting shareholders of Westland the amount, if any, to which they
shall be entitled under the provisions of the Utah Revised Business Corporation
Act with respect to the rights of dissenting shareholders.
Article V
---------
Termination
If, at any time prior to the effective date hereof, events or circumstances
occur which in the opinion of a majority of the board of directors of either
constituent corporation renders it inadvisable to consummate the merger, this
Agreement of Merger shall not become effective even though previously adopted by
the shareholders of the corporation as herein before provided. The filing of the
merger documents shall conclusively establish that no action to terminate this
plan has been taken by the board of directors of either corporation.
Article VI
----------
Amendment
The board of directors of the constituent corporations may amend this
Agreement of Merger at any time prior to the filing of the Agreement (or a
certificate in lieu thereof) with the States of Utah and Nevada provided that an
amendment made subsequent to the adoption of the Agreement of Merger by the
stockholders of any constituent corporation shall not (1) alter or change the
amount of any kind of shares, securities, cash, property and/or rights to be
received in exchange for on conversion of all or any of the shares of any class
or series thereof of such constituent corporation, except to correct manifest
error as may be permitted by law; (2) alter or change any term of the
Certificate of Incorporation of the surviving corporation to be effected by the
merger; or (3) alter or change any of the other terms and conditions of the
Agreement Merger if such alteration or change would adversely affect the holders
of any class or series thereof of such constituent corporation
IN WITNESS WHEREOF, Pagestar, Inc., a Nevada corporation, has caused this
Plan and Agreement of Merger to be signed by its president and its secretary in
accordance with the requirements of Section 461 NRS and Westland Resources,
Inc., a Utah corporation, has caused this Plan and Agreement of Merger to be
signed by its president and its secretary in accordance with the requirements of
Section 16-10a-1104 of the Utah Revised Business Corporation Act all as of the
day and year first above written.
-3-
<PAGE> 14
Attest: Westland Resources, Inc.
A Utah Corporation
/s/ Carl T. Suter /s/ William Marshall
- -------------------------- --------------------------------
Carl T. Suter, Secretary William Marshall, Vice-President
Attest: Pagestar, Inc.
A Nevada Corporation
/s/ Ronald N. Vance By /s/ Ronald N. Vance
- -------------------------- ------------------------------
Ronald N. Vance, Secretary Ronald N. Vance, President
-4-
<PAGE> 15
CERTIFICATE OF AMENDMENT
FILED OF
IN THE OFFICE OF THE ARTICLES OF INCORPORATION
SECRETARY OF STATE OF THE OF
STATE OF NEVADA PAGESTAR, INC.
APR 29 1997
No.___________________
/s/ DEAN HELLER
DEAN HELLER, SECRETARY OF STATE
Pursuant to the provision of Nevada Revised Statutes, Title 7, Chapter 78,
the undersigned officers do hereby certify:
1. They are President and Secretary, respectively, of PAGESTAR, INC., a
Nevada corporation (the "Corporation").
2. The Board of Directors of the Corporation by unanimous written consent
dated April 25, 1997, duly adopted the following resolutions:
RESOLVED, that the Board of Directors deems it to be in the best
interests of the Corporation and its stockholders to change the name of
the Corporation from "Pagestar, Inc." to "Satellite Control
Technologies, Inc.", and that in order to accomplish this name change,
Article FIRST of the Articles of Incorporation of the Corporation is
hereby amended to read as follows:
"FIRST. The name of the corporation is SATELLITE CONTROL
TECHNOLOGIES, INC."
RESOLVED FURTHER, that the appropriate officers of the Corporation are
hereby authorized and directed to (i) submit the foregoing amendment for
approval by a majority of the Corporation's stockholders in accordance
with the provisions of Title 7, Chapter 78 of the Nevada Revised
Statutes, (ii) execute a Certificate of Amendment of Articles of
Incorporation ("Certificate") containing such amendment and submit it
for filing with the Secretary of State of Nevada, and (iii) insert a
copy of the Certificate as executed and filed in the Minute Book and see
that a copy of the Certificate is kept at the principal office for the
transaction of business of the Corporation in accordance with Section
78.105 of the Nevada Revised Statutes.
3. The total number of outstanding shares having voting power of the
Corporation and the total number of votes entitled to be cast by the holders of
all of the outstanding shares is 14,121,170.
<PAGE> 16
4. The holders of a majority of the total number of outstanding shares
having voting power, to wit, 7,300,000 shares, dispensed with the holding of a
meeting of stockholders and adopted to amendment herein certified by a consent
in writing signed by all of them in accordance with the provisions of Nevada
Revised Statutes, Title 7, Section 78.320.
Dated: April 26, 1997 /s/ Steve Lipman
------------------------------------
Steve Lipman, President
/s/ Lawrence Hecox
------------------------------------
Lawrence Hecox, Secretary
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On April 28, 1997, before me, Carl A. Levredge, a Notary Public, personally
appeared Steve Lipman, (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person(s), or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Carl A. Levredge
------------------------------
Notary's Signature
STATE OF CALIFORNIA )
) ss. (NOTARY STAMP)
COUNTY OF LOS ANGELES )
On April 26, 1997, before me, M__________ S_______ a Notary Public,
personally appeared Lawrence Hecox, (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s), is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ M_________ S_________
--------------------------------
Notary's Signature
(NOTARY STAMP)
-2-
<PAGE> 17
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
SATELLITE CONTROL TECHNOLOGIES, INC.
Satellite Control Technologies, Inc., a Nevada corporation, by its
President and Secretary, does hereby certify:
That pursuant to the unanimous vote by written consent dated August
12, 1999, the Shareholders of this Corporation adopted the following amendment
to the Articles of Incorporation, which shall now read as follows:
ARTICLE FIRST
NAME
The name of the corporation is:
SATX, INC.
IN WITNESS WHEREOF, this Certificate of Amendment of Articles of
Incorporation of Satellite Control Technologies, Inc. has been executed this
12th day of August, 1999.
/s/ Merritt Jesson
---------------------------------
Merritt Jesson, President
/s/ Khoren Shaginian
---------------------------------
Khoren Shaginian, Secretary
STATE OF FLORIDA )
) ss
COUNTY OF HILLSBOROUGH )
This instrument was acknowledged before me on the 12th day of August,
1999, by Merritt Jesson as President of Satellite Control Technologies, Inc.
/s/ Dorothy K. Leonard
---------------------------------
Notary Public
[SEAL}
<PAGE> 1
EXHIBIT 2.2
PAGESTAR, INC.
BY-LAWS
ARTICLE I MEETINGS OF SHAREHOLDERS
1. Shareholders' Meetings shall be held in the office of the corporation,
at Carson City, NV, or at such other place or places as the Directors shall,
from time to time, determine.
2. The annual meeting of the shareholders of this corporation shall be
held at 11:00 a.m., on the 25th day of September of each year beginning in
1996, at which time there shall be elected by the shareholders of the
corporation a Board of Directors for the ensuing year, and the shareholders
shall transact such other business as shall properly come before them. If the
day fixed for the annual meeting shall be a legal holiday such meeting shall be
held on the next succeeding business day.
3. A notice signed by any Officer of the corporation or by any person
designated by the Board of Directors, which sets forth the place of the annual
meeting, shall be personally delivered to each of the shareholders of record,
or mailed postage prepaid, at the address as appears on the stock book of the
corporation, or if no such address appears in the stock book of the
corporation, to his last known address, at least ten (10) days prior to the
annual meeting.
Whenever any notice whatever is required to be given under any article of
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time of the meeting of the
shareholders, shall be deemed equivalent to proper notice.
4-1
<PAGE> 2
4. A majority of the shares issued and outstanding, either in person or
by proxy, shall constitute a quorum for the transaction of business at any
meeting of the shareholders.
5. If a quorum is not present at the annual meeting, the shareholders
present, in person or by proxy, may adjourn to such future time as shall be
agreed upon by them, and notice of such adjournment shall be mailed, postage
prepaid, to each shareholder of record at least ten (10) days before such date
to which the meeting was adjourned; but if a quorum is present, they may
adjourn from day to day as they see fit, and no notice of such adjournment need
be given.
6. Special meetings of the shareholders may be called at anytime by the
President; by all of the Directors provided there are no more than three, or if
more than three, by any three Directors; or by the holder of a majority share
of the capital stock of the corporation. The Secretary shall send a notice of
such called meeting to each shareholder of record at least ten (10) days before
such meeting, and such notice shall state the time and place of the meeting,
and the object thereof. No business shall be transacted at a special meeting
except as stated in the notice to the shareholders, unless by unanimous consent
of all shareholders present, either in person or by proxy, all such shares
being represented at the meeting.
7. Each shareholder shall be entitled to one vote for each share of
stock in his own name on the books of the corporation, whether represented in
person or by proxy.
8. At all meetings of shareholders, a shareholder may vote by proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed withe the Secretary of the
corporation before or at the time of the meeting.
9. The following order of business shall be observed at all meetings of
the
4-2
<PAGE> 3
shareholders so far as is practicable:
a. Call the roll;
b. Reading, correcting, and approving of
the minutes of the previous meeting;
c. Reports of Officers;
d. Reports of Committees;
e. Election of Directors;
f. Unfinished business; and
g. New business.
10. Unless otherwise provided by law, any action required to be taken at
a meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action to be taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE II STOCK
1. Certificates of stock shall be in a form adopted by the Board of
Directors and shall be signed by the President and Secretary of the corporation.
2. All certificates shall be consecutively numbered; the name of the
person owning the shares represented thereby, with the number of such shares
and the date of issue shall be entered on the company's books.
3. All certificates of stock transferred by endorsement thereon shall be
surrendered by cancellation and new certificates issued to the purchaser or
assignee.
4. Upon surrender to the corporation or the transfer agent of the
corporation of a
4-3
<PAGE> 4
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, and
cancel the old certificate; every such transfer shall be entered on the
transfer book of the corporation.
5. The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE III DIRECTORS
1. A Board of Directors, consisting of at least one (1) person shall be
chosen annually by the shareholders at their meeting to manage the affairs of
the corporation. The Directors' term of office shall be one (1) year, and
Directors may be re-elected for successive annual terms.
2. Vacancies on the Board of Directors by reason of death, resignation
or other causes shall be filled by the remaining Director or Directors choosing
a Director or Directors to fill the unexpired term.
3. Regular meetings of the Board of Directors shall be held at 1:00
p.m. on the 25th day of September of each year beginning in 1996 at the office
of the company at Carson City, NV, or at such other time or place as the Board
of Directors shall be resolution appoint; special meetings may be called by the
President or any Director giving ten (10) days notice to each Director. Special
meetings may also be called by execution of the appropriate waiver of notice
and called when executed by a majority of the Directors of the company. A
majority of the
4-4
<PAGE> 5
Directors shall constitute a quorum.
4. The Directors shall have the general management and control of the
business and affairs of the corporation and shall exercise all the powers that
may be exercised or performed by the corporation, under the statutes, the
Articles of Incorporation, and the By-Laws. Such management will be by equal
vote of each member of the Board of Directors with each Board member having an
equal vote.
5. The act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Directors.
6. A resolution, in writing, signed by all or a majority of the members
of the Board of Directors, shall constitute action by the Board of Directors to
effect therein expressed, with the same force and effect as though such
resolution had been passed at a duly convened meeting; and it shall be the duty
of the Secretary to record every such resolution in the Minute Book of the
corporation under its proper date.
7. Any or all of the Directors may be removed for cause by vote of the
shareholders or by action of the Board. Directors may be removed without cause
only by vote of the shareholders.
8. A Director may resign at any time by giving written notice to the
Board, the President or the Secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the Board or such Officer, and the acceptance of the resignation shall not
be necessary to make it effective.
9. A Director of the corporation who is present at a meeting of the
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action
4-5
<PAGE> 6
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a Director who voted in favor of such action.
ARTICLE IV OFFICERS
1. The Officers of this company shall consist of: a President, one or
more Vice Presidents, Secretary, Treasurer, and such other officers as shall,
from time to time, be elected or appointed by the Board of Directors.
2. The PRESIDENT shall preside at all meetings of the Directors and the
shareholders and shall have general charge and control over the affairs of the
corporation subject to the Board of Directors. He shall sign or countersign all
certificates, contracts and other instruments of the corporation as authorized
by the Board of Directors and shall perform all such other duties as are
incident to his office or are required by him by the Board of Directors.
3. The VICE PRESIDENT shall exercise the functions of the President
during the absence or disability of the President and shall have such powers
and such duties as may be assigned to him, from time to time, by the Board of
Directors.
4. The SECRETARY shall issue notices for all meetings as required by the
By-Laws, shall keep a record of the minutes of the proceedings of the meetings
of the shareholders and Directors, shall have charge of the corporate books,
and shall make such reports and perform such other duties as are incident to
his office, or properly required of him by the Board of Directors. He shall be
responsible that the corporation complies with Section 78.105 of the
4-6
<PAGE> 7
Nevada Revised Statutes and supplies to the Nevada Resident Agent or Registered
Office in Nevada, any and all amendments to the corporation's Articles of
Incorporation and any and all amendments or changes to the By-Laws of the
corporation. In compliance with Section 78.105, he will also supply to the
Nevada Resident Agent or Registered Office in Nevada, and maintain, a current
statement setting out the name of the custodian of the stock ledger or
duplicate stock ledger, and the present and complete Post Office address,
including street and number, if any, where such stock ledger or duplicate stock
ledger is kept.
5. The TREASURER shall have the custody of all monies and securities of
the corporation and shall keep regular books of account. He shall disburse the
funds of the corporation in payment of the just demands against the
corporation, or as may be ordered by the Board of Directors, making proper
vouchers for such disbursements and shall render to the Board of Directors,
from time to time, as may be required of him, an account of all his
transactions as Treasurer and of the financial condition of the corporation. He
shall perform all duties incident to his office or which are properly required
of him by the Board of Directors.
6. The RESIDENT AGENT shall be in charge of the corporation's registered
office in the State of Nevada, upon whom process against the corporation may be
served and shall perform all duties required of him by statute.
7. The salaries of all Officers shall be fixed by the Board of Directors
and may be changed, from time to time, by a majority vote of the Board.
8. Each of such Officers shall serve for a term of one (1) year or until
their successors are chosen and qualified. Officers may be re-elected or
appointed for successive annual terms.
4-7
<PAGE> 8
9. The Board of Directors may appoint such other Officers and Agents, as
it shall deem necessary or expedient, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined, from time to time, by the Board of Directors.
10. Any Officer or Agent elected or appointed by the Directors may be
removed by the Directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
11. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Directors for the unexpired
portion of the term.
ARTICLE V INDEMNIFICATION OF OFFICERS AND DIRECTORS
The corporation shall indemnify any and all of its Directors and Officers,
and its former Directors and Officers, or any person who may have served at the
corporation's request as a Director or Officer of another corporation in which
it owns shares of capital stock or of which it is a creditor, against expenses
actually and necessarily incurred by them in connection with the defense of any
action, suit or proceeding in which they, or any of them, are made parties, or
a party, by reason of being or having been Director(s) or Officer(s) of the
corporation, or of such other corporation, except, in relation to matters as to
which any such Director or Officer or former Director or Officer or person
shall be adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such indemnification
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled, under By-Law, agreement, vote of shareholders or otherwise.
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<PAGE> 9
ARTICLE VI DIVIDENDS
The Directors may, from time to time, declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE VII WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or Director of the corporation under the provisions of
these By-Laws or under the provisions of the Articles of Incorporation, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE VIII AMENDMENTS
1. Any of these By-Laws may be amended by a majority vote of the
shareholders at any annual meeting or at any special meeting called for that
purpose.
2. The Board of Directors may amend the By-Laws or adopt additional
By-Laws, but shall not alter or repeal any By-Laws adopted by the shareholders
of the company.
CERTIFIED TO BE THE BY-LAWS OF:
PAGESTAR, INC.
By: ________________________
Secretary
4-9
<PAGE> 1
EXHIBIT 3.2
see reverse for CUSIP NO. 78400J 10 0
certain definitions
SATX, INC.
"The shares represented by this certificate have not been registered under the
Securities Act of 1933 (the "Act") and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective registration
statement under the Act or pursuant to an exemption from registration under the
Act, the availability of which is to be established to the satisfaction of the
Company."
NUMBER SHARES
A Nevada Corporation
Common Stock - Par Value $.001
This Certifies That
is the owner of
fully paid and non-assessable shares of the Par Value $.001 Common Stock of
SATX, INC.
transferrable only on the books of the corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned by the
Transfer Agent.
In Witness Whereof, the corporation has caused this certificate to be signed by
the facsimile signatures of its duly authorized officers and to be sealed with
the facsimile seal of the corporation.
Dated
[CORPORATE
- ------------------------------ NEVADA --------------------------------------
Secretary SEAL] President
Countersigned
GENERAL SECURITIES TRANSFER AGENCY, INC.
P.O. Box 3805, Albuquerque, New Mexico 87190-3805
By /s/
-----------------------------------------------
Transfer Agent & Registrar Authorized Signature
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT - ________ Custodian ______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act ___________________________
in common (State)
Additional abbreviations may also be used though not in the above list.
"The shares represented by this certificate have not been registered under the
Securities Act of 1933 (the "Act") and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective registration
statement under the Act or pursuant to an exemption from registration under the
Act, the availability of which is to be established to the satisfaction of the
Company."
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------
- --------------------------------
For Value received, _______________________________ hereby sell, assign and
transfer unto _________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee.
________________________________________________________________________________
________________________________________________________________________________
_____________ Shares of the Common Stock represented by the within Certificate,
and do hereby irrevocably constitute and appoint ______________________________
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated, ___________________________
Signature __________________________________
Signature Guaranteed:
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES; NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, MIDWEST STOCK EXCHANGE.
________________________________________________________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
<PAGE> 1
EXHIBIT 6.1
ADDENDUM TO LEASE
DATE: JANUARY 29, 1999
That certain Lease dated June 19, 1998 by and between ARA Properties No. 1,
Ltd., a Florida Limited Partnership, doing business as Eisenhower Technology
Park, having an address c/o Peter Lawrence Commercial Real estate, Inc., 4710
Eisenhower Boulevard, Suite C-1, Tampa, Florida 33634, hereinafter referred to
as the Lessor, and DEBITFONE INTERNATIONAL, INC. a Florida corporation, having
an address at 4710 Eisenhower Boulevard Suite E-1, Tampa, FL 33634 hereinafter
referred to as the Lessee, shall be amended as follows:
1. Lessee agrees to pay Lessor January 1999 rent and late fee, CAM, and sales
tax and February 1999 rent, CAM, and sales tax prior to 5:00 p.m., Friday,
January 29, 1999 in the amount of seventeen thousand seven hundred twelve
dollars and 12/100 ($17,712.12). Said payment shall be in the form of a banker's
check and cashier's check with a Florida licensed bank acceptable to Lessor.
2. Lessee shall pay to Lessor an additional security deposit in the amount of
fifty thousand dollars ($50,000.00) prior to 5:00 p.m., Friday, January 29,
1999. Said payment shall be in the form of a banker's check or cashier's check
with a Florida licensed bank acceptable to Lessor. Upon Lessor's receipt of the
additional fifty thousand dollars ($50,000.00) subject to the terms above, then
Lessee shall have a total security deposit on account with the Lessor in the
amount of seventy four thousand dollars ($74,000). The total seventy four
thousand dollars ($74,000.00) security deposit shall remain on account with
Lessor during the term of the Lease per the terms of paragraph 31 of the Lease.
3. In consideration of the above and subject to the specific terms described
above, Lessor shall terminate the Guaranty with Teledata World Services dated
June 12, 1998. Teledata World Services shall have no further obligations or
liabilities under the stated Guaranty as of the date of the Lease Addendum as
executed by Lessor.
AGREED AND ACCEPTED:
LESSOR:
ARA Properties No. 1, Ltd., by its agent
Peter Lawrence Commercial Real Estate, Inc.
Witnesses: By: /s/ James J. Shapiro
-------------------------------------
/s/ James J. Shapiro, President
- ------------------------------
/s/ Pamela S. Duke Date: 1/29/99
- ------------------------------ -------------------------------------
/s/ Pamela S. Duke DEBITFONE INTERNATIONAL, INC.
- ------------------------------
By: /s/ Merritt Jesson, President
/s/ ---------------------------------------
- ------------------------------ Merritt Jesson, President
Date: 1-29-99
-------------------------------------
1
<PAGE> 2
EISENHOWER TECHNOLOGY PARK
LEASE AGREEMENT
THIS LEASE AGREEMENT made and entered into this 19th day of June, 1998, by
and between ARA PROPERTIES NO. 1, LTD., doing business as EISENHOWER TECHNOLOGY
PARK, a Florida Limited Partnership, having a mailing address c/o Peter Lawrence
Commercial Real Estate, Inc., 4710 Eisenhower Boulevard, Suite C-1, Tampa,
Florida 33634-6334, hereinafter referred to as the "Lessor," and DEBITFONE
INTERNATIONAL, INC., a Florida corporation, having an address at 4710 Eisenhower
Blvd., Suite E-1, Tampa, Florida 33634, hereinafter referred to as the "Lessee."
WITNESSETH:
1. PREMISES: Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the office and warehouse space having a mailing address of 4710
Eisenhower Blvd., Suite E-1, Tampa, Florida 33634, which office and warehouse
space contains an "agreed upon" 11,192 square feet of space and is hereinafter
referred to as the "demised premises." The demised premises are located in a
building located in an industrial park commonly known as "Eisenhower Technology
Park" and which industrial park is hereinafter referred to as the "Industrial
Park." The demised premises are shown on Exhibit A, attached to this Lease and
made a part hereof.
2. TERM: The lease term of Four year(s) shall commence on July 1, 1998 and
expire on June 30, 2002. If the demised premises are not available for
possession by Lessee on the stated commencement date, then (i) this Lease shall
not be void or voidable and Lessor shall not be liable to Lessee for any loss or
damage resulting therefrom; (ii) the tenancy and Lessee's obligation to pay rent
shall begin upon the date possession is given to Lessee; and (iii) the
expiration date shall be adjusted so as to provide for a full Four (4) year
term. If this Lease commences on other than the first day of a calendar month or
expires on other than the last day of a calendar month, the installment of base
rent for the applicable month will be prorated and paid on a per diem basis on
the actual number of days in the applicable calendar month.
3. RENT:
a. As base rent for the demised premises, Lessee shall pay to Lessor the
following:
1) For the term July 1, 1998 through June 30, 1999 base rent shall be
$77,224.80 per annum plus all applicable sales taxes and
utilities.
2) For the term July 1, 1999 the June 30, 2000 base rent shall be
$81,086.04 per annum plus all applicable sales taxes and
utilities.
3) For the term July 1, 2000 through June 30, 2001 base rent shall be
$85,140.34 per annum plus all applicable sales taxes and
utilities.
4) For the term July 1, 2001 through June 30, 2002 base rent shall be
$89,397.36 per annum plus all applicable sales taxes and
utilities.
b. Base rent stipulated for each of the applicable lease years shall be
paid in equal one-twelfth (1/12th) installments in advance on the
first day of each calendar month for the applicable lease year
together with all applicable sales or other taxes payable on, or in
connection with, the payment of each installment of base rent. Base
rent and all other items of rent or payments due Lessor under this
Lease shall be paid to Lessor at the address of Lessor set forth
above or at such other address and/or to such other party as Lessor
may, from time to time, designate by written notice to Lessee in the
manner hereafter set forth.
c. Lessor hereby acknowledges receipt of Lessee's check, subject to
collection, in the amount of $24,000.00, representing payment of the
initial security deposit required by paragraph 31 of this Lease.
d. Lessor hereby acknowledges receipt of Lessee's check, subject to
collection, in the amount of $8,512.57, representing payment of one
month(s) of base rent ($6,435.40) and Estimated Pass-Thru Expenses in
advance ($1,588.90) plus sales thereon ($538.27).
e. Lessee covenants and agrees to pay all licenses, taxes, sales taxes
and assessments of every kind and character imposed by any
governmental body, on, against or in connection with the operation of
the business conducted on the demised premises, or against Lessee's
property in or on the demised premises or on any installment of base
rent or item of additional rent or other charge payable by Lessee
under this Lease.
4. REPAIR AND MAINTENANCE: Lessor shall (other than for any repairs or
replacements required as a result of the acts or omissions or negligence of
Lessee, its agents, officers and its and their employees or invitees) maintain
1
<PAGE> 3
and replace parts and materials as required. Lessee shall, at its own expense,
keep the demised premises in good repair, order and clean and, at its own
expense, will remove all refuse and garbage therefrom. Garbage and refuse shall
be stored at such locations and in such containers as shall be approved by
Lessor. Lessee shall use such rubbish and trash removal contractors as Lessor,
at its option, may designate.
5. COMPLIANCE WITH REQUIREMENTS OF LAW: Lessee, at its sole cost and
expense, shall promptly comply with all laws, statutes, ordinances, rules,
orders, regulations and requirements of the Federal, State, County and local
government and of any and all their departments and bureaus with jurisdiction
over the demised premises, and with any directives of any public officer or
officers which shall impose any violation, order or duty upon Lessor or Lessee
with respect to the demised premises and/or relate to the correction, prevention
and/or abatement of nuisances or other grievances in, upon or connected with the
demised premises during the term hereof, Lessee shall, at Lessee's own cost and
expense, also promptly comply with and obey all rules, orders and regulations of
any fire underwriting or rating authority. Any governmental or municipal
permits, approvals or consents required in order for Lessee to be able to use
the demised premises for the purposes for which Lessee intends, and is permitted
hereunder, to use the demised premises, if necessary, shall be obtained by
Lessee, at Lessee's sole cost and expense, and any failure of Lessee to obtain
such permits, approvals or consents shall not relieve Lessee of its obligations
hereunder.
6. UTILITIES: Lessee shall be responsible for procuring directly from the
providers of all such services, and paying to such providers the costs and
expenses of all utilities and services used on the premises during the term of
this Lease. No trucks, cars or equipment are to be washed on the premises.
7. ALTERATIONS: Lessee shall make no additions, installations, alterations
or changes in or to the demised premises without obtaining the prior written
permission of Lessor. In any event, all installations, alterations or work done
by Lessee shall at all times comply with:
a. Laws, rules, orders and regulations of all governmental or municipal
bodies, authorities, departments or agencies having jurisdiction
thereof and such rules and regulations as Lessor shall promulgate.
b. Plans and specifications prepared by and at the expense of Lessee
therefore submitted to Lessor for its prior written approval; no
installations, alterations or any other work shall be undertaken,
started or begun by Lessee, its agents, servants or employees, until
Lessor has approved such plans and specifications; and no amendments
or additions to such plans and specifications shall be made without
the prior written consent of Lessor.
c. Lessee agrees to pay Lessor's costs and expenses of reviewing any
plans and specifications submitted for Lessor's review plus an
inspection fee of One Hundred and no/100 ($100.00) Dollars per
inspection.
8. ACCESS: Lessee shall permit Lessor and other authorized by Lessor to
enter upon the demised premises at all reasonable times to examine the condition
thereof and conditions of Lessee's occupancy, to make such repairs, additions or
alterations therein as Lessor may deem necessary, for such other purposes as may
be related to Lessor's ownership or to exhibit the same to prospective tenants,
purchasers and/or mortgagees. During the last six (6) months prior to the
expiration of the Lease Term or any renewal term, the Lessor may exhibit the
Leased Premises to prospective tenants and/or brokers and may place on or about
the Leased Premises or the Project, signs, banners or other notices advertising
the Leased premises as being available for lease. Lessee hereby waives all
claims of any nature whatsoever, including, without limitation, damages,
inconvenience to or interference with Lessee's business, lost profits or loss of
quiet enjoyments, arising out of, occasioned by or in any manner related to such
signage, access or notices.
9. SIGNAGE: Lessee may not erect any sign in or on any portion of the
demised premises, the building in which the demised premises are located or
anywhere in the Industrial Park without Lessor's prior written approval.
10. USE: Lessee shall use the demised premises solely for warehouse and
office purposes in connection with the telecommunications equipment sales,
services and storage and for no other use or purpose. Lessee shall not use, or
permit the use of, the demised premises contrary to any applicable statute,
ordinance, law, rule or regulation or in violation of the certificate of
occupancy.
11. LIABILITY: Lessee shall save and hold Lessor harmless from all
liabilities, charges, expenses (including counsel fees) and costs on account of
all claims for damages and otherwise and/or suits for or by reason of any injury
or injuries to any person or property of any kind whatsoever, whether the person
or property of Lessee, its agents or employees or third persons, from any cause
or causes whatsoever while on or upon or in proximity to said premises or due to
any breach of a covenant herein by Lessee or to Lessee's use and occupancy of
the demised premises. Lessor shall not in any manner be liable to Lessee for
damages, losses or any other claim resulting from Lessor's delay or failure in
delivery of the demised premises.
12. SURRENDER AND TERMINATION: All fixtures, equipment, improvements and
appurtenances attached to or built into the demised premises prior to or during
the term, whether by Lessor, at its expense or at the expense of Lessee, or by
Lessee, shall be and remain part of the demised premises and shall not be
removed by Lessee at the end of the term, unless Lessor, at least fifteen (15)
days prior to the expiration of the term, notifies Lessee to remove the same.
All of Lessee's removable trade fixtures and removable business equipment may be
removed by Lessee upon condition that such removal does not materially damage
the building and that the cost of repairing any damage to the demised premises
or the building arising from such removal shall be paid by Lessee. Any property
of Lessee or of any subtenant or occupant that Lessee has the right to remove or
may hereunder be required to remove which shall remain in the building after the
expiration or termination of the term of this Lease shall be deemed to have been
abandoned by Lessee, and either may be retained by Lessor as its property or may
be disposed of in such manner as Lessor may see fit; provided, however, that,
notwithstanding
2
<PAGE> 4
the foregoing, in the event of any failure of Lessee to promptly remove the
items requested by Lessor to be removed and/or restore any damage to the
building or demised premises occasioned by such removal, Lessor, at Lessee's
cost and expense, may remove the items Lessee failed to remove and/or effect all
repairs to the building and demised premises. If such property or any part
thereof shall be sold, Lessor may receive and retain the proceeds of such sale
and apply the same, at its option, against the expenses of the sale, the cost of
moving and storage, any arrears of base rent, additional rent or other charge
payable hereunder and any damages to which Lessor may be entitled hereunder or
pursuant to law. Upon the expiration of other termination of the term of this
Lease, Lessee shall quit and surrender to Lessor the demised premises, broom
clean, in good order and condition, ordinary wear excepted, and Lessee shall (i)
remove all of its property and other items that it is permitted or required
hereunder to remove and (ii) repair all damage to the building and/or the
demised premises occasioned by such removal. Lessee's obligation to observe or
perform this covenant shall survive the expiration or other termination of the
term of this Lease.
13. INDEMNITY: Lessor, its agents and its and their employees shall not be
liable for any damage to property of Lessee or of any other party claiming by,
through or under Lessee, nor for the loss or damage to any property of Lessee by
theft or otherwise. Lessee shall, at its own cost and expense, be responsible
for the repairs or restoration due to, or resulting from, any theft or
otherwise. Lessor or its agent shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, electrical disturbance, water, rain or snow or leaks from any part
of the building or from the pipes, appliances or plumbing works or from the
roof, street or sub-surface or from any other place or by dampness or by any
other cause of whatsoever nature; nor shall Lessor or its agents be liable for
any such damage caused by other tenants or persons in the building or caused by
operations in construction of any private, public or quasi-public work; nor
shall Lessor be liable for any defect (latent or otherwise) in the demised
premises or in the building in which the demised premises are a part. Lessee
shall reimburse and compensate Lessor as additional rent for all expenditures
made by, or damages or lines sustained or incurred by, Lessor due to
non-performance or non-compliance with or breach or failure to observe any term,
covenants or condition of this Lease upon Lessee's part to be kept, observed,
performed or complied with.
14. NO WAIVER: The failure of Lessor to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease shall not prevent a subsequent act, which would have originally
constituted a violation from having all the force and effect of an original
violation. The receipt by Lessor of rent with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach. No provision
of this Lease shall be deemed to have been waived by Lessor unless such waiver
be in writing signed my Lessor. No surrender of this Lease shall be effective
without Lessor's written agreement to accept such surrender. No payment by
Lessee, or receipt by Lessor, of a lesser amount than the full rent, additional
rent or payment obligation hereunder shall be deemed to be other than on account
for the sum or sums stipulated hereunder, nor shall any endorsement or statement
on any check or any letter accompanying a payment by Lessee be deemed an accord
and satisfaction and Lessor may accept such check or payment without prejudice
to Lessor's right to recover the balance of such rent, additional rent or other
payment or pursue any other remedy available to Lessor. No waiver, on the part
of Lessor, its successors or assigns, of any default or breach by Lessee of any
covenant, agreement or condition of this Lease shall be construed to be a waiver
of the rights of Lessor as to any prior or future default or breach by Lessee.
15. SUBORDINATION: This Lease is subject and subordinate to the lien of any
and all (i) mortgages, deeds of trust or other security devices which may now or
hereafter affect or encumber all or any portion of the Industrial Park. This
clause shall be self-operative and no further instrument of subordination shall
be required by any mortgagee, or holder of another security device or holder of
a ground leasehold interest. In confirmation of such subordination, Lessee shall
execute promptly any certificate that Lessor may request. Lessee hereby
constitutes and appoints Lessor Lessee's attorney-in-fact to execute any such
certificate or certificates for and on behalf of Lessee.
16. INSURANCE: Lessee shall, during the term hereof, keep in full force and
effect (i) public liability and property damage insurance with respect to the
demised premises and the use and/or business operated by Lessee in the demised
premises, in which the limits of public liability shall not be less than One
Million and no/100 ($1,000,000.00) Dollars on account of personal injury in or
the death of any one or more persons, as a result of any accident or disaster,
and Five Hundred Thousand and no/100 ($500,000.00) Dollars on account of damage
to property; (ii) fire and extended coverage insurance with VMM and sprinkler
leakage coverage in an amount sufficient to cover the cost of replacing its
property and fixtures and (iii) plate glass and other glass breakage and
replacement insurance.
a. The limits of said insurance shall not, however, in any way limit the
liability of Lessee under this Lease.
b. All insurance policies which Lessee is required to secure and
maintain shall be in such form and by companies acceptable to Lessor,
such acceptance to not be unreasonably withheld.
c. Lessee shall include in its fire and plate glass insurance policies
for the demised premises appropriate clauses pursuant to which the insurance
carriers (i) waive all rights of subrogation against Lessor, Lessor's mortgagees
and holders of any ground lease, with respect to losses payable under such
policies and/or (ii) agree that such policies shall not be invalidated should
the insured waive, in writing, prior to a loss any or all right of recovery
against any party for losses covered by such policies. If Lessee, at any time,
is unable to obtain such inclusion of either of the clauses described in the
preceding sentence, Lessee shall have Lessor, Lessor's mortgagees and holders of
any ground lease named in such policies as insureds. Lessee hereby waives any
and all right of recovery which it might otherwise have against Lessor, its
contractors, agents and its and their employees, for loss or damage to Lessee's
furniture, furnishings, fixtures and other property and all other losses covered
by the insurance required to be carried by Lessee. Lessee shall, concurrently
with its execution of this Lease (and thereafter, at least thirty (30) days
prior to the expiration of any policy) furnish Lessor with a duplicate original
of all insurance carried by Lessee at the demised premises with evidence that
the premiums therefor has been paid current.
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<PAGE> 5
d. All public liability policies required by this Lease to be obtained
by Lessee shall name Lessor and such other parties as Lessor shall
designate as an insured thereunder;
17. DEFAULT: Time is of the essence with regard to the performance of
Lessee's obligations under this Lease. Any of the following constitutes a
default of this Lease by Lessee:
a. Failure to pay any installment of base rent, item of additional rent
or other charge payable under this Lease on the applicable payment
date.
Lessee shall pay Lessor interest at the rate of eighteen (18%)
percent simple interest per annum (or if such rate be illegal, at the
maximum rate permitted by law, and any payment in excess of that
which is permitted by law shall, and be deemed to be, an advance
payment of base rent and shall be applied against the installments of
base rent next becoming due) on all payments due under this Lease
that are not made on the date when due, calculated from the date when
due until paid in full.
b. Failure to cure any other default of Lessee's obligations under this
Lease for a period of ten (10) days after notice specifying the
nature of the default.
c. Vacation or abandonment of the demised premises.
d. Lessee files a voluntary petition in bankruptcy or is adjudicated
insolvent or a bankrupt, or makes an assignment for the benefit of
creditors, or files a petition for relief under any applicable
bankruptcy law, or consents to the appointment of a trustee or
receiver of all or any substantial part of its property; or
e. An involuntary petition under any applicable bankruptcy law is filed
against Lessee and is not vacated within thiry (30) days.
18. LESSOR'S REMEDIES: Upon Lessee's default and the expiration of any
applicable grace period, Lessor may, at Lessor's option, take any one or more of
the following actions without further notice or demand.
a. Declare all base rent, additional rent and other charges for the
entire remaining portion of the term immediately due and payable.
b. Bring an action against Lessee to collect all base rent and other
sums due and owing Lessor, or to enforce any other term or provision
of this Lease.
c. Terminate this Lease by three (3) days' written notice to Lessee. In
the event of termination, Lessee agrees to immediately surrender
possession of the demised premises. If Lessor terminates this Lease,
Lessor may recover from Lessee all damages Lessor incurs by reason of
Lessee's default, including damages equal to the present value of the
difference between the base rent due for the remainder of the term
and the market value rent rate for the remainder of the term, and all
Lessor's costs, expenses and attorneys' fees.
d. Lessor may pay or perform, or cause to be paid or performed, any
obligation of Lessee under this Lease, for Lessee's account, and
Lessee shall promptly reimburse Lessor, upon demand, for all Lessor's
costs, expenses and attorneys' fees so incurred.
e. Relet the demised premises for Lessee's account without terminating
this Lease. All sums received by Lessor from reletting shall be
applied first to Lessor's reasonable costs and expenses incurred in
reletting, including, without limitation, Lessor's attorneys' fees,
advertising costs, brokerage commissions and costs of alterations,
improvements and repairs to the demised premises expended or incurred
by Lessor in order to effect such reletting, then to the payment of
all sums due under this Lease. Upon Lessor's demand, Lessee shall pay
any deficiency to Lessor as it arises.
Lessor's remedies in this paragraph 18 are cumulative and in addition to
any other remedies available at law or in equity.
19. DESTRUCTION - FIRE OR OTHER CAUSE: If the demised premises shall be
partially damaged by fire or other cause without the fault or neglect of Lessee
or Lessee's servants, employees, agents, invitees or licensees, Lessor shall,
upon Lessor's receipt of the insurance proceeds and to the extent such proceeds
are allocable or attributable to the demised premises, repair the portions of
the demised premises covered by Lessor's insurance, and the rent until such
repairs shall have been made shall be apportioned according to the part of the
demised premises which is usable by Lessee. But if such partial damage is due to
the fault or neglect of Lessee or Lessee's servants, employees, agents, invitees
or licensees, without prejudice to any other rights and remedies of Lessor and
without prejudice to the rights of subrogation of Lessor's insurer, the damages
shall be required by Lessor but there shall be no apportionment or abatement of
rent. If the demised premises are totally damaged or are rendered wholly
untenantable by fire or other cause and Lessor shall decide not to restore or
not to rebuild the same, or if the building of which the demised premises are a
part shall be so damaged that Lessor shall decide to demolish it or not to
rebuild it, or if the damage occurs in the last year of the then term of this
Lease, or if the building of which the demised premises are a part (whether or
not the demised premises have been damaged) should be damaged to the extent of
fifty (50%) percent or more of the then monetary value thereof, or if the damage
resulted from a risk not fully covered by Lessor's insurance, then or in any of
such events, Lessor may, within ninety (90) days after such fire or
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other cause, give Lessee a notice of Lessor's election to cancel this Lease, and
thereupon the term of this Lease shall expire by lapse of time upon the third
day after such notice is given, and Lessee shall vacate the demised premises
and surrender the same to Lessor. For purposes of this Lease, the term
"Lessor's receipt of insurance proceeds" shall mean the portion of the
insurance proceeds paid over to Lessor free and clear of any collection by
mortgagees for the value of the damage, attorney fees and other costs of
compromise, adjustment, settlement and collection of the insurance proceeds.
20. LEGAL FEES: In the event it shall become necessary for either party at
any time to institute any legal action or proceedings of any nature for the
enforcement of this Lease, or any of the provisions hereof, or to employ an
attorney-at-law therefor and said party prevails in such action or proceedings,
then the non-prevailing party shall pay to the prevailing party such prevailing
party's costs (including a reasonable attorney's fee) incurred in such action
or proceedings.
21. CONDEMNATION: If all of the building in which the demised premises
are located is taken by or under the power of eminent domain (or conveyance in
lieu thereof), this Lease shall terminate on the date the condemning authority
takes possession. In all other cases of any taking of the building of which the
demised premises are a part by the power of eminent domain (or conveyance in
lieu thereof), Lessor shall have the option of electing to terminate this
Lease. If Lessor does not elect to terminate, Lessor shall do the work
necessary so as to constitute the portion of the building not so taken a
complete architectual unit and Lessee shall do all other work necessary for it
to use and occupy the demised premises for its permitted purpose. During the
period of Lessor's repairs, rent shall abate in an amount bearing the same
ratio as the portion of the demised premises usable by Lessee bears to the
entire demised premises; and Estimated Pass-Thru Expenses shall, at Lessor's
discretion, be equitably adjusted. Rent and Estimated Pass-Thru Expenses shall
be equitably adjusted, as of the date the condemning authority permanently
acquires possession of any portion of the demised premises, to reflect any
permanent reduction in the tenantable portion of the demised premises. Lessee
shall not be entitled to, hereby expressly waives, and hereby assigns to Lessor
all Lessee's right, title and interest in and to, any condemnation award for any
taking (or consideration paid for a conveyance in lieu thereof), whether whole,
partial, temporary or permanent, and whether for diminution of the value of
Lessee's interest in this Lease or term thereof or to the lease improvements or
for any other claim or damage, except Lessee shall not be precluded from seeking
a separate claim for business damages or to moving expenses against the
condemning authority provided any awards or proceeds sought by, or paid to,
Lessee does not reduce or diminish in any way or amount the awards or proceeds
otherwise payable to Lessor.
22. ASSIGNMENT AND SUBLETTING: Lease shall not assign the Lease or
sublease all or any portion of the demised premises during the term of this
Lease without first obtaining the written consent of Lessor.
23. PARKING: Lessee shall not park any vehicle, in any area, where said
parking will constitute a problem to other tenants. Parking areas shall be
provided at no additional cost to Lessee. Lessor reserves the right at all
times during the term hereof to designate and redesignate such parking areas
and to prescribe the use thereof by reasonable rules and regulations. Lessee,
its officers, employees, guests, invitees and visitors shall not at any time
park trucks or vehicles in any of the areas designated for automobile parking.
Lessee shall not be entitled to any minimum or maximum parking spaces or
areas. Lessor shall have no responsibility to police or otherwise insure
Lessee's or other lessees' use thereof. Parking areas shall be provided by
Lessor for use by Lessee, it officers, employees, guests, invitees and visitors
in common with the other tenants of the Industrial Park, their officers,
employees, guests, invitees, visitors and such other parties as Lessor shall,
from time to time permit, on a "first come-first served" basis. All parking
spaces and parking areas shall be non-attended and shall be utilized at the
vehicles owner's risk. Lessor shall not be liable for any injury to persons or
property or loss by theft or otherwise to any vehicle or its contents. Vehicles
parked on lawn areas are subject to being towed away at vehicle owner's expense.
24. KEYS: At the expiration or earlier termination of the Lease, Lessee
shall furnish Lessor with at least one (1) key to each door or other locked
area in or to the demised premises.
25. MECHANICS' LIENS: Neither Lessor nor the property shall be liable for
any labor, services or materials furnished or to be furnished to Lessee upon
credit, and no mechanic's or other lien for any such labor, services or
materials shall attach to, encumber or in any way affect the reversionary
interest or other estate or interest of Lessor in and to the land or the
property comprising the Industrial Park. Nothing in this Lease shall be
construed as a consent by Lessor to subject Lessor's reversionary interest in
the demised premises to liability under the Florida Mechanic's Lien Law. If, as
a result of any work or installation made by, or on behalf of Lessee, or
Lessee's maintenance and repair of the demised premises, a claim of lien is
filed against the demised premises or all or any portion of the Industrial Park,
within ten (10) days after it is filed, Lessee shall either satisfy the claim of
lien or transfer it to a bond as permitted by Chapter 718 of the Florida
Statutes. If Lessee fails to do so within the ten (10) day period, Lessor may
transfer the lien to a bond as permitted by Chapter 718 of the Florida Statutes
or satisfy the lien, and Lessee shall reimburse Lessor for all Lessor's costs
and expenses (including reasonable attorney's fees) incurred in connection
therewith.
26. NOTICES: All notices by Lessee to Lessor or by Lessor to Lessee with
regard to this Lease must be in writing and shall be deemed conclusively
delivered when same are either hand delivered, or deposited in the U.S. mail,
postage prepaid, certified, return receipt requested, or picked up for delivery
by a nationally recognized courier for overnight delivery with such delivery
charge being prepaid, if to Lessor, addressed to Lessor at the address set forth
for Lessor on page 1 of this Lease or if to Lessee, at the address set forth for
Lessee on page 1 of this Lease prior to Lessee's initial occupancy of the
demised premises and thereafter at 4710 Eisenhower Blvd., Suite E-1, Tampa,
Florida 33634. Either party hereto may, by notice given as aforesaid, designate
a different address or addresses for notices.
27. LESSEE'S PROPORTIONATE SHARE: During the term of this Lease, Lessee
agrees to pay Lessor, as additional rent, Lessee's proportionate share of (i)
all real property taxes and assessments (including any changes or additions to
any existing method of taxation) for the Land and Buildings,(ii) all premiums
for fire, casualty and extended coverage (including, without limitation, rent
insurance and VMM) and public liability insurance maintained by Lessor for the
Land and Buildings, (iii) all Operating Expenses, as such term is hereinafter
defined, incurred or expended by Lessor for the Industrial Park and (iv) all
fees, levies, charges impositions, taxes or assessments imposed by Federal,
State or local government upon the use or ownership of the Land and Buildings
or receipts of rent for the Land and Buildings (hereafter collectively, "Pass-
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(including, without limitation, rent insurance and VMM) and public liability
insurance maintained by Lessor for the Land and Buildings, (iii) all Operating
Expenses, as such term is hereinafter defined, incurred or expended by Lessor
for the Industrial Park and (iv) all fees, levies, charges, impositions, taxes
or assessments imposed by Federal, State or local government upon the use or
ownership of the Land and Buildings or receipts of rent for the Land and
Buildings (hereafter, collectively "Pass-Thru Expenses"). Lessee's
proportionate share for the purposes of this paragraph no. 27 shall be 5.72%.
Such percentage is computed on the basis that the demised premises consist of
Eleven Thousand One Hundred Ninety Two (11,192) square feet, and the Buildings
consist of one hundred ninety-five thousand six hundred twenty-five (195,625)
square feet. Lessee's proportionate share shall be recomputed if, and each
time, the aggregate size of the buildings is reduced. On or about January 1 of
each year, the Lessor shall provide the Lessee with the Lessor's estimate of the
Pass-Thru Expenses on a per square foot basis for that year, ("Estimated
Pass-Thru Expenses"). For calendar year 1998, the Estimated Pass-Thru Expenses
on a per square foot basis are $1.65 per square foot, and Lessee's
proportionate share of the Estimated Pass-Thru Expenses is $18,466.80. Lessee
shall pay one-twelfth (1/12) of Lessee's proportionate share of the Estimated
Pass-Thru Expenses on a monthly basis in the amount of $1,538.90, plus sales
tax of $103.88 for a monthly total of $1,642.78 throughout the term of the
Lease, on or before the same day that the Lessee's base rent payment for that
month is due. Lessor shall, within a period of one hundred twenty (120) days (or
as soon thereafter as practical) after the close of each calendar year provide
to Lessee an unaudited statement of such year's actual Pass-Thru Expenses. If
the actual Pass-Thru Expenses for the year are greater than the Estimated
Pass-Thru Expenses, Lessee shall pay Lessor, within thirty (30) days of Lessee's
receipt of such statement, Lessee's proportionate share of such excess. If the
Estimated Pass-Thru Expenses are greater than the actual Pass-Thru Expenses,
then Lessor shall credit such excess against Lessee's next monthly payment(s) of
Estimated Pass-Thru Expenses coming due immediately after the issuance of such
statement. The term "Operating Expenses" shall mean the total of the amount of
expenses, cost or charges expended, paid or incurred by Lessor in any calendar
year with respect to the repair, replacement, operation and maintenance of the
Land and Buildings, including but not limited to, electricity, water, fuel,
water rates, sewer charges or rent, air conditioning, labor cost, security cost,
elevator charges, service contracts, management charges, window and other
cleaning, refuse removal, landscaping, interior and exterior repairs and
replacement, and drainage and parking field operation, maintenance, repairs and
replacements (including, without limitation, lighting, stripping and
resurfacing), the cost of painting and decorating the common areas of the
Buildings, and all other expenses, cost and charges relative to the repair,
replacements, operation and maintenance of the Land and Buildings, including all
legal and auditing fees necessarily incurred in connection with the foregoing
and including all improvements and equipment required by any Federal, State or
local law or government regulation, but not including taxes and insurance which
are included in Paragraphs (i) and (ii) above.
28. AIR-CONDITIONING: Lessee has the right to inspect the air-conditioning
system. Upon notification by Lessee prior to August 1, 1998, Lessor will make
any needed repairs and perform any maintenance to place the air-conditioning
system in good working order, after which time the air-conditioning system will
be the sole responsibility of Lessee who shall maintain and repair the same
pursuant to, and in accordance with, the terms and conditions of paragraph 39
hereof.
29. "AS-IS": Lessor shall not be required to do any work in, on or upon
the demised premises or the building ready the same for Lessee's use or
occupancy of the demised premises and Lessee agrees to accept the demised
premises in an "as is" condition, it being acknowledged that Lessee is fully
familiar with the condition of the demised premises and that Lessee has either
undertaken an exhaustive examination of the same prior to the execution of
this Lease or has waived the opportunity to undertake such inspection.
30. WAIVER OF JURY COUNTERCLAIM: It is mutually agreed by and between
Lessor and Lessee that the respective parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out
or in any way connected with this Lease, the relationship of Lessor and
Lessee, Lessee's use or occupancy of said demised premises and/or any claim of
injury or damage and any emergency statutory or any other statutory remedy. It
is further mutually agreed that in the event Lessor commences any summary
proceeding or action for non-payment of rent, additional rent or other charge
payable hereunder, Lessee will not interpose any counterclaim of whatsoever
nature or description in such proceeding or action or seek to consolidate any
action or proceedings with Lessor's action or proceedings. Lessor and Lessee
agree that in the event of any litigation regarding this Lease, its terms and
the enforcement of the rights and obligations of the parties hereto, the sole
proper venue for any such litigation shall be in Hillsborough County, Florida.
31. SECURITY: Lessee has deposited with Lessor the sum of ($24,000.00)
Dollars as security for the faithful performance and observance by Lessee of
the terms, provisions and conditions of this Lease; it is agreed that in the
event Lessee defaults in respect of any of the terms, provisions and conditions
of this Lease, Lessor may, without prejudice to any other remedy which Lessor
may have on account therefor, appropriate, use, apply or retain the whole or any
part of the security so deposited to the extent required for the payment of
any sum as to which Lessee is in default and Lessee shall forthwith, upon
demand of Lessor, restore said security to the original sum deposited, Lessor
may commingle the security deposit with its other funds and no interest shall
be payable to Lessee. In the event that Lessee shall fully and faithfully
comply with all of the terms, provisions, covenants and conditions of this
Lease, the security shall be returned to Lessee after the date fixed at the end
of this Lease and after delivery of entire possession of the demised premises
to Lessor. In the event of a sale of the land and building or leasing of the
building, Lessor shall have the right to transfer the security to the vendee or
lessee and Lessor shall thereupon be release by Lessee from all liability for
the return of such security.
32. FLORIDA LAW: This Lease shall be governed by and construed in
accordance with the laws of, or applicable to, the State of Florida.
33. BROKER: Lessee represents that the sole broker instrumental in
consummating this Lease was Hanover Real Estate of Tampa, Inc. and that no
dealings or prior negotiations were had with any other broker concerning the
renting of the demised premises. Lessee agrees to hold Lessor harmless against
any claims for brokerage commissions, other than those made by Hanover Real
Estate of Tampa, Inc. arising out of any conversations had by Lessee with any
broker other than Hanover Real Estate of Tampa, Inc.
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35. RULES AND REGULATIONS: Lessee shall observe faithfully and comply
strictly with the rules and regulations set forth in Exhibit B attached hereto
and made a part hereof and any amendments or supplements thereto and such
further rules and regulations as Lessor may, from time to time, adopt or
promulgate.
36. RADON: Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of radon that exceed Federal
and State guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from the county
public health unit in which the demised premises are located.
37. WAIVER OF LIABILITY: The term "Lessor" as used in this Lease shall
mean only the owner or mortgagee in possession, for the time being, of the
building, or the lessee or leasehold mortgagee in possession, for the time
being, of a lease of the building (which may include a lease of the land), so
that in the event of any transfer of title to the building or any assignment of
said lease, or in the event of lease of the building or of the land and
building, the entity so transferring, assigning or leasing shall be and hereby
is entirely freed and relieved of all covenants and obligations of Lessor
hereunder, and it shall be deemed and construed as a covenant running with the
land without further agreement between the parties and their successors in
interest, or between the parties and any such transferee assignee or lessee,
that the said transferee, assignee or lessee has assumed and agreed to carry out
any and all covenants and obligations of Lessor hereunder. Lessee agrees to look
solely to the estate and interest of Lessor in the land and building, and
subject to prior right of any mortgage of the land and/or building, for the
collection of any judgment (or other judicial process) recovered against Lessor
based upon the breach by Lessor of any of the terms, conditions or covenants of
this Lease on the part of Lessor to be performed, and no other property or
assets of Lessor shall be subject to levy, execution or other enforcement
procedures for the satisfaction of Lessee's remedies under or with respect to
either this Lease, the relationship of Lessor or Lessee hereunder, or Lessee's
use and occupancy of the demised premises.
38. RIGHT OF LESSOR TO DISCHARGE OBLIGATIONS OF LESSEE: If Lessee shall
fail to perform or observe any of the terms, obligations or conditions,
contained herein on its part to be performed or observed hereunder, within the
time limits set forth herein, Lessor may, at its option, but shall be under no
obligation to do so, perform or observe the same and all costs and expenses
incurred or expended by Lessor in such performance or observance shall, upon
demand by Lessor, be immediately repaid to Lessor by Lessee together with
interest thereon at the higher of eighteen (18%) percent per annum or one
hundred twenty (120%) percent of the prime rate charged by Citibank, N.A. (or
if both rates be illegal, at the maximum rate permitted by law) to the date of
repayment. For the purposes of this Lease, the term "prime rate" shall mean the
rate then being charged by Citibank, N.A. to its largest corporate customers
for unsecured loans of ninety (90) days or less.
39. SERVICE CONTRACTS: In addition to Lessee's other obligations
contained herein, Lessee specifically agrees to keep and maintain in good
order and condition the heating, air-conditioning and ventilating systems and
equipment now or hereafter located on and/or servicing the demised premises;
and in connection therewith, Lessee shall, at its sole cost and expense,
obtain, procure and keep in full force and effect, throughout the term of this
Lease, a standard maintenance agreement by a contractor approved by Lessor, such
approval not to be unreasonably withheld or delayed, which agreement must be
acceptable in form and content to Lessor, and provide, among other things, for
the contractor to furnish the parts and labor necessary to repair and maintain
such systems and equipment in good working order and to provide prophylactic
inspections and maintenance services on at least quarter annual intervals, a
copy of which service contract shall be given to Lessor within sixty (60) days
after the execution of this Lease, and thereafter at least sixty (60) days prior
to the expiration date of the then current contract.
40. BINDING ON SUCCESSORS, ETC.: Except as otherwise provided in this
Lease, the covenants, conditions and agreements contained in this Lease shall
bind and inure to the benefit of Lessor and Lessee and their respective legal
representatives, successors and assigns.
41. LATE CHARGE: Lessee shall pay to Lessor a late charge of ten
(10(cents)) cents per dollar for any installment of base annual rent, any item
of additional rent or other charge payable hereunder which Lessee has failed to
pay to Lessor within ten (10) days of Lessor's demand, not as penalty, but to
help defray administrative and other expenses involved in handling delinquent
payments. In the event any check given to Lessor by, or on behalf of, Lessee is
returned to Lessor by its bank for insufficient funds or for any other reason or
is otherwise uncollectible, Lessee shall pay to Lessor a service charge in the
sum equal to the higher of (i) Ten and no/100 ($10.00) Dollars for each check
so returned or otherwise uncollected or (ii) five (5%) percent of the amount of
the check so returned or otherwise uncollected, which service charge, if
applicable and if not prohibited by law, shall be in addition to, and not in
substitution of, any "late charge".
42. ATTORNMENT: If Lessor's interest in the ground lease or demised
premises or the building is encumbered by a mortgage and such mortgage is
foreclosed, or Lessor's interest in the ground lease, the demised premises or
building is acquired by deed in lieu of foreclosure or if Lessor's interest in
the ground lease, the demised premises or building are sold pursuant to such
foreclosure or by reason of a default under said mortgage, then notwithstanding
such foreclosure, such acquisition by deed in lieu of foreclosure, such sale, or
such default (i) Lessee shall not disaffirm this Lease or any of its obligations
hereunder and (ii) at the request of the applicable mortgagee, transferee by
deed in lieu of foreclosure or purchaser at such foreclosure or sale, Lessee
shall attorn to such mortgagee, transferee or purchaser and execute a new lease
for the demised premises for the rentals reserved herein and otherwise setting
forth all of the provisions of this Lease except that the term of such new lease
shall be for the balance of the term of this Lease.
43. EXECUTION OF LEASE: The submission of this Lease for examination
does not constitute a reservation or option of any kind or nature whatsoever on
or for the demised premises or any other space within the building and shall
vest no right in either party. This Lease shall become effective as a lease only
upon execution and legal delivery thereof by the parties hereto. This Lease may
be executed in more than one counterpart, and each such counterpart shall be
deemed to be an original document.
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44. MORTGAGEE PROTECTION CLAUSE: Lessee agrees to give any
mortgage and/or trust deed holders, by certified mail, a copy of any notice of
default served upon Lessor. Lessee further agrees that if Lessor shall have
failed to cure such default within the time provided for in this Lease, then the
mortgagees and/or trust deed holders shall have such additional time as may be
necessary to cure such default (including, but not limited to, commencement of
foreclosure proceedings, if necessary to effect such cure), in which event this
Lease shall not be terminated while such remedies are being so pursued.
45. PARTIAL INVALIDITY: If any provision of this Lease or
application thereof to any person or circumstance shall to any extent be
invalid, the remainder of this Lease or the application of such provision to
persons or circumstances other than those as to which it is held invalid shall
not be affected thereby and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by law.
46. HOLDING OVER: Any holding over after the expiration of the
term or any validly exercised renewal term shall be construed to be a tenancy
from month to month at the rent equal to twice the base and additional rentals
and other charges specified herein (prorated on a monthly basis) and shall
otherwise be on the terms herein specified so far as applicable.
47. HAZARDOUS MATERIALS: Lessee covenants and agrees, at its sole
cost and expense, to indemnify, protect and save Lessor harmless against and
from any and all damages, losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including without limitation, attorneys' and experts'
reasonable fees and disbursements) of any kind or of any nature whatsoever
(collectively, the "Indemnified Matters") which may at any time be imposed upon,
incurred by or asserted or awarded against Lessor and arising from or out of any
Hazardous Materials (as hereinafter defined) on, in, under or affecting all or
any portion of the demised premises. As used herein, "Hazardous Materials"
means petroleum products and any other hazardous or toxic materials, wastes and
substances which are defined, determined or identified as such in any Laws (as
hereinafter defined) or materials which are required by any Laws to be
encapsulated or removed from the demised premises or any surrounding area. As
used herein, "Laws" means any Federal, State or local laws, rules or regulations
(whether now existing or hereafter enacted or promulgated) and any judicial or
administrative interpretation thereof, including any judicial or administrative
orders or judgments.
Indemnified Matters shall include, without limitation, all of
the following: (i) the costs of removal of any and all Hazardous Materials from
all or any portion of the demised premises or any surrounding areas (except that
the indemnity provided for under this paragraph shall not cover the costs of
such removal unless either (a) such removal is required by any Laws or (b) any
present or future use, operation, development, construction, alteration or
reconstruction of all or any portion of the demised premises is or would be
conditioned in any way upon, or is or would be limited in any way until the
completion of, such removal in accordance with any Laws), (ii) additional costs
required to take necessary precautions to protect against the release of
Hazardous Materials on, in, under or affecting the demised premises into the
air, any body of water, any other public domain or any surrounding areas and
(iii) costs incurred to bring the demised premises and any surrounding areas
into compliance with all applicable Laws with respect to Hazardous Materials.
All removal work referred to in clause (i) above, all work and other actions to
take precautions against release referred to in clause (ii) above and all work
and other actions performed in order to comply with Laws referred to in clause
(iii) above are herein collectively referred to as "Corrective Work."
Lessor's rights under this paragraph 47 shall be in addition
to all other rights of Lessor under this lease. Notwithstanding anything to the
contrary contained herein, the indemnity provided for under this paragraph 47
with respect to surrounding areas shall not extend to the cost of Corrective
Work on, in, under or affecting any surrounding areas, if the applicable
Hazardous Materials did not originate from any portion of the demised premises,
unless the removal of any Hazardous Materials on, in under or affecting any
surrounding areas is required by Law or by order or directive of any Federal,
State or local governmental authority in connection with the Corrective Work on,
in, under or affecting any portion of the demised premises.
48. ESTOPPEL CERTIFICATE: Lessee agrees, at any time, and from
time to time, upon not less than ten (10) days' prior notice by Lessor, to
execute, acknowledge and deliver to Lessor, a statement in writing addressed to
Lessor or such other party as Lessor shall designate certifying that this Lease
is unmodified and in full force and effect (or, if there have been
modifications, that the same is in full force and effect as modified and stating
the modification), stating the dates to which base rent, additional rent and
other charges have been paid, the amount of security deposited, if any, and
stating whether or not there exists any default in the performance of any
covenant, agreement, term, provisions or condition contained in this Lease, and,
if so, specifying each such default and containing such other information, items
and certifications as Lessor shall request, it being intended that any such
statement delivered pursuant hereto may be relied upon by Lessor and by any
purchaser, mortgagee or prospective mortgagee of any mortgage affecting all or
any portion of the Industrial Park and by any lessor under a ground or
underlying lease affecting all or any portion of the Industrial Park.
8
<PAGE> 10
49. FINANCIAL STATEMENTS: Lessee hereby agrees, from time to time and at
the request of Lessor, to furnish Lessor, within thirty (30) days of each such
request, with such audited financial statements of Lessee as Lessor shall
require in order to reasonably determine the financial condition of Lessee.
Such statements shall be prepared by an independent certified public accountant
and shall include, without limitation, Lessee's net worth statements and
statements of financial position and retained earnings statement of Lessee and
its subsidiaries, if any, for the preceding three (3) years. Lessee agrees that
Lessor may furnish any of its lenders or potential lenders or purchasers copies
of such financial statements and records. Lessor agrees to hold, and to cause
its lender and potential lenders and purchasers to hold, such financial
statements in confidence and not to disclose such records to any party other
than such party as shall have a financial interest in the Industrial Park or
who has a loan on all or any portion of the Industrial Park or who is
interested in making a loan on all or any portion of the Industrial Park or who
is interested in purchasing all or a portion of the Industrial Park.
IN WITNESS WHEREOF, we have hereunto set our hands and seals the
day and year first above written.
LESSOR:
Witnesses: ARA PROPERTIES NO. 1, LTD., by its agent,
Peter Lawrence Commercial Real Estate, Inc.
/s/ By: /s/ James J. Shapiro
- ------------------------------- -------------------------------
James J. Shapiro, President
/s/ Date: 6/19/98
- ------------------------------- -----------------------------
LESSEE:
Witnesses: DEBITFONE INTERNATIONAL, INC.
/s/ By: /s/
- ------------------------------- -------------------------------
/s/ Date: 6/12/98
- ------------------------------- -----------------------------
9
<PAGE> 11
[DIAGRAM]
EISENHOWER TECHNOLOGY PARK
Suite E-1
11,192 SF (MOL)
Scale: 1" = 18'0"
<PAGE> 12
EXHIBIT "B"
EISENHOWER TECHNOLOGY PARK
RULES AND REGULATIONS
1. Lessee shall not obstruct or impede the use of the Common Areas by others
nor use the Common Areas for other than their intended purposes.
2. Lessee shall lock the demised Premises and shut off water faucets, lights
and electrical equipment and appliances located in the Leased Premises
before leaving the demised Premises each day.
3. All deliveries and shipments shall be made only at Lessee's loading
dock(s) or other areas designated by Lessor.
4. Lessee shall place garbage and refuse only in trash containers approved
by Lessor. Such containers shall be kept either inside the demised Premises
or outside the demised Premises in such areas as are from time to time
designated by Lessor. The Lessor shall approve the trash collection and
disposal service which will be utilized to empty and haul away such garbage
and refuse and the times and days of the week such containers shall be
emptied. Lessee shall pay for the cost of the containers and the periodic
trash collection and disposal charges.
5. No aerials or antennae shall be placed by Lessee on or about the Building
or Industrial Park.
6. Lessee shall not engage in any activity nor utilize any machinery or
apparatus which shall be heard, smelled or seen outside the demised
Premises.
7. Lessee shall not use the plumbing facilities serving the demised Premises
for the disposal of refuse or any other improper use. Lessee shall, at its
sole cost expense, repair any damage to such plumbing facilities caused by
any such misuse.
8. No animals or birds shall be allowed in or about the demised Premises.
9. Lessee shall not store any personal property outside the demised Premises.
10. Lessee shall, at the request of Lessor, retain a pest and rodent
extermination service approved by Lessor which shall periodically treat the
demised Premises in a manner and at such times as are approved by Lessor.
11. Lessee shall not burn or incinerate trash, refuse or any other items in or
outside the demised Premises.
12. Lessee shall not alter nor add locks or bolts on doors providing ingress
and egress to the demised Premises.
13. Lessee shall not allow anyone to reside or sleep in the demised Premises.
14. Lessor shall not be responsible for any loss, theft or disappearance of
personal property from the demised premises and/or Industrial Park.
15. Lessee shall park only in those areas designated by Lessor. Lessee shall
comply with all directional and other signs posted in the parking areas and
shall use only one (1) parking stall per vehicle. Lessee shall not park
mobile homes, trailers or similar vehicles in the common parking areas. No
inoperable vehicle shall be allowed to remain in the common parking areas.
Any vehicle which is parked in the common parking areas by Lessee in
violation of these Rules and Regulations may be towed away at Lessee's
expense.
16. Lessee shall not cover all or any part of any window or door of the
Building without obtaining the prior written approval of the Lessor.
17. Lessee shall not conduct or permit to be conducted any auction or similar
sale on or about the demised premises.
18. Lessee shall not wash, service or repair any vehicles on or about the
Industrial Park.
These Rules and Regulations and any amendments hereto are intended to
supplement the terms and provision of the Lease and where possible shall be
applied and interpreted in a manner which is consistent with the terms and
provisions of the Lease. In the event of a conflict between the Lease and these
Rules and Regulations, or any amendments thereto, the Lease shall govern. If
Lessee fails to fully comply with these Rules and Regulations, Lessor may, in
its sole discretion and without waiving any other right or remedy, undertake
such actions on behalf of Lessee as Lessor determines are necessary to cause
Lessee to fully comply with these Rules and Regulations. All costs, expenses
and fees expended by Lessor to insure full compliance with these Rules and
Regulations shall constitute Additional Rent under the Lease and be immediately
due and payable by the Lessee upon demand and shall bear interest at the rate
of fifteen percent (15%) per annum until paid.
10
<PAGE> 1
EXHIBIT 6.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of May 28, 1999, between
DebitFone International, Inc., a Florida corporation, Satellite Control
Technology, Inc., a Nevada corporation ("the Companies"), and Merritt Jesson
("Employee").
WHEREAS, the Companies are presently in the business of selling and
reselling domestic and international telecommunications services; and
WHEREAS, Employee desires to become employed by the Companies as
President/CEO for the Companies and the Companies desire to employ Employee in
such capacity pursuant to the terms hereof; and
WHEREAS, in such capacity, Employee has agreed to be responsible for all
day-to-day operations of the Companies as more fully provided herein, all
subject to the direction of the Board of Directors of Satellite Control
Technology, Inc., the Parent Company.
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the adequacy of
which the parties hereby acknowledge, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. EMPLOYMENT OF EMPLOYEE. The Companies hereby employ Employee, and
Employee hereby accepts employment, as President/CEO of the Companies upon the
terms and conditions of this Agreement.
2. TERMS OF AGREEMENT. This Agreement shall remain in force and effect
for a five (5) year period commencing on June 1, 1999 (the "Employment Date")
and ending at the close of business on May 31, 2002, unless sooner terminated
pursuant to paragraph 9 below (the "Initial Term"). At the end of the Initial
Term, the Companies may, in its sole discretion, extend the term of this
Agreement for up to three additional successive one-year periods (each such
one-year period referred to herein as a "Renewal Term") by providing written
notice to the Employee at least ninety (90) days prior to the expiration of the
Initial Term or of any Renewal Term, as applicable. (The Initial Term together
with any Renewal Term(s) granted by the Companies is sometimes collectively
referred to herein as the "Term").
3. EMPLOYEE'S DUTIES. During the Term of this Agreement, Employee shall
serve as President/CEO for the Companies, and be responsible for all the
day-to-day activities of the companies. All activities including but not
limited to the foregoing activities shall be conducted by Employee under the
direction of and subject to the control of the Board of Directors of Satellite
Control Technology, Inc., the Parent Company.
4. LOYALTY TO THE COMPANY. Employee shall devote his full time,
attention and efforts to the business and affairs of the Companies and to the
performance of his duties and responsibilities during the Term hereof. Employee
shall owe his full loyalty to the Companies and shall not engage in any
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 1 of 8
<PAGE> 2
activity or enter into any transaction that would or might constitute a
conflict of interest, or the appearance thereof, with the duties and loyalties
owed by him to the Companies. Without limiting the foregoing, Employee agrees
that during the Term of this Agreement, Employee will not engage in any
business activity other than those duties described in this Agreement, whether
or not such business is pursued for gain or profit, or other pecuniary
advantage. However, Employee may invest his assets in such form or manner as
will not require his services in the operation of the affairs of the companies
in which such investments are made, provided that such investments are not
wholly or in part based upon confidential information obtained in his
employment with the Companies. If any such investment is contemplated to be
made with a competitor of the Companies, the specific nature and amount of the
investment shall be disclosed to the Companies in writing prior to such
investment and such investment may not be made without the prior approval in
writing of the Board of Directors of the Parent Company.
5. SALARY.
(a) BASE SALARY. In consideration of the performance by the Employee of
the duties and obligations contained in this Agreement, the Company
shall pay Employee an initial gross salary of $104,000 per year,
payable bi-monthly in accordance with the normal payroll practices of
the Company. Any amounts shall be prorated for periods less than a
month. Salary payments shall be subject to withholding and other
applicable taxes. The aforementioned initial salary will be subject to
review by the Companies, which may decide, in its sole discretion to
raise such salary. Such review shall occur annually on or about each
Employment Date anniversary.
6. BONUS ELIGIBILITY.
(a) STOCK OPTIONS. In addition to the base salary described in
paragraph 5 above, Employee shall be eligible to receive an
option to purchase up to 500,000 shares of the common stock of
SATX annually commencing on the first anniversary date of this
Agreement. The exercise price of the options shall be fifty cents
($.50) per share in year one. Thereafter, the exercise price of
the options shall be as follows:
Year 2. Sixty percent (60%) of the trading price as of the date
of the grant.
Year 3. Seventy percent (70%) of the trading price as of the date
of the grant.
Year 4. Eighty percent (80%) of the trading price as of the date
of the grant.
Year 5. Ninety percent (90%) of the trading price as of the date
of the grant.
The actual number of shares awarded to Employee each year shall
be dependent upon the pre-tax profit of SATX. For example, should
SATX meet its projected pre-tax profit (as approved by the Board
of Directors) for the year, Employee shall be entitled to an
option grant of 500,000 shares. However, if SATX's pre-tax profit
is only 50% of projections, then Employee shall be entitled to a
grant of 250,000 shares. Employee shall not be entitled to more
than 500,000 shares if SATX exceeds the projection.
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 2 of 8
<PAGE> 3
The option shall fully vest upon the date of the grant and shall
expire if not exercised within five (5) years of the date of the
grant.
(b) ADDITIONAL BONUS. The Employee may be eligible for an additional
performance bonus with an equivalent value of thirty percent
(30%-50%) of the Employee's base salary on a quarterly basis. The
Companies shall determine Employee's eligibility for such
additional bonus based upon certain performance criteria
described in Exhibit A, (SATX projected pre-tax profit as
approved by the Board of Directors). The performance criteria
shall be evaluated by the Company achieving (80%-120%) of the
projected pre-tax profits in such exhibit on a quarterly basis.
If the Companies determine that such performance goals have been
achieved, the Employee shall have the option to receive the bonus
in cash or common stock in the Parent Company; (SATX) at 90% of
average market price of the shares of the Company over last
thirty (30) days prior to issue. If at the end of the year
volumes are made up to cover any quarters that volumes were not
met and the bonus was not paid, the company will offer the bonus
for that quarter. As additional responsibilities for assumed
acquisitions by (SATX) occur projections will be subsequently
attached as exhibits to this contract and bonus eligibility will
be the same formula as for DebitFone International, Inc. The
sliding scale used in the calculation of bonus is:
Level of Company Performance 80% 100% 120%
Payout % of Employee annual salary 30% 40% 50%
7. BENEFITS. Employee shall be entitled to receive benefits made
available to other executive officers within the Companies consistent with the
policies and practices of the Company effected from time to time. As of the
Employment Date, these benefits include insurance benefits.
8. BUSINESS EXPENSES. Employee may incur expenses in connection with
the performance of his duties as President/CEO for the Companies, including
expenses for business travel, meals, lodging and similar items. The Companies
will reimburse Employee for all such customary, reasonable and necessary
expenses upon Employee's periodic presentation of an itemized and documented
account of such expenditures and in accordance with the Company's expense
reimbursement policies, which are in effect at the time the expense is incurred.
9. TERMINATION.
(a) TERMINATION BY THE PARENT COMPANY; (SATX).
i. FOR CAUSE. The Parent Company may terminate the Employee's
employment with the Companies at any time for "cause," which
termination shall be effective immediately upon written notice to
Employee. The Companies shall pay base salary through the date of
termination and have no further obligations to Employee as of the
date of termination. For purposes of this Agreement, "cause" is
defined to mean such act, omission or course of conduct which the
Companies determine is (1) a willful violation of any of the
provisions of this Agreement; (2) willful misconduct
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 3 of 8
<PAGE> 4
which is demonstrably injurious to the Companies, monetarily or
otherwise; (3) the commission of a felony involving the Companies
and/or its business and suggesting moral turpitude on the part of
the Employee, whether or not the Employee ultimately is
indicted, arraigned or convicted; (4) improper or unethical
business activity, including, but not limited to, the Employee's
fraud, misappropriation, embezzlement, dishonesty, unlawful
harassment, or gross negligence; (5) lack of sufficient effort or
willful neglect in the performance of his duties; or (6)
inability to perform the essential functions of the job, even
with reasonable accommodation by the Companies, due to disability
of thirty days or more.
ii. WITHOUT CAUSE. The Parent Company may terminate the
Employee's employment with the Companies without cause, effective
upon thirty (30) days written notice to Employee. Employee shall
be entitled to (a) continuation of compensation as provided in
Paragraph 5 for a period of one year from the date of termination
and COBRA benefits. In such event, Employee, if requested by the
Companies, shall continue to render his services and shall be
paid his regular salary and receive his normal benefits up to the
effective date of termination. All stock options in employment
agreement shall be considered vested at the time of termination.
(b) TERMINATION BY EMPLOYEE. Employee may terminate his employment
under this Agreement at any time upon thirty (30) day's notice to
the Companies. In such event, Employee, if requested by the
Companies, shall continue to render his services and shall be
paid his regular salary and receive his normal benefits only up
to the effective date of termination. The Company's salary
obligations to the Employee shall cease as of the effective date
of termination, paragraph 6 shall continue in effect for the
original term of employment agreement.
(c) TERMINATION UPON DEATH. This Agreement shall terminate
automatically upon the death of Employee during the Term hereof,
and all salary payments shall immediately cease upon death. All
bonus eligibility shall be considered vested as per paragraph 6.
10. RESTRICTIVE COVENANTS.
(a) COVENANT NOT TO COMPETE. Employee acknowledges that as
President/CEO, Employee shall be engaged, without limitation, in,
and performing the other duties set forth in Paragraph 3 herein.
Employee also acknowledges that the Companies are currently
engaged in selling and reselling domestic and international
telecommunication service (the "Services"). Employee agrees that,
during the term of his employment and for a period of one year
after the expiration or termination of his employment with the
Companies, whether such termination is voluntary or involuntary,
with or without cause, he shall not, either directly or
indirectly, for himself or through, on behalf of, or in
conjunction with any other person or legal entity, perform
services for any other business engaged in providing the
Services.
(b) NON-INTERFERENCE WITH EMPLOYEES. During the term of Employee's
employment and for a period of one year after the expiration or
termination of his employment with the
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 4 of 8
<PAGE> 5
Companies, whether such termination is voluntary or involuntary,
with or without cause, Employee will not, directly or indirectly,
on his own behalf or on behalf of or in conjunction with any
person or legal entity other than the Companies, recruit,
solicit, or induce or attempt to recruit, solicit or induce any
employee of the Companies to become employed by or to be engaged
in a business engaged in providing the Services.
(c) NON-SOLICITATION COVENANT. Employee agrees that during the term
of his employment and for a period of one year after the
expiration or termination of his employment by the Companies,
whether such termination is voluntary or involuntary, with or
without cause, Employee will not, directly or indirectly, on his
own behalf or on behalf of or in conjunction with any person or
entity other than the Companies, actively solicit the business or
patronage of any of the clients, customers or accounts of the
Companies served by Employee during the term of this Agreement.
(d) NON-DISCLOSURE COVENANTS. Employee acknowledges that as an
integral part of the Company's business, the Companies have
developed, and will develop, at a considerable investment of time
and expense, plans, procedures, methods of operation, methods of
production, financial data, lists of actual and potential
customers, suppliers, marketing strategies, plans for development
and expansion, customer and supplier data, and other confidential
and sensitive information, and Employee acknowledges that the
Companies have legitimate business interest in protecting the
confidentiality of such information. Employee acknowledges that
as President/CEO for the Companies, he will be entrusted with
such information. Employee, therefore, acknowledges a continuing
responsibility with respect to the protection of the information
and agrees:
i. "Trade Secrets" shall be defined as information, without
regard to form, belonging to the Companies or licensed by it
including, but not limited to, technical or nontechnical
data, formulae, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data,
financial plans, product plans, or lists of actual or
potential customers of suppliers which is not commonly known
by or available to the public and which information: (a)
derive economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by
proper means by, other persons or entities who can obtain
economic value from their disclosure or use; and (b) are the
subject of efforts that are reasonable under the
circumstances to maintain their secrecy.
ii. "Confidential Information" shall be defined as any
information belonging to the Companies or licensed by it
other than Trade Secrets with its material to the Companies
and not generally known by the public.
iii. Employee will treat as confidential and will not, without
the prior written approval of the Companies, use (other than
in the performance of his duties of employment with the
Company), publish, disclose copyright or authorize anyone
else to use, publish, disclose or copyright, either during
the term of Employee's employment or at any time subsequent
thereto, any information which constitutes
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 5 of 8
<PAGE> 6
Trade Secrets of the Companies whether or not the Trade
Secrets are in written or tangible form.
iv. Employee will treat as confidential and will not, without
the prior written approval of the Companies, use (other than
in the performance of his duties of employment with the
Companies), publish, disclose, copyright or authorize anyone
else to use, publish, disclose or copyright, any
Confidential Information either during the term of his
employment or for two (1) year after termination of
employment, whether voluntary or involuntary, with or
without cause, and whether or not the Confidential
Information is in written or other tangible form.
v. All records, notes, files, drawings, documents, plans and
like items, and all copies thereof, relating to or
containing or disclosing Confidential Information or Trade
Secrets of the Companies which are made or kept by Employee
or which are disclosed to or come into the possession of
Employee, shall be and remain the sole and exclusive
property of the Companies. Upon termination of employment,
Employee agrees to deliver to the Companies or their
designee, the originals and all copies of any of the
foregoing.
11. PROPRIETARY RIGHTS IN DEVELOPMENTS. In the course of rendering
his services to the Companies, Employee may conceive, create or develop or
invent ideas, concepts, methods of operation, processes, programs or other
matter or material, whether or not constituting an advance to, or an
improvement of, or pertaining to existing Companies proprietary matter (all of
which are hereinafter referred to as "Developments"). All Developments shall
constitute Confidential Information (and may constitute Trade Secrets) and
shall be subject to all of the restrictions imposed on Employee pursuant to
this Agreement. In addition, all Developments and all rights therein throughout
the world constitute works made for hire and in all circumstances shall be and
remain the sole and exclusive property of the Companies whether or not
protectible under any laws now known or hereafter applicable, including but not
limited to patent, copyright, trademark or trade secret laws.
(a) ASSIGNMENT BY EMPLOYEE OF ALL RIGHTS IN DEVELOPMENTS. Employee hereby
assigns to the Companies all rights throughout the world, however,
denominated (whether under patent, copyright, trademark, trade secret
or like or different laws), in all media now known or hereafter
recognized, in and to each such Development. This assignment is not
intended to derogate any rights the Companies have as an author of a
work made for hire. In order to fully effectuate these provisions,
Employee hereby represents and warrants, that, with respect to each
such Development: (i) to the extent of Employee's contribution, all
such matter is original and does not and will not infringe or violate
the rights of any other person or entity; and (ii) that neither
Employee nor anyone on his behalf have granted or will grant or
purport to grant to any other person or entity any rights, in whole or
in part, in and to such Developments.
(b) COOPERATION. Employee shall, during and after termination of
Employee's employment, cooperate with the Companies in the prosecution
or defense of any claims, litigation, or other proceedings involving
the Developments and provide such information and execute such
documents as the Companies may reasonably request to confirm,
implement or
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 6 of 8
<PAGE> 7
enforce its rights in such Developments. The Companies shall be
responsible for the expenses associated with the filing of any patent,
copyright, trademark or like applications.
12. REMEDIES FOR BREACH. In the event of Employee's actual or threatened
breach of the provisions of Paragraphs 10 or 11, the Companies, in addition to
all other rights, shall be entitled to an injunction-restraining Employee
therefrom. Nothing herein shall be construed as prohibiting the Companies from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages from Employee. This provision shall remain in
full force and effect in the event Employee should claim that the Companies
violated any of the terms of this Agreement. In such event, Employee agrees to
pursue such claim against the Companies independently of his covenants set
forth in such Paragraphs.
13. GOVERNING LAW. This Agreement shall be construed under, governed by
and enforced in accordance with the laws of the State of Florida, not including
its conflicts of law principles.
14. RIGHT OF OFFSET. In the event Employee violates any of the terms or
conditions of this Agreement, the Companies shall have the right, in addition
to and not in lieu of all other rights at law or in equity, to offset the
amount of any damages caused by such breach or violation against any sums due
or to become due to Employee under the terms of this Agreement.
15. NOTICE. Any notice required or desired to be given under this
Agreement shall be deemed given in writing and hand-delivered or sent by
Certified mail to his address shown herein below in the case of Employee, or to
its principal office in the case of the Companies.
16. NO WAIVER BY COMPANIES. The waiver by the Companies of a breach of
any provision of this Agreement by Employee shall not operate or be construed
as a waiver of any subsequent breach by Employee. No waiver shall be valid
unless in writing and signed by an authorized officer of the Companies.
17. ASSIGNMENT. Employee acknowledges that the services to be rendered by
him are unique and personal. Accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. The
rights and obligations of the Companies under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Companies.
18. SEVERABILITY. Should any part of this Agreement, for any reason, be
declared invalid by an arbitrator or a court of competent jurisdiction, such
decision or determination shall not affect the validity of any remaining
portion, and such remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid portion eliminated; provided, that
in the event of declaration of invalidity, the provision declared invalid shall
not be invalidated in its entirety, but shall be observed and performed by the
parties to the extent such provision is valid and enforceable.
19. COMPLETE AGREEMENT. This Agreement shall constitute the entire
agreement between the parties hereto and shall supersede all previous
negotiations, commitments and writings with respect
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 7 of 8
<PAGE> 8
to Employee's employment. Any subsequent alteration or modification to this
Agreement must be made in writing and signed by both parties.
EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH AN
ATTORNEY OR ANY OTHER INDIVIDUAL FROM WHOM HE WISHED TO OBTAIN ADVICE
CONCERNING THIS AGREEMENT. EMPLOYMENT STATES THAT HE HAS CAREFULLY READ THE
WITHIN AND FOREGOING "EMPLOYMENT AGREEMENT" AND KNOWS AND UNDERSTANDS THE
CONTENTS THEREOF AND THAT HE IS EXECUTING THE SAME AS HIS OWN FREE ACT AND DEED.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMPANY: EMPLOYEE:
DEBITFONE INTERNATIONAL, INC. MERRITT JESSON
a Florida corporation
By: /s/ MERRITT JESSON /s/ MERRITT JESSON
-------------------------- -------------------------
Merritt Jesson
Its: President/CEO
SATELLITE CONTROL TECHNOLOGIES, Inc.,
a Nevada corporation
By: /s/ KOSTI SHIRVANIAN /s/ JOHN HARTUNIAN
-------------------------- -------------------------
Kosti Shirvanian John Hartunian
Its: Majority Stockholders
By: /s/ KHOREN SHAGINIAN
--------------------------
Khoren Shaginian, Director
Initials:
________ By: _______
Employee Company
MJ EMPLOYMENT AGREEMENTS
Page 8 of 8
<PAGE> 1
EXHIBIT 6.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of June 1, 1999, between
DebitFone International, Inc., a Florida corporation ("DFI"), Satellite Control
Technology, Inc., a public Nevada corporation ("SATX"), the Parent Company,
both hereinafter referred to as the "Company", and Robert Ellis ("Employee").
WHEREAS, the Companies are presently in the business of selling and
reselling domestic and international telecommunications services; and
WHEREAS, Employee desires to become employed by the Company as Chief
Operating Officer, (COO) and Chief Financial Officer, (CFO) for the Company and
the Company desire to employ Employee in such capacity pursuant to the terms
hereof; and
WHEREAS, in such capacity, Employee has agreed to be responsible for all
day-to-day operations of the Company as more fully provided herein, all subject
to the direction of the President and CEO of DebitFone International, Inc. and
Satellite Control Technology, Inc.
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the adequacy of
which the parties hereby acknowledge, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. EMPLOYMENT OF EMPLOYEE. The Company hereby employs Employee, and
Employee hereby accepts employment, as COO/CFO of the Company upon the terms
and conditions of this Agreement.
2. TERM OF AGREEMENT. This Agreement shall remain in force and effect
for a three (3) year period commencing on June 1, 1999 (the "Employment Date")
and ending at the close of business on May 31, 2002, unless sooner terminated
pursuant to paragraph 9 below (the "Initial Term"). At the end of the Initial
Term, the Company may, in their sole discretion, extend the term of this
Agreement for up to three additional successive one-year periods (each such
one-year period referred to herein as a "Renewal Term") by providing written
notice to the Employee at least ninety (90) days prior to the expiration of the
Initial Term or of any Renewal Term, as applicable. (The Initial Term together
with any Renewal Term(s) granted by the Company is sometimes collectively
referred to herein as the "Term").
3. EMPLOYEE'S DUTIES. During the Term of this Agreement, Employee shall
serve as COO/CFO for the Company, and be responsible for all the day-to-day
activities of the Company. all activities including but not limited to the
foregoing activities shall be conducted by Employee under the direction of and
subject to the control of the President and CEO of DebitFone International,
Inc. and Satellite Control Technology, Inc.
4. LOYALTY TO THE COMPANY. Employee shall devote his full time,
attention and efforts to the business and affairs of the Company and to the
performance of his duties and responsibilities during the Term hereof. Employee
shall owe his full loyalty to the Company and shall not engage in any activity
or enter into any
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 1 of 8
<PAGE> 2
transaction that would or might constitute a conflict of interest, or the
appearance thereof, with the duties and loyalties owed by him to the Company.
Without limiting the foregoing, Employee agrees that during the Term of this
Agreement, Employee will not engage in any business activity other than those
duties described in this Agreement, whether or not such business is pursued for
gain or profit, or other pecuniary advantage. However, it is understood by the
Parties that Employee is currently assisting existing prepaid cellular
participants in creating technology and business solutions which benefit those
clients and will likely benefit the Company in some measurable manner in the
near future. Such assistance is acceptable within the terms of this Agreement
as long as it is performed on a non-interference basis with Company business
and does not negatively impact the Company's position, and ability to compete,
in the prepaid cellular marketplace. In addition, Employee may invest his
assets in such form or manner as will not require his services in the operation
of the affairs of the companies in which such investments are made, provided
that such investments are not wholly or in part based upon confidential
information obtained in his employment with the Company. It is also acceptable
for Employee to serve on the Board of Directors or as Trustee to outside
companies as long as there is no competitive conflict of interest in the
association. If any such investment is contemplated to be made with a
competitor of the Company, the specific nature and amount of the investment
shall be disclosed to the Company in writing prior to such investment and such
investment may not be made without the prior approval in writing of the Board
of Directors of the Parent Company.
5. SALARY.
(a) BASE SALARY. In consideration of the performance by the Employee
of the duties and obligations contained in this Agreement, the Company shall
pay Employee an initial gross salary of $96,000 per year, payable in accordance
with the normal payroll practices of the Company. Any amounts shall be
prorated for periods less than a month. Salary payments shall be subject to
withholding and other applicable taxes and deductions. The aforementioned
initial salary will be subject to review by the Company, which may decide, in
their sole discretion to raise such salary. Such review shall occur at least
annually, on or about each Employment Date anniversary.
6. BONUS ELIGIBILITY.
(a) SIGNING BONUS. Employee shall receive 100,000 shares of the
common stock of SATX upon the signing of this employment contract.
(b) STOCK OPTIONS. In addition to the base salary described in
paragraph 5 above, Employee shall be eligible to receive an option to purchase
up to 100,000 shares of the common stock of SATX annually commencing on the
first anniversary date of this Agreement. The exercise price of the options
shall be ($.50) per share in year one. Thereafter, the exercise price of the
options shall be as follows:
Year 2. Sixty percent (60%) of the trading price as of the date of the
grant.
Year 3. Seventy percent (70%) of the trading price as of the date of
the grant.
Year 4. Eighty percent (80%) of the trading price as of the date of
the grant.
Year 5. Ninety percent (90%) of the trading price as of the date of
the grant.
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 2 of 8
<PAGE> 3
The actual number of shares awarded to employee each year shall be dependent
upon the pre-tax profit of SATX. For example, should SATX meet its projected
pre-tax profit (as approved by the Board of Directors) for the year, Employee
shall be entitled to an option grant of 100,000 shares. However, if SATX's
pre-tax profit is only 50% of projections, then Employee shall be entitled to a
grant of 50,000 shares. Employee shall not be entitled to more than 100,000
shares if SATX exceeds the projection. The option shall fully vest upon the
date of the grant and shall expire if not exercised within five (5) years of
the date of the grant.
(c) ADDITIONAL BONUS. The Employee may be eligible for an additional
quarterly Performance bonus equal to a range of twenty to forty percent
(20%-40%) of Employee's annual base salary to be paid out, if earned, on a
quarterly basis after completion of each of the Company's fiscal quarters. The
calculation of earned bonus is based upon the Company's financial performance
against certain performance criteria described in Exhibit A to this document
(Company Projections). The threshold for enacting the bonus pool for a specific
quarter shall be Company attainment of eighty percent (80%) or more performance
against the applicable goals in Exhibit A. Exhibit A will be officially revised
for bonus calculation purposes, as required by changes in business events and
forecasts, only as approved by the Board of Directors of SATX.
Each quarter's earned bonus will be calculated from the following sliding scale:
Level of Company goal performance 80% 100% 120%
Payout % of Employee's annual salary 20% 30% 40%
If goals are achieved, and a bonus is earned for a quarter, Employee shall have
the option of receiving the bonus in cash or in common stock in the Parent
Company (SATX). If stock is chosen, the number of shares to be issued will be
calculated using eighty percent (80%) of the average market price of the shares
of the Company over the most recent thirty (30) days prior to issue date.
In order to compensate for variations in quarterly performance, and to
recognize the ability to make up for previous lesser performance, the quarterly
bonus calculation will be made from year-to-date Company data. Thus, within any
given performance year, a previous quarter's shortcoming can be offset by
subsequent performance improvement. The instant quarter's bonus payout is
therefore calculated as the year-to-date earned bonus less the cumulative bonus
paid previously during the applicable year.
As additional management responsibilities are assumed by Employee due to
acquisitions by SATX, projections for those acquired entities will be added to
the performance criteria in Exhibit A, and the size of the applicable bonus
pool for Employee will be increased accordingly, as approved by the SATX Board
of Directors.
7. BENEFITS. Employee shall be entitled to receive benefits
made available to other Executive officers within the Company consistent with
the policies and practices of the Company effected from time to time. As of the
Employment Date, these benefits include insurance benefits.
8. BUSINESS EXPENSES. Employee may incur expenses in
connection with the performance of his duties as COO/CFO for the Company,
including expenses for business travel, meals, lodging and similar
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 3 of 8
<PAGE> 4
items. The Company will reimburse Employee for all such customary, reasonable
and necessary expenses upon Employee's periodic presentation of an itemized and
documented account of such expenditures and in accordance with the Company's
expense reimbursement policies, which are in effect at the time the expense is
incurred.
9. TERMINATION.
(a) TERMINATION BY THE COMPANY.
i. FOR CAUSE. The Company may terminate the Employee's
employment with the Company at any time for "cause," which termination shall be
effective immediately upon written notice to Employee. The Company shall pay
base salary through the date of termination and have no further obligations to
Employee as of the date of termination. For purposes of this Agreement, "cause"
is defined to mean such act, omission or course of conduct which the Companies
determine is (1) a willful violation of any of the provisions of this
Agreement; (2) willful misconduct which is demonstrably injurious to the
Company, monetarily or otherwise; (3) the commission of a felony involving the
Company and/or its business and suggesting moral turpitude on the part of the
Employee, whether or not the Employee ultimately is indicated, arraigned or
convicted; (4) improper or unethical business activity, including, but not
limited to, the Employee's fraud, misappropriation, embezzlement, dishonesty,
unlawful harassment, or gross negligence, (5) lack of sufficient effort or
willful neglect in the performance of his duties; or (6) inability to perform
the essential functions of the job, even with reasonable accommodation by the
Company, due to disability of thirty days or more.
ii. WITHOUT CAUSE. The Company may terminate the Employee's
employment with the Company without cause, effective upon thirty (30) days
written notice to Employee. Employee shall be entitled to (a) continuation of
compensation as provided in Paragraph 5 & 6 through the original term of
employment agreement, and (b) COBRA benefits. In such event, Employee, if
requested by the Company, shall continue to render his services and shall be
paid his regular salary and receive his normal benefits up to the effective
date of termination. All stock options in employment agreement shall be
considered vested at the time of termination.
(b) TERMINATION BY EMPLOYEE. Employee may terminate his employment
under this Agreement at any time upon thirty (30) day's notice to the Company.
In such event, Employee, if requested by the Company, shall continue to render
his services and shall be paid his regular salary and receive his normal
benefits only up to the effective date of termination. The Company's salary
obligations to the Employee shall cease as of the effective date of termination.
(c) TERMINATION UPON DEATH. This Agreement shall terminate
automatically upon the death of Employee during the Term hereof, and all salary
payments shall immediately cease upon death.
10. RESTRICTIVE COVENANTS.
(a) COVENANT NOT TO COMPETE. Employee acknowledges that as COO/CFO,
Employee shall be engaged, without limitation, in, and performing the other
duties set forth in Paragraph 3 herein. Employee also acknowledges that the
Companies are currently engaged in selling and reselling domestic and
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 4 of 8
<PAGE> 5
international telecommunication service (the "Services"). Employee agrees that,
during the term of his employment and for a period of one year after the
expiration or termination of his employment with the Company, whether such
termination is voluntary or involuntary, with or without cause, he shall not,
either directly or indirectly, for himself or through, on behalf of, or in
conjunction with any other person or legal entity, perform the same services
for any other business engaged in providing directly competitive Services.
(b) NON-INTERFERENCE WITH EMPLOYEES. During the term of Employee's
employment and for a period of one year after the expiration of termination of
his employment with the Company, whether such termination is voluntary or
involuntary, with or without cause, Employee will not, directly or indirectly,
on his own behalf or on behalf of or in conjunction with any person or legal
entity other than the Company, recruit, solicit, or induce or attempt to
recruit, solicit or induce any employee of the Company to become employed by or
to be engaged in a business engaged in providing the Services.
(c) NON-SOLICITATION COVENANT. Employee agrees that during the term
of his employment and for a period of one year after the expiration or
termination of his employment by the Company, whether such termination is
voluntary or involuntary, with or without cause, Employee will not, directly or
indirectly, on his own behalf or on behalf of or in conjunction with any person
or entity other than the Company, actively solicit the business or patronage of
any of the clients, customers or accounts of the Company served by Employee
during the term of this Agreement.
(d) NON-DISCLOSURE COVENANTS. Employee acknowledges that as an
integral part of the Company's business, the Company has developed, and will
develop, at a considerable investment of time and expense, plans, procedures,
methods of operation, methods of production, financial data, lists of actual
and potential customers, suppliers, marketing strategies, plans for development
and expansion, customer and supplier data, and other confidential and sensitive
information, and Employee acknowledges that the Company has legitimate business
interest in protecting the confidentiality of such information. Employee
acknowledges that as COO/CFO for the Company, he will be entrusted with such
information. Employee, therefore, acknowledges a continuing responsibility with
respect to the protection of the information and agrees:
i. "Trade Secrets" shall be defined as information, without
regard to form, belonging to the Company or licensed by it including, but not
limited to, technical or nontechnical data, formulae, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data,
financial plans, product plans, or lists of actual or potential customers of
suppliers which is not commonly known by or available to the public and which
information: (a) derive economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons or entities who can obtain economic value from their disclosure or
use; and (b) are the subject of efforts that are reasonable under the
circumstances to maintain their secrecy.
ii. "Confidential Information" shall be defined, as any
information belonging to the Company or licensed by it other than Trade Secrets
which is material to the Company and not generally known to the public.
iii. Employee will treat as confidential and will not, without
the prior written approval of the Company, use (other than in the performance of
his duties of employment with the Company), publish, disclose, copyright or
authorize anyone else to use, publish, disclose or copyright, either
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 5 of 8
<PAGE> 6
during the term of Employee's employment or at any time subsequent thereto, any
information which constitutes Trade Secrets of the Company whether or not the
Trade Secrets are in written or tangible form.
iv. Employee will treat as confidential and will not, without
the prior written approval of the Company, use (other than in the performance of
his duties of employment with the Company), publish, disclose, copyright or
authorize anyone else to use, publish, disclose or copyright, any Confidential
Information either during the term of his employment or for two (2) years after
termination of employment, whether voluntary or involuntary, with or without
cause, and whether or not the Confidential Information is in written or other
tangible form.
v. All records, notes, files, drawings, documents, plans and
like items, and all copies thereof, relating to or containing or disclosing
Confidential Information or Trade Secrets of the Companies which be made or
kept by Employee or which are disclosed to or come into the possession of
Employee, shall be and remain the sole and exclusive property of the Company.
Upon termination of employment, Employee agrees to deliver to the Company or
its designee, the originals and all copies of any of the foregoing.
11. PROPRIETARY RIGHTS IN DEVELOPMENTS. In the course of rendering his
services to the Company, Employee may conceive, create or develop or invent
ideas, concepts, methods of operation, processes, programs or other matter or
material, whether or not constituting an advance to, or an improvement of, or
pertaining to existing Company proprietary matter (all of which are hereinafter
referred to as "Developments"). All Developments shall constitute Confidential
Information (and may constitute Trade Secrets) and shall be subject to all of
the restrictions imposed on Employee pursuant to this Agreement. In addition,
all Developments and all rights therein throughout the world constitute works
made for hire and in all circumstances shall be and remain the sole and
exclusive property of the Company whether or not protectible under any laws now
known or hereafter applicable, including but not limited to patent, copyright,
trademark or trade secret laws.
(a) ASSIGNMENT BY EMPLOYEE OF ALL RIGHTS IN DEVELOPMENTS. Employee
hereby assigns to the Company all rights throughout the world, however,
denominated (whether under patent, copyright, trademark, trade secret or like
or different laws), in all media now known or hereafter recognized, in and to
each such Development. This assignment is not intended to derogate any rights
the Company has as an author of a work made for hire. In order to fully
effectuate these provisions, Employee hereby represents and warrants, that,
with respect to each such Development: (i) to the extent of Employee's
contribution, all such matter is original and does not and will not infringe or
violate the rights of any other person or entity; and (ii) that neither
Employee nor anyone on his behalf have granted or will grant or purport to
grant to any other person or entity any rights, in whole or in part, in and to
such Developments.
(b) COOPERATION. Employee shall, during and after termination of
Employee's employment, cooperate with the Company in the prosecution or defense
of any claims, litigation, or other proceedings involving the Developments and
provide such information and execute such documents as the Company may
reasonably request to confirm, implement or enforce its rights in such
Developments. The Company shall be responsible for the expenses associated with
the filing of any patent, copyright, trademark or like applications.
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 6 of 8
<PAGE> 7
12. REMEDIES FOR BREACH. In the event of Employee's actual or threatened
breach of the provisions of Paragraphs 10 or 11, the Company, in addition to
all other rights, shall be entitled to an injunction-restraining Employee
therefrom. Nothing herein shall be construed as prohibiting the Companies from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages from Employee. This provision shall remain in
full force and effect in the event Employee should claim that the Company
violated any of the terms of this Agreement. In such event, Employee agrees to
pursue such claim against the Company independently of his covenants set
forth in such Paragraphs.
13. GOVERNING LAW. This Agreement shall be construed under, governed by
and enforced in accordance with the laws of the State of Florida, not including
its conflicts of law principles.
14. RIGHT OF OFFSET. In the event Employee violates any of the terms or
conditions of this Agreement, the Company shall have the right, in addition
to and not in lieu of all other rights at law or in equity, to offset the
amount of any damages caused by such breach or violation against any sums due
or to become due to Employee under the terms of this Agreement.
15. NOTICE. Any notice required or desired to be given under this
Agreement shall be deemed given in writing and hand-delivered or sent by
Certified mail to his address shown herein below in the case of Employee, or to
its principal office in the case of the Company.
16. NO WAIVER BY COMPANY. The waiver by the Company of a breach of
any provision of this Agreement by Employee shall not operate or be construed
as a waiver of any subsequent breach by Employee. No waiver shall be valid
unless in writing and signed by an authorized officer of the Company.
17. ASSIGNMENT. Employee acknowledges that the services to be rendered by
him are unique and personal. accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Company.
18. SEVERABILITY. Should any part of this Agreement, for any reason, be
declared invalid by an arbitrator or a court of competent jurisdiction, such
decision or determination shall not affect the validity of any remaining
portion, and such remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid portion eliminated; provided, that
in the event of declaration of invalidity, the provision declared invalid shall
not be invalidated in its entirety, but shall be observed and performed by the
parties to the extent such provision is valid and enforceable.
19. COMPLETE AGREEMENT. This Agreement shall constitute the entire
agreement between the parties hereto and shall supersede all previous
negotiations, commitments and writings with respect to Employee's employment.
Any subsequent alteration or modification to this Agreement must be made in
writing and signed by both parties.
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 7 of 8
<PAGE> 8
EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH AN
ATTORNEY OR ANY OTHER INDIVIDUAL FROM WHOM HE WISHED TO OBTAIN ADVICE
CONCERNING THIS AGREEMENT. EMPLOYMENT STATES THAT HE HAS CAREFULLY READ THE
WITHIN AND FOREGOING "EMPLOYMENT AGREEMENT" AND KNOWS AND UNDERSTANDS THE
CONTENTS THEREOF AND THAT HE IS EXECUTING THE SAME AS HIS OWN FREE ACT AND DEED.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMPANY: EMPLOYEE:
DEBITFONE INTERNATIONAL, INC. ROBERT ELLIS
a Florida corporation
By: /s/ MERRITT JESSON /s/ ROBERT ELLIS
-------------------------- -------------------------
Merritt Jesson
Its: President/CEO
SATELLITE CONTROL TECHNOLOGIES, Inc.,
a Nevada corporation
By: /s/ MERRITT JESSON
--------------------------
MERRITT JESSON
Its: President/CEO
Initials:
________ By: _______
Employee Company
RE EMPLOYMENT AGREEMENT REV 5-31.DOC
Page 8 of 8
<PAGE> 1
Exhibit 6.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of June 1, 1999, between
DebitFone International, Inc., a Florida corporation ("DFI"), Satellite Control
Technology, Inc., a public Nevada corporation ("SATX"), the Parent Company,
both hereinafter referred to as the "Company", and Larry Bisgrove
("Employee").
WHEREAS, the Companies are presently in the business of selling and
reselling domestic and international telecommunications services; and
WHEREAS, Employee desires to become employed by the Company as Vice
President of Operations for the Company and the Company desire to employ
Employee in such capacity pursuant to the terms hereof, and
WHEREAS, in such capacity, Employee has agreed to be responsible for
planning and managing the operational aspects of the Company as more fully
provided herein, all subject to the direction of the Chief Operating Officer of
the Company.
NOW, THEREFORE, in consideration of the mutual promises and
conditions contained herein, and other good and valuable consideration, the
adequacy of which the parties hereby acknowledge, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment of Employee. The Company hereby employs Employee,
and Employee hereby accepts employment, as Vice President of Operations of the
Company upon the terms and conditions of this Agreement.
2. Term of Agreement. This Agreement shall remain in force and
effect for a three (3) year period commencing on June 1, 1999 (the "Employment
Date") and ending at the close of business on May 31, 2002, unless sooner
terminated pursuant to paragraph 9 below (the "Initial Term"). At the end of
the Initial Term, the Company may, in their sole discretion, extend the term of
this Agreement for up to three additional successive one-year periods (each
such one-year period referred to herein as a "Renewal Term") by providing
written notice to the Employee at least ninety (90) days prior to the
expiration of the Initial Term or of any Renewal Term, as applicable. (The
Initial Term together with any Renewal Term(s) granted by the Company is
sometimes collectively referred to herein as the "Term").
3. Employee's Duties. During the Term of this Agreement,
Employee shall serve as Vice President of Operations for the Company, and be
responsible for managing the day-to-day activities of the Company. All
activities including but not limited to the foregoing activities shall be
conducted by Employee under the direction of and subject to the control of the
Chief Operating Officer of DebitFone International, Inc. and Satellite Control
Technology, Inc.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 1 of 8
<PAGE> 2
4. Loyalty to the Company. Employee shall devote his full time,
attention and efforts to the business and affairs of the Company and to the
performance of his duties and responsibilities during the Term hereof. Employee
shall owe his full loyalty to the Company and shall not engage in any activity
or enter into any transaction that would or might constitute a conflict of
interest, or the appearance thereof, with the duties and loyalties owed by him
to the Company. Without limiting the foregoing, Employee agrees that during the
Term of this Agreement, Employee will not engage in any business activity other
than those duties described in this Agreement, whether or not such business is
pursued for gain or profit, or other pecuniary advantage. However, it is
understood by the Parties that Employee is currently assisting existing prepaid
cellular participants in creating technology and business solutions which
benefit those clients and will likely benefit the Company in some measurable
manner in the near future. Such assistance is acceptable within the terms of
this Agreement as long as it is performed on a non-interference basis with
Company business and does not negatively impact the Company's position, and
ability to compete, in the prepaid cellular marketplace. In addition, Employee
may invest his assets in such form or manner as will not require his services
in the operation of the affairs of the companies in which such investments are
made, provided that such investments are not wholly or in part based upon
confidential information obtained in his employment with the Company. If any
such investment is contemplated to be made with a competitor of the Company,
the specific nature and amount of the investment shall be disclosed to the
Company in writing prior to such investment and such investment may not be made
without the prior approval in writing of the Board of Directors of the Parent
Company.
5. Salary.
(a) Base Salary. In consideration of the performance by
the Employee of the duties and obligations contained in this Agreement, the
Company shall pay Employee an initial gross salary of $88,000 per year, payable
in accordance with the normal payroll practices of the Company. Any amounts
shall be prorated for periods less than a month. Salary payments shall be
subject to withholding and other applicable taxes and deductions. The
aforementioned initial salary will be subject to review by the Company, which
may decide, in their sole discretion to raise such salary. Such review shall
occur at least annually, on or about each Employment Date anniversary.
6. Bonus Eligibility
(a) Signing Bonus. Employee shall receive 50,000 shares
of the common stock of SATX upon the signing of this employment contract.
(b) Stock Options. In addition to the base salary
described in paragraph 5 above, Employee shall be eligible to receive an option
to purchase up to 50,000 shares of common stock of the common stock of SATX
annually commencing on the first anniversary date of this Agreement. The
exercise price of the options shall be ($0.50) per share in year one.
Thereafter, the exercise price of the options shall be as follows:
Year 2. Sixty percent (60%) of the trading price as of the
date of the grant.
Year 3. Seventy percent (70%) of the trading price as of
the date of the grant.
Year 4. Eighty percent (80%) of the trading price as of the
date of the grant.
Year 5. Ninety percent (90%) of the trading price as of the
date of the grant.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 2 of 8
<PAGE> 3
The actual number of shares awarded to Employee each year shall be dependent
upon the pre-tax profit of SATX. For example, should SATX meet its projected
pre-tax profit (as approved by the Board of Directors) for the year, Employee
shall be entitled to an option grant of 50,000 shares. However, if SATX's
pre-tax profit is only 50% of projections, then Employee shall be entitled to a
grant of 25,000 shares. Employee shall not be entitled to more than 50,000
shares if SATX exceeds the projection. The option shall fully vest upon the
date of the grant and shall expire if not exercised within five (5) years of
the date of the grant.
(c) Additional Bonus. The Employee may be eligible for
an additional quarterly Performance bonus equal to a range of twenty to forty
percent (20% - 40%) of Employee's annual base salary to be paid out, if earned,
on a quarterly basis after completion of each of the Company's fiscal quarters.
The calculation of earned bonus is based upon the Company's financial
performance against certain performance criteria described in Exhibit A to this
document (Company Projections). The threshold for enacting the bonus pool for a
specific quarter shall be Company attainment of eighty percent (80%) or more
performance against the applicable goals in Exhibit A. Exhibit A will be
officially revised for bonus calculation purposes, as required by changes in
business events and forecasts, only as approved by the Board of Directors of
SATX.
Each quarter's earned bonus will be calculated from the following sliding
scale:
Level of Company goal performance 80% 100% 120%
Payout % of Employee's annual salary 20% 30% 40%
If goals are achieved, and a bonus is earned for a quarter, Employee shall have
the option of receiving the bonus in cash or in common stock in the Parent
Company (SATX). If stock is chosen, the number of shares to be issued will be
calculated using eighty percent (80%) of the average market price of the shares
of the Company over the most recent thirty (30) days prior to issue date.
In order to compensate for variations in quarterly performance, and to
recognize the ability to make up for previous lesser performance, the quarterly
bonus calculation will be made from year-to-date Company data. Thus, within any
given performance year, a previous quarter's shortcoming can be offset by
subsequent performance improvement. The instant quarter's bonus payout is
therefore calculated as the year-to-date earned bonus less the cumulative bonus
paid previously during the applicable year.
As additional management responsibilities are assumed by Employee due to
acquisitions by SATX, projections for those acquired entities will be added to
the performance criteria in Exhibit A, and the size of the applicable bonus
pool for Employee will be increased accordingly, as approved by the SATX Board
of Directors.
7. Benefits. Employee shall be entitled to receive benefits made
available to other Executive officers within the Company consistent with the
policies and practices of the Company effected from time to time. As of the
Employment Date, these benefits include insurance benefits.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 3 of 8
<PAGE> 4
8. Business Expenses. Employee may incur expenses in connection
with the performance of his duties as Vice President of Operations for the
Company, including expenses for business travel, meals, lodging and similar
items. The Company will reimburse Employee for all such customary, reasonable
and necessary expenses upon Employee's periodic presentation of an itemized and
documented account of such expenditures and in accordance with the Company's
expense reimbursement policies, which are in effect all the time the expense is
incurred.
9. Termination.
(a) Termination by the Company.
i. For Cause. The Company may terminate the
Employee's employment with the Company at any time for "cause," which
termination shall be effective immediately upon written notice to Employee.
The Company shall pay base salary through the date of termination and have no
further obligations to Employee as of the date of termination. For purposes of
this Agreement, "cause" is defined to mean such act, omission or course of
conduct which the Companies determine is (1) a willful violation of any of the
provisions of this Agreement; (2) willful misconduct which is demonstrably
injurious to the Company, monetarily or otherwise; (3) the commission of a
felony involving the Company and/or its business and suggesting moral turpitude
on the part of the Employee, whether or not the Employee ultimately is
indicted, arraigned or convicted; (4) improper or unethical business activity,
including, but not limited to, the Employee's fraud, misappropriation,
embezzlement, dishonesty, unlawful harassment, or gross negligence; (5) lack of
sufficient effort or willful neglect in the performance of his duties; or (6)
inability to perform the essential functions of the job, even with reasonable
accommodation by the Company, due to disability of thirty days or more.
ii. Without Cause. The Company may terminate
the Employee's employment with the Company without cause, effective upon
thirty (30) days written notice to Employee. Employee shall be entitled to (a)
continuation of compensation as provided in Paragraph 5 & 6 through the
original term of employment agreement, and (b) COBRA benefits. In such event,
Employee, if requested by the Company, shall continue to render his services
and shall be paid his regular salary and receive his normal benefits up to the
effective date of termination. All stock options in employment agreement shall
be considered vested at the time of termination.
(b) Termination by Employee. Employee may terminate his
employment under this Agreement at any time upon thirty (30) days notice to the
Company. In such event, Employee, if requested by the Company, shall continue
to render his services and shall be paid his regular salary and receive his
normal benefits only up to the effective date of termination. The Company's
salary obligations to the Employee shall cease as of the effective date of
termination.
(c) Termination Upon Death. This Agreement shall
terminate automatically upon the death of Employee during the Term hereof, and
all salary payments shall immediately cease upon death.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 4 of 8
<PAGE> 5
10. Restrictive Covenants.
(a) Covenant Not To Compete. Employee acknowledges that
as Vice President of Operations, Employee shall be engaged, without limitation,
in, and performing the other duties set forth in Paragraph 3 herein. Employee
also acknowledges that the Companies are currently engaged in selling and
reselling domestic and international telecommunication service (the
"Services"). Employee agrees that, during the term of his employment and for a
period of one year after the expiration or termination of his employment with
the Company, whether such termination is voluntary or involuntary, with or
without cause, he shall not, either directly or indirectly, for himself or
through, on behalf of, or in conjunction with any other person or legal entity,
perform the same services for any other business engaged in providing directly
competitive Services.
(b) Non-Interference with Employees. During the term of
Employee's employment and for a period of one year after the expiration or
termination of his employment with the Company, whether such termination is
voluntary or involuntary, with or without cause, Employee will not, directly or
indirectly, on his own behalf or on behalf of or in conjunction with any person
or legal entity other than the Company, recruit, solicit, or induce or attempt
to recruit, solicit or induce any employee of the Company to become employed by
or to be engaged in a business engaged in providing the Services.
(c) Non-Solicitation Covenant. Employee agrees that
during the term of his employment and for a period of one year after the
expiration or termination of his employment by the Company, whether such
termination is voluntary or involuntary, with or without cause, Employee will
not, directly or indirectly, on his own behalf or on behalf of or in
conjunction with any person or entity other than the Company, actively solicit
the business or patronage of any of the clients, customers or accounts of the
Company served by Employee during the term of this Agreement.
(d) Non-Disclosure Covenants. Employee acknowledges that
as an integral part of the Company's business, the Company has developed, and
will develop, at a considerable investment of time and expense, plans,
procedures, methods of operation, methods of production, financial data, lists
of actual and potential customers, suppliers, marketing strategies, plans for
development and expansion, customer and supplier data, and other confidential
and sensitive information, and Employee acknowledges that the Company has
legitimate business interest in protecting the confidentiality of such
information. Employee acknowledges that as Vice President of Operations for the
Company, he will be entrusted with such information. Employee, therefore,
acknowledges a continuing responsibility with respect to the protection of the
information and agrees:
i. "Trade Secrets" shall be defined as
information, without regard to form, belonging to the Company or licensed by it
including, but not limited to, technical or nontechnical data, formulae,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans, or lists of actual
or potential customers of suppliers which is not commonly known by or available
to the public and which information: (a) derive economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons or entities who can obtain
economic value from their disclosure or use; and (b) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 5 of 8
<PAGE> 6
ii. "Confidential Information" shall be
defined, as any information belonging to the Company or licensed by it other
than Trade Secrets with is material to the Company and not generally known by
the public.
iii. Employee will treat as confidential and
will not, without the prior written approval of the Company, use (other than in
the performance of his duties of employment with the Company), publish,
disclose copyright or authorize anyone else to use, publish, disclose or
copyright, either during the term of Employee's employment or at any time
subsequent thereto, any information which constitutes Trade Secrets of the
Company whether or not the Trade Secrets are in written or tangible form.
iv. Employee will treat as confidential and
will not, without the prior written approval of the Company, use (other than in
the performance of his duties of employment with the Company), publish
disclose, copyright or authorize anyone else to use, publish, disclose or
copyright, any Confidential Information either during the term of his
employment or for two (1) year after termination of employment, whether
voluntary or involuntary, with or without cause, and whether or not the
Confidential Information is in written or other tangible form.
v. All records, notes, files, drawings,
documents, plans and like items, and all copies thereof, relating to or
containing or disclosing Confidential Information or Trade Secrets of the
Companies which be made or kept by Employee or which are disclosed to or come
into the possession of Employee, shall be and remain the sole and exclusive
property of the Company. Upon termination of employment, Employee agrees to
deliver to the Company or its designee, the originals and all copies of any of
the foregoing.
11. Proprietary Rights In Developments. In the course of
rendering his services to the Company, Employee may conceive, create or develop
or invent ideas, concepts, methods of operation, processes, programs or other
matter or material, whether or not constituting an advance to, or an
improvement of, or pertaining to existing Company proprietary matter (all of
which are hereinafter referred to as "Developments"). All Developments shall
constitute Confidential Information (and may constitute Trade Secrets) and
shall be subject to all of the restrictions imposed on Employee pursuant to
this Agreement. In addition, all Developments and all rights therein throughout
the world constitute works made for hire and in all circumstances shall be and
remain the sole and exclusive property of the Company whether or not
protectible under any laws now known or hereafter applicable, including by not
limited to patent, copyright, trademark or trade secret laws.
(a) Assignment by Employee of All Rights in
Developments. Employee hereby assigns to the Company all rights throughout the
world, however, denominated (whether under patent, copyright, trademark, trade
secret or like or different laws), in all media now known or hereafter
recognized, in and to each such Development. This assignment is not intended to
derogate any rights the Company has as an author of a work made for hire. In
order to fully effectuate these provisions, Employee hereby represents and
warrants, that, with respect to each such Development: (i) to the extent of
Employee's contribution, all such matter is original and does not and will not
infringe or violate the rights of any other person or entity, and (ii) that
neither Employee nor anyone on his behalf have granted or will grant or purport
to grant to any other person or entity any rights, in whole or in part, in and
to such Developments.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 6 of 8
<PAGE> 7
(b) Cooperation. Employee shall, during and after
termination of Employee's employment, cooperate with the Company in the
prosecution or defense of any claims, litigation, or other proceedings
involving the Developments and provide such information and execute such
documents as the Company may reasonably request to confirm, implement or
enforce its rights in such Developments. The Company shall be responsible for
the expenses associated with the filing of any patent, copyright, trademark
or like applications.
12. Remedies for Breach. In the event of Employee's actual or
threatened breach of the provisions of Paragraphs 10 or 11, the Company, in
addition to all other rights, shall be entitled to an injunction-restraining
Employee therefrom. Nothing herein shall be construed as prohibiting the Company
form pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages from Employee. This provision shall remain in
full force and effect in the event Employee should claim that the Company
violated any of the terms of this Agreement. In such event, Employee agrees to
pursue such claim against the Company independently of his covenants set forth
in such Paragraphs.
13. Governing Law. This Agreement shall be construed under,
governed by and enforced in accordance with the laws of the State of Florida,
not including its conflicts of law principles.
14. Right of Offset. In the event Employee violates any of the
terms or conditions of this Agreement, the Company shall have the right, in
addition to and not in lieu of all other rights at law or in equity, to offset
the amount of any damages caused by such breach or violation against any sums
due or to become due to Employee under the terms of this Agreement.
15. Notice. Any notice required or desired to be given under this
Agreement shall be deemed given in writing and hand-delivered or sent by
Certified mail to his address shown herein below in the case of Employee, or to
its principal office in the case of the Company.
16. No Waiver by Company. The waiver by the Company of a breach
of any provision of this Agreement by Employee shall not operate or be
construed as a waiver of any subsequent breach by Employee. No waiver shall be
valid unless in writing and signed by an authorized officer of the Company.
17. Assignment. Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, Employee may not assign
any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
18. Severability. Should any part of this Agreement for any
reason, be declared invalid by an arbitrator or a court of competent
jurisdiction, such decision or determination shall not affect the validity of
any remaining portion, and such remaining portion shall remain in force and
effect as if this Agreement had been executed with the invalid portion
eliminated; provided, that in the event of declaration of invalidity, the
provision declared invalid shall not be invalidated in its entirety, but shall
be observed and performed by the parties to the extent such provision is valid
and enforceable.
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
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<PAGE> 8
19. Complete Agreement. This Agreement shall constitute the
entire agreement between the parties hereto and shall supersede all previous
negotiations, commitments and writings with respect to Employee's employment.
Any subsequent alteration or modification to this Agreement must be made in
writing and signed by both parties.
EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH
AN ATTORNEY OR ANY OTHER INDIVIDUAL FROM WHOM HE WISHED TO OBTAIN ADVICE
CONCERNING THIS AGREEMENT. EMPLOYMENT STATES THAT HE HAS CAREFULLY READ THE
WITHIN AND FOREGOING "EMPLOYMENT AGREEMENT" AND KNOWS AND UNDERSTANDS THE
CONTENTS THEREOF AND THAT HE IS EXECUTING THE SAME AS HIS OWN FREE ACT AND
DEED.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
COMPANY: EMPLOYEE:
DEBITFONE INTERNATIONAL, INC. LARRY BISGROVE
a Florida corporation
By: /s/ Merritt Jesson /s/ Larry Bisgrove
----------------------------------- --------------------------------------
Merritt Jesson
Its: President/CEO
SATELLITE CONTROL TECHNOLOGY, INC.,
a Nevada corporation
By: /s/ Merritt Jesson
------------------------------------
Merritt Jesson
Its: President/CEO
Initials:
/s/ LB By: /s/ MJ
- -------- --------
Employee Company
LB FINAL EMPLOYMENT AGREE 7-99.DOC
Page 8 of 8
<PAGE> 1
Exhibit 6.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of October 1, 1999,
between DebitFone International, Inc., a Florida corporation ("the Company"),
SATX, Inc., a Nevada corporation ("the Parent Company"), and Donna Skell
("Employee").
WHEREAS, the Company is presently in the business of selling and
reselling domestic and international telecommunications services; and
WHEREAS, Employee desires to become employed by the Company as Vice
President of Sales and Marketing for the Company and the Company desires to
employ Employee in such capacity pursuant to the terms hereof, and
WHEREAS, in such capacity, Employee has agreed to be responsible for
day-to-day sales and marketing operations of the Company as more fully provided
herein, all subject to the direction of the CEO of SATX, Inc., the Parent
Company.
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the adequacy of
which the parties hereby acknowledge, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Employment of Employee. The Company hereby employ's Employee,
and Employee hereby accepts employment, as Vice President of Sales and
Marketing of the Company upon the terms and conditions of this Agreement.
2. Term of Agreement. This Agreement shall remain in force and
effect for a three-(3) year period commencing on October 1, 1999 (the
"Employment Date") and ending at the close of business on September 30, 2002,
unless sooner terminated pursuant to paragraph 9 below (the "Initial Term"). At
the end of the Initial Term, the Companies may, in its sole discretion, extend
the term of this Agreement for up to three additional successive one-year
periods (each such one-year period referred to herein as a "Renewal Term") by
providing written notice to the Employee at least ninety (90) days prior to the
expiration of the Initial Term or of any Renewal Term, as applicable. (The
Initial Term together with any Renewal Term(s) granted by the Companies is
sometimes collectively referred to herein as the "Term").
3. Employee's Duties. During the Term of this Agreement,
Employee shall serve as Vice President of Sales and Marketing for the Company,
and be responsible for all the day-to-day activities of the Company. All
activities including but not limited to the foregoing activities shall be
conducted by Employee under the direction of and subject to the control of the
CEO of SATX, Inc., the Parent Company.
4. Loyalty to the Company. Employee shall devote his full time,
attention and efforts to the business and affairs of the Company and to the
performance of his duties and responsibilities during the Term hereof. Employee
shall owe his full loyalty to the Company and shall not engage in any activity
or enter into any transaction that would or might constitute a conflict of
interest, or the
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 1 of 8
<PAGE> 2
appearance thereof, with the duties and loyalties owed by him to the Company.
Without limiting the foregoing, Employee agrees that during the Term of this
Agreement, Employee will not engage in any business activity other than those
duties described in this Agreement, whether or not such business is pursued for
gain or profit or other pecuniary advantage. However, Employee may invest his
assets in such form or manner as will not require his services in the operation
of the affairs of the company in which such investments are made, provided that
such investments are not wholly or in part based upon confidential information
obtained in his employment with the Company or association with the Parent
Company. If any such investment is contemplated to be made with a competitor of
the Company or Parent Company, the specific nature and amount of the investment
shall be disclosed to the Parent Company in writing prior to such investment
and such investment may not be made without the prior approval in writing of
the Board of Directors of the Parent Company.
5. Salary.
(a) Base Salary. In consideration of the performance by
the Employee of the duties and Obligations contained in this Agreement, the
Company shall pay Employee an initial gross salary of $70,000 per year,
payable bi-weekly in accordance with the normal payroll practices of the
Company. Any amounts shall be prorated for periods less than a month. Salary
payments shall be subject to withholding and other applicable taxes. The
aforementioned initial salary will be subject to review by the Companies, which
may decide, in its sole discretion to raise such salary. Such review shall
occur annually on or about each Employment Date anniversary.
6. Bonus Eligibility.
(a) Signing Bonus. It is acknowledged that employee
personally has numerous sales opportunities being brought to company for
closing, therefore employee is entitled to a signing bonus of 100,000 shares of
common stock subject to 144 rules. It is agreed that after 120 days SATX will
remove the 144 restrictions on 50,000 shares of the bonus stock.
(b) Stock Options. In addition to the base salary
described in paragraph 5 above, Employee shall be eligible to receive an option
to purchase up to 50,000 shares of the common stock of SATX annually commencing
on the first anniversary date of this Agreement. The exercise price of the
options shall be fifty cents ($.50) per share in year one. Thereafter, the
exercise price of the options shall be as follows:
Year 2. Sixty percent (60%) of the trading price as
of the date of the grant.
Year 3. Seventy percent (70%) of the trading price
as of the date of the grant.
The actual number of shares awarded to Employee each year shall be dependent
upon the pre-tax profit of the Company. For example, should the Company meet
its projected pre-tax profit (as approved by the Board of Directors) for the
year, Employee shall be entitled to an option grant of 50,000 shares. However,
if the Companies pre-tax profit is only 50% of projections, then Employee shall
be
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 2 of 8
<PAGE> 3
entitled to a grant of 25,000 shares. Employee shall not be entitled to more
than 50,000 shares if the Company exceeds the projection.
The option shall fully vest upon the date of the grant and shall expire if not
exercised within three (3) years of the date of the grant.
(c) Additional Bonus. The Employee may be eligible for
an additional performance bonus with an equivalent value of twenty percent -
forty percent (20% - 40%) of the Employee's base salary on a quarterly basis.
The Companies shall determine Employee's eligibility for such additional bonus
based upon certain performance criteria described in Exhibit A, (DebitFone &
AlphaTrack Projections). The performance criteria shall be evaluated by the
Company achieving (80% - 120%) of the projected pre-tax profits in such exhibit
on a quarterly basis. If the Company determines that such performance goals
have been achieved, the Employee shall have the option to receive the bonus in
cash or common stock in the Parent Company; (SATX) at 90% of average market
price of the shares of (SATX) over the last thirty (30) days prior to issue. If
at the end of the year volumes are made up to cover any quarters that volumes
were not met and the bonus was not paid, the company will offer the bonus for
that quarter. The sliding scale used in the calculation of bonus is:
Level of Company Performance 80% 100% 120%
Payout % of Employee annual salary 20% 30% 40%
7. Benefits. Employee shall be entitled to receive benefits made
available to other executive officers within the Company consistent with the
policies and practices of the Company and Parent Company effected from time to
time. As of the Employment Date, these benefits include insurance benefits.
8. Business Expenses. Employee may incur expenses in connection
with the performance of his duties as Vice President of Sales and Marketing for
the Company, including expenses for business travel, meals, lodging and similar
items. The Company will reimburse Employee for all such customary, reasonable
and necessary expenses upon Employees periodic presentation of an itemized and
documented account of such expenditures and in accordance with the Company's
expense reimbursement policies, which are in effect at the time the expense is
incurred.
9. Termination.
(a) Termination by the Parent Company; (SATX).
i. For Cause. The Parent Company may terminate
the Employee's employment with the Company at any time for "cause," which
termination shall be effective immediately upon written notice to Employee. The
Company shall pay base salary through the date of termination and have no
further obligations to Employee as of the date of termination. For purposes of
this Agreement "cause" is defined to mean
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 3 of 8
<PAGE> 4
such act, omission or course of conduct which the Parent Company determines is
(1) a willful violation of any of the provisions of this Agreement; (2) willful
misconduct which is demonstrably injurious to the Company, monetarily or
otherwise; (2) the commission of a felony involving the Company and/or its
business and suggesting moral turpitude on the part of the Employee, whether or
not the Employee ultimately is indicted, arraigned or convicted; (4) improper
or unethical business activity, including, but not limited to, the Employee's
fraud, misappropriation, embezzlement, dishonesty, unlawful harassment, or
gross negligence; (5) lack of sufficient effort or willful neglect in the
performance of his duties; or (6) inability to perform the essential functions
of the job, even with reasonable accommodation by the Company, due to
disability of thirty days or more.
ii. Without Cause. The Parent Company may
terminate the Employee's employment with the Company without cause, effective
upon thirty-(30) days written notice to Employee. Employee shall be entitled to
(a) continuation of compensation as provided in Paragraph 5 for the original
term of the employment agreement with COBRA benefits. In such event, Employee,
if requested by the Company, shall continue to render his services and shall be
paid his regular salary and receive his normal benefits up to the effective
date of termination. All stock options in employment agreement shall be
considered vested at the time of termination.
(b) Termination by Employee. Employee may terminate his
employment under this Agreement at any time upon thirty-(30) day's notice to
the Company. In such event, Employee, if requested by the Company, shall
continue to render his services and shall be paid his regular salary and
receive his normal benefits only up to the effective date of termination. All
obligations to the Employee shall cease as of the effective date of
termination.
(c) Termination Upon Death. This Agreement shall
terminate automatically upon the death of Employee during the Term hereof and
all salary payments shall immediately cease upon death. All bonus eligibility
shall be considered vested as per paragraph 6.
10. Restrictive Covenants.
(a) Covenant Not To Compete. Employee acknowledges that
as Vice President of Sales and Marketing, Employee shall be engaged, without
limitation, in, and performing the other duties set forth in Paragraph 3
herein. Employee also acknowledges that the Company is currently engaged in
Cellular Telecommunications and Global Position Satellite services (the
"Services"). Employee agrees that, during the term of his employment and for a
period of one year after the expiration or termination of his employment with
the Company, whether such termination is voluntary or involuntary, with or
without cause, he shall not either directly or indirectly, for himself or
through, on behalf of, or in conjunction with any other person or legal entity,
perform services for any other business engaged in providing the Services.
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 4 of 8
<PAGE> 5
(b) Non-Interference with Employees. During the term of
Employee's employment and for a period of one year after the expiration or
termination of his employment with the Company, whether such termination is
voluntary or involuntary, with or without cause, Employee will not directly or
indirectly, on his own behalf or on behalf of or in conjunction with any person
or legal entity other than the Company, recruit, solicit, or induce or attempt
to recruit solicit or induce any employee of the Company to become employed by
or to be engaged in a business engaged in providing the Services.
(c) Non-Solicitation Covenant. Employee agrees that
during the term of his employment and for a period of one year after the
expiration or termination of his employment by the Company, whether such
termination is voluntary or involuntary, with or without cause, Employee will
not directly or indirectly, on his own behalf or on behalf of or in conjunction
with any person or entity other than the Company, actively solicit the business
or patronage of any of the clients, customers or accounts of the Company served
by Employee during the term of this Agreement.
(d) Non-Disclosure Covenants. Employee acknowledges that
as an integral part of the Company's business, the Company has developed, and
will develop, at a considerable investment of time and expense, plans,
procedures, methods of operation, methods of production, financial data, lists
of actual and potential customers, suppliers, marketing strategies, plans for
development and expansion, customer and supplier data, and other confidential
and sensitive information, and Employee acknowledges that the Company has
legitimate business interest in protecting the confidentiality of such
information. Employee acknowledges that as Vice President of Sales and
Marketing for the Company, he will be entrusted with such information.
Employee, therefore, acknowledges a continuing responsibility with respect to
the protection of the information and agrees:
i. "Trade Secrets" shall be defined as
information, without regard to form, belonging to the Company or licensed by it
including, but not limited to, technical or nontechnical data, formulae,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans, or lists of actual
or potential customers of suppliers which is not commonly known by or available
to the public and which information: (a) derive economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons or entities who can obtain
economic value from their disclosure or use; and (b) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy.
ii. "Confidential Information" shall be
defined, as any information belonging to the Company or licensed by it other
than Trade Secrets with is material to the Company and not generally known by
the public.
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 5 of 8
<PAGE> 6
iii. Employee will treat as confidential and
will not, without the prior written approval of the Company, use (other than in
the performance of his duties of employment with the Company), publish,
disclose copyright or authorize anyone else to use, publish, disclose or
copyright either during the term of Employee's employment or at any time
subsequent thereto, any information which constitutes Trade Secrets of the
Company whether or not the Trade Secrets are in written or tangible form.
iv. Employee will treat as confidential and
will not, without the prior written approval of the Company, use (other than in
the performance of his duties of employment with the Company), publish
disclose, copyright or authorize anyone else to use, publish, disclose or
copyright, any Confidential Information either during the term of his
employment or for two (1) year after termination of employment, whether
voluntary or involuntary, with or without cause, and whether or not the
Confidential Information is in written or other tangible form.
v. All records, notes, files, drawings,
documents, plans and like items, and all copies thereof, relating to or
containing or disclosing Confidential Information or Trade Secrets of the
Company which are made or kept by Employee or which are disclosed to or come
into the possession of Employee, shall be and remain the sole and exclusive
property of the Company. Upon termination of employment, Employee agrees to
deliver to the Company or their designee, the originals and all copies of any
of the foregoing.
11. Proprietary Rights In Development. In the course of
rendering his services to the Company, Employee may conceive, create or develop
or invent ideas, concepts, methods of operation, processes, programs or other
matter or material, whether or not constituting an advance to, or an
improvement of, or pertaining to existing Company's proprietary matter (all of
which are hereinafter referred to as "Developments"). All Developments shall
constitute Confidential Information (and may constitute Trade Secrets) and
shall be subject to all of the restrictions imposed on Employee pursuant to
this Agreement. In addition, all Developments and all rights therein throughout
the world constitute works made for hire and in all circumstances shall be and
remain the sole and exclusive property of the Company whether or not protectible
under any laws now known or hereafter applicable, including by not limited to
patent, copyright, trademark or trade secret laws.
(a) Assignment by Employee of All Rights in Developments.
Employee hereby assigns to the Company all rights throughout the world, however,
denominated (whether under patent copyright, trademark, trade secret or like or
different laws), in all media now known or hereafter recognized, in and to each
such Development. This assignment is not intended to derogate any rights the
Company has as an author of a work made for hire. In order to fully effectuate
these provisions, Employee hereby represents and warrants, that, with respect
to each such Development: (i) to the extent of Employee's contribution, all
such matter is original and does not and will not infringe or violate the
rights of any other person or entity; and (ii) that neither Employee nor anyone
on his behalf have granted or will grant or purport to grant to
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 6 of 8
<PAGE> 7
any other person or entity any rights, in whole or in part in and to such
Developments.
(b) Cooperation. Employee shall, during and after
termination of Employee's employment, cooperate with the Company in the
prosecution or defense of any claims, litigation, or other proceedings
involving the Developments and provide such information and execute such
documents as the Company may reasonably request to confirm, implement or
enforce its rights in such Developments. The Company shall be responsible for
the expenses associated with the filing of any patent, copyright and trademark
or like applications.
12. Remedies for Breach. In the event of Employee's actual or
threatened breach of the provisions of Paragraphs 10 or 11, the Company or
Parent Company, in addition to all other rights, shall be entitled to an
injunction-restraining Employee therefrom. Nothing herein shall be construed as
prohibiting the Company from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages from Employee.
This provision shall remain in full force and effect in the event Employee
should claim that the Company violated any of the terms of this Agreement. In
such event, Employee agrees to pursue such claim against the Company
independently of his covenants set forth in such Paragraphs.
13. Governing Law. This Agreement shall be construed under,
governed by and enforced in accordance with the laws of the State of Florida,
not including its conflicts of law principles.
14. Right of Offset. In the event Employee violates any of the
terms or conditions of this Agreement, the Company shall have the right, in
addition to and not in lieu of all other rights at law or in equity, to offset
the amount of any damages caused by such breach or violation against any sums
due or to become due to Employee under the terms of this Agreement.
15. Notice. Any notice required or desired to be given under this
Agreement shall be deemed given in writing and hand-delivered or sent by
Certified mail to his address shown herein below in the case of Employee, or to
its principal office in the case of the Company.
16. No Waiver by Companies. The waiver by the Company of a breach
of any provision of this Agreement by Employee shall not operate or be
construed as a waiver of any subsequent breach by Employee. No waiver shall be
valid unless in writing and signed by an authorized officer of the Parent
Company.
17. Assignment. Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, Employee may not assign
any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
18. Severability. Should any part of this Agreement for any
reason, be declared invalid by an arbitrator or a court of competent
jurisdiction, such decision or determination shall not affect the validity of
any remaining portion, and such remaining portion shall remain in force and
effect as if this Agreement had been executed with the invalid portion
eliminated; provided, that in the event of
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 7 of 8
<PAGE> 8
declaration of invalidity , the provision declared invalid shall not be
invalidated in its entirety, but shall be observed and performed by the parties
to the extent such provision is valid and enforceable.
19. Complete Agreement. This Agreement shall constitute the
entire agreement between the parties hereto and shall supersede all previous
negotiations, commitments and writings with respect to Employee's employment.
Any subsequent alteration or modification to this Agreement must be made in
writing and signed by both parties.
EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH
AN ATTORNEY OR ANY OTHER INDIVIDUAL FROM WHOM HE WISHED TO OBTAIN ADVICE
CONCERNING THIS AGREEMENT. EMPLOYMENT STATES THAT HE HAS CAREFULLY READ THE
WITHIN AND FOREGOING "EMPLOYMENT AGREEMENT" AND KNOWS AND UNDERSTANDS THE
CONTENTS THEREOF AND THAT HE IS EXECUTING THE SAME AS HIS OWN FREE ACT AND
DEED.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
COMPANY: EMPLOYEE:
DEBITFONE INTERNATIONAL, INC. DONNA SKELL
A Florida corporation
By: /s/ Merritt Jesson /s/ Donna Skell
----------------------------------- --------------------------------------
Merritt Jesson Donna Skell
Its: President/CEO
SATX, INC.
Nevada Corporation
By: /s/ Merritt Jesson
-----------------------------------
Merritt Jesson
Its: President/CEO
Initials:
/s/ DS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 8 of 8
<PAGE> 1
Exhibit 6.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of October 1, 1999,
between DebitFone International, Inc., a Florida corporation ("the Company"),
SATX, Inc., a Nevada corporation ("the Parent Company"), and Anton Skell
("Employee").
WHEREAS, the Company is presently in the business of selling and
reselling domestic and international telecommunications services; and
WHEREAS, Employee desires to become employed by the Company as Vice
President of Sales and Marketing for the Company and the Company desires to
employ Employee in such capacity pursuant to the terms hereof, and
WHEREAS, in such capacity, Employee has agreed to be responsible for
day-to-day sales and marketing operations of the Company as more fully provided
herein, all subject to the direction of the CEO of SATX, Inc., the Parent
Company.
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the adequacy of
which the parties hereby acknowledge, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Employment of Employee. The Company hereby employ's Employee,
and Employee hereby accepts employment, as Vice President of Sales and
Marketing of the Company upon the terms and conditions of this Agreement.
2. Term of Agreement . This Agreement shall remain in force and
effect for a three-(3) year period commencing on October 1, 1999 (the
"Employment Date") and ending at the close of business on September 30, 2002,
unless sooner terminated pursuant to paragraph 9 below (the "Initial Term"). At
the end of the Initial Term, the Companies may, in its sole discretion, extend
the term of this Agreement for up to three additional successive one-year
periods (each such one-year period referred to herein as a "Renewal Term") by
providing written notice to the Employee at least ninety (90) days prior to the
expiration of the Initial Term or of any Renewal Term, as applicable. The
Initial Term together with any Renewal Term(s) granted by the Companies is
sometimes collectively referred to herein as the "Term").
3. Employee's Duties. During the Term of this Agreement,
Employee shall serve as Vice President of Sales and Marketing for the Company,
and be responsible for all the day-to-day activities of the Company. All
activities including but not limited to the foregoing activities shall be
conducted by Employee under the direction of and subject to the control of the
CEO of SATX, Inc., the Parent Company.
4. Loyalty to the Company. Employee shall devote his full time,
attention and efforts to the business and affairs of the Company and to the
performance of his duties and responsibilities during the Term hereof Employee
shall owe his full loyalty to the Company and shall not engage in any activity
or enter into any transaction that would or might constitute a conflict of
interest, or the
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 1 of 8
<PAGE> 2
appearance thereof, with the duties and loyalties owed by him to the Company.
Without limiting the foregoing, Employee agrees that during the Term of this
Agreement, Employee will not engage in any business activity other than those
duties described in this Agreement whether or not such business is pursued for
gain or profit or other pecuniary advantage. However, Employee may invest Ins
assets in such form or manner as will not require his services in the operation
of the affairs of the company in which such investments are made, provided that
such investments are not wholly or in part based upon confidential information
obtained in his employment with the Company or association with the Parent
Company. If any such investment is contemplated to be made with a competitor of
the Company or Parent Company, the specific nature and amount of the investment
shall be disclosed to the Parent Company in writing prior to such investment
and such investment may not be made without the prior approval in writing of
the Board of Directors of the Parent Company.
5. Salary.
(a) Base Salary. In consideration of the performance by
the Employee of the duties and Obligations contained in this Agreement, the
Company shall pay Employee an initial gross salary of $70,000 per year,
payable bi-weekly in accordance with the normal payroll practices of the
Company. Any amounts shall be prorated for periods less than a month. Salary
payments shall be subject to withholding and other applicable taxes. The
aforementioned initial salary will be subject to review by the Companies, which
may decide, in its sole discretion to raise such salary. Such review shall
occur annually on or about each Employment Date anniversary.
6. Bonus Eligibility.
(a) Signing Bonus. It is acknowledged that employee
personally has numerous sales opportunities being brought to company for
closing, therefore employee is entitled to a signing bonus of 100,000 shares of
common stock subject to 144 rules. It is agreed that after 120 days SATX will
remove the 144 restrictions on 50,000 shares of the bonus stock.
(b) Stock Options. In addition to the base salary
described in paragraph 5 above, Employee shall be eligible to receive an option
to purchase up to 50,000 shares of the common stock of SATX annually commencing
on the first anniversary date of this Agreement. The exercise price of the
options shall be fifty cents ($.50) per share in year one. Thereafter, the
exercise price of the options shall be as follows:
Year 2. Sixty percent (60%) of the trading price as
of the date of the grant.
Year 3. Seventy percent (70%) of the trading price
as of the date of the grant.
The actual number of shares awarded to Employee each
year shall be dependent upon the pre-tax profit of the Company. For example,
should the Company meet its projected pre-tax profit (as approved by the Board
of Directors) for the year, Employee shall be entitled to an option grant of
50,000 shares. However, if the Companies pre-tax profit is only 50% of
projections, then employee shall be
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 2 of 8
<PAGE> 3
entitled to a grant of 25,000 shares. Employee shall not be entitled to more
than 50,000 shares if the Company exceeds the projection.
The option shall fully vest upon the date of the grant and shall expire if not
exercised within three (3) years of the date of the grant.
(c) Additional Bonus. The Employee may be eligible for
an additional performance bonus with an equivalent value of twenty percent -
forty percent (20% - 40%) of the Employee's base salary on a quarterly basis.
The Companies shall determine Employee's eligibility for such additional bonus
based upon certain performance criteria described in Exhibit A, (DebitFone &
AlphaTrack Projections). The performance criteria shall be evaluated by the
Company achieving (80% - 120%) of the projected pre-tax profits in such
exhibit on a quarterly basis. If the Company determines that such performance
goals have been achieved, the Employee shall have the option to receive the
bonus in cash or common stock in the Parent Company; (SATX) at 90% of average
market price of the shares of (SATX) over the last thirty (30) days prior to
issue. If at the end of the year volumes are made up to cover any quarters that
volumes were not met and the bonus was not paid, the company will offer the
bonus for that quarter. The sliding scale used in the calculation of bonus is:
Level of Company Performance 80% 100% 120%
Payout % of Employee annual salary 20% 30% 40%
7. Benefits. Employee shall be entitled to receive benefits made
available to other executive officers within the Company consistent with the
policies and practices of the Company and Parent Company effected from time to
time. As of the Employment Date, these benefits include insurance benefits.
8. Business Expense. Employee may incur expenses in connection
with the performance of his duties as Vice President of Sales and Marketing for
the Company, including expenses for business travel, meals, lodging and similar
items. The Company will reimburse Employee for all such customary, reasonable
and necessary expenses upon Employee's periodic presentation of an itemized and
documented account of such expenditures and in accordance with the Company's
expense reimbursement policies, which are in effect all the time the expense is
incurred.
9. Termination.
(a) Termination by the Parent Company; (SATX).
i. For Cause. The Parent Company may terminate
the Employee's employment with the Company at any time for "cause," which
termination shall be effective immediately upon written notice to Employee. The
Company shall pay base salary through the date of termination and have no
further obligations to Employee as of the date of termination. For purposes of
this Agreement "cause" is defined to mean
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 3 of 8
<PAGE> 4
such act, omission or course of conduct which the Parent Company determines is
(1) a willful violation of any of the provisions of this Agreement; (2) willful
misconduct which is demonstrably injurious to the Company, monetarily or
otherwise; (2) the commission of a felony involving the Company and/or its
business and suggesting moral turpitude on the part of the Employee, whether or
not the Employee ultimately is indicted, arraigned or convicted; (4) improper or
unethical business activity, including, but not limited to, the Employees
fraud, misappropriation, embezzlement dishonesty, unlawful harassment or gross
negligence; (5) lack of sufficient effort or willful neglect in the performance
of his duties; or (6) inability to perform the essential functions of the job,
even with reasonable accommodation by the Company, due to disability of thirty
days or more.
ii. Without Cause. The Parent Company may
terminate the Employee's employment with the Company without cause, effective
upon thirty-(30) days written notice to Employee. Employee shall be entitled to
(a) continuation of compensation as provided in Paragraph 5 for the original
term of the employment agreement with COBRA benefits. In such event, Employee,
if requested by the Company, shall continue to render his services and shall be
paid his regular salary and receive his normal benefits up to the effective
date of termination. All stock options in employment agreement shall be
considered vested at the time of termination.
(b) Termination by Employee. Employee may terminate his
employment under this Agreement at any time upon thirty-(30) day's notice to
the Company. In such event, Employee, if requested by the Company, shall
continue to render his services and shall be paid his regular salary and
receive his normal benefits only up to the effective date of termination. All
obligations to the Employee shall cease as of the effective date of
termination.
(c) Termination Upon Death. This Agreement shall
terminate automatically upon the death of Employee during the Term hereof and
all salary payments shall immediately cease upon death. All bonus eligibility
shall be considered vested as per paragraph 6.
10. Restrictive Covenants.
(a) Covenant Not To Compete. Employee acknowledges that
as Vice President of Sales and Marketing, Employee shall be engaged, without
limitation, in, and performing the other duties set forth in Paragraph 3 herein.
Employee also acknowledges that the Company is currently engaged in Cellular
Telecommunications and Global Position Satellite services (the "Services").
Employee agrees that, during the term of his employment and for a period of one
year after the expiration or termination of his employment with the Company,
whether such termination is voluntary or involuntary, with or without cause, he
shall not, either directly or indirectly, for himself or through, on behalf of,
or in conjunction with any other person or legal entity, perform services for
any other business engaged in providing the Services.
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 4 of 8
<PAGE> 5
(b) Non-Interference with Employees. During the term of
Employee's employment and for a period of one year after the expiration or
termination of his employment with the Company, whether such termination is
voluntary or involuntary, with or without cause, Employee will not, directly or
indirectly, on his own behalf or on behalf of or in conjunction with any person
or legal entity other than the Company, recruit, solicit, or induce or attempt
to recruit, solicit or induce any employee of the Company to become employed by
or to be engaged in a business engaged in providing the Services.
(c) Non-Solicitation Covenant. Employee agrees that
during the term of his employment and for a period of one year after the
expiration or termination of his employment by the Company, whether such
termination is voluntary or involuntary, with or without cause, Employee will
not directly or indirectly, on his own behalf or on behalf of or in conjunction
with any person or entity other than the Company, actively solicit the business
or patronage of any of the clients, customers or accounts of the Company served
by Employee during the term of this Agreement.
(d) Non-Disclosure Covenants. Employee acknowledges that
as an integral part of the Company's business, the Company has developed, and
will develop, at a considerable investment of time and expense, plans,
procedures, methods of operation, methods of production, financial data, lists
of actual and potential customers, suppliers, marketing strategies, plans for
development and expansion, customer and supplier data, and other confidential
and sensitive information, and Employee acknowledges that the Company has
legitimate business interest in protecting the confidentiality of such
information. Employee acknowledges that as Vice President of Sales and
Marketing for the Company, he will be entrusted with such information.
Employee, therefore, acknowledges a continuing responsibility with respect to
the protection of the information and agrees:
i. "Trade Secrets" shall be defined as
information, without regard to form, belonging to the Company or licensed by it
including, but not limited to, technical or nontechnical data, formulae,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans, or lists of actual
or potential customers of suppliers which is not commonly known by or available
to the public and which information: (a) derive economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons or entities who can obtain
economic value from their disclosure or use; and (b) are the subject of efforts
that are reasonable under the circumstances to maintain their secrecy.
ii. "Confidential Information" shall be
defined, as any information belonging to the Company or licensed by it other
than Trade Secrets with is material to the Company and not generally known by
the public.
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 5 of 8
<PAGE> 6
iii. Employee will treat as confidential and
will not, without the prior written approval of the Company, use (other than in
the performance of his duties of employment with the Company), publish,
disclose copyright or authorize anyone else to use, publish, disclose or
copyright, either during the term of Employee's employment or at any time
subsequent thereto, any information which constitutes Trade Secrets of the
Company whether or not the Trade Secrets are in written or tangible form.
iv. Employee will treat as confidential and
will not, without the prior written approval of the Company, use (other than in
the performance of his duties of employment with the Company), publish
disclose, copyright or authorize anyone else to use, publish, disclose or
copyright, any Confidential Information either during the term of his
employment or for two (1) year after termination of employment, whether
voluntary or involuntary, with or without cause, and whether or not the
Confidential Information is in written or other tangible form.
v. All records, notes, files, drawings,
documents, plans and like items, and all copies thereof, relating to or
containing or disclosing Confidential Information or Trade Secrets of the
Company which are made or kept by Employee or which are disclosed to or come
into the possession of Employee, shall be and remain the sole and exclusive
property of the Company. Upon termination of employment, Employee agrees to
deliver to the Company or their designee, the originals and all copies of any
of the foregoing.
11. Proprietary Rights In Development. In the course of rendering
his services to the Company, Employee may conceive, create or develop or invent
ideas, concepts, methods of operation, processes, programs or other matter or
material, whether or not constituting an advance to, or an improvement of, or
pertaining to existing Company's proprietary matter (all of which are
hereinafter referred to as "Developments"). All Developments shall constitute
Confidential Information (and may constitute Trade Secrets) and shall be
subject to all of the restrictions imposed on Employee pursuant to this
Agreement. In addition, all Developments and all rights therein throughout the
world constitute works made for hire and in all circumstances shall be and
remain the sole and exclusive property of the Company whether or not protectible
under any laws now known or hereafter applicable, including but not limited to
patent, copyright, trademark or trade secret laws.
(a) Assignment by Employee of All Rights in
Developments. Employee hereby assigns to the Company all rights throughout the
world, however, denominated (whether under patent copyright, trademark, trade
secret or like or different laws), in all media now known or hereafter
recognized, in and to each such Development. This assignment is not intended to
derogate any rights the Company has as an author of a work made for hire. In
order to fully effectuate these provisions, Employee hereby represents and
warrants, that, with respect to each such Development: (i) to the extent of
Employee's contribution, all such matter is original and does not and will not
infringe or violate the rights of any other person or entity; and (ii) that
neither Employee nor anyone on his behalf have granted or will grant or purport
to grant to
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 6 of 8
<PAGE> 7
any other person or entity any rights, in whole or in part, in and to such
Developments.
(b) Cooperation. Employee shall during and after
termination of Employee's employment, cooperate with the Company in the
prosecution or defense of any claims, litigation, or other proceedings
involving the Developments and provide such information and execute such
documents as the Company may reasonably request to confirm, implement or
enforce its rights in such Developments. The Company shall be responsible for
the expenses associated with the filing of any patent, copyright, and trademark
or like applications.
12. Remedies for Breach. In the event of Employee's actual or
threatened breach of the provisions of Paragraphs 10 or 11, the Company or
Parent Company, in addition to all other rights, shall be entitled to an
injunction-restraining Employee therefrom. Nothing herein shall be construed as
prohibiting the Company form pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages from Employee.
This provision shall remain in full force and effect in the event Employee
should claim that the Company violated any of the terms of this Agreement. In
such event, Employee agrees to pursue such claim against the Company
independently of his covenants set forth in such Paragraphs.
13. Governing Law. This Agreement shall be construed under,
governed by and enforced in accordance with the laws of the State of Florida,
not including its conflicts of law principles.
14. Right of Offset. In the event Employee violates any of the
terms or conditions of this Agreement, the Company shall have the right, in
addition to and not in lieu of all other rights at law or in equity, to offset
the amount of any damages caused by such breach or violation against any sums
due or to become due to Employee under the terms of this Agreement.
15. Notice. Any notice required or desired to be given under this
Agreement shall be deemed given in writing and hand-delivered or sent by
Certified mail to his address shown herein below in the case of Employee, or to
its principal office in the case of the Company.
16. No Waiver by Companies. The waiver by the Company of a breach
of any provision of this Agreement by Employee shall not operate or be
construed as a waiver of any subsequent breach by Employee. No waiver shall be
valid unless in writing and signed by an authorized officer of the Parent
Company.
17. Assignment. Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, Employee may not assign
any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
18. Severabili1y. Should any part of this Agreement, for any
reason, be declared invalid by an arbitrator or a court of competent
jurisdiction, such decision or determination shall not affect the validity of
any remaining portion, and such remaining portion shall remain in force and
effect as if this Agreement had been executed with the invalid portion
eliminated; provided, that in the event of
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 7 of 8
<PAGE> 8
declaration of invalidity, the provision declared invalid shall not be
invalidated in its entirety, but shall be observed and performed by the parties
to the extent such provision is valid and enforceable.
19. Complete Agreement. This Agreement shall constitute the
entire agreement between the parties hereto and shall supersede all previous
negotiations, commitments and writings with respect to Employee's employment.
Any subsequent alteration or modification to this Agreement must be made in
writing and signed by both parties.
EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH
AN ATTORNEY OR ANY OTHER INDIVIDUAL FROM WHOM HE WISHED TO OBTAIN ADVICE
CONCERNING THIS AGREEMENT. EMPLOYMENT STATES THAT HE HAS CAREFULLY READ THE
WITHIN AND FOREGOING "EMPLOYMENT AGREEMENT" AND KNOWS AND UNDERSTANDS THE
CONTENTS THEREOF AND THAT HE IS EXECUTING THE SAME AS HIS OWN FREE ACT AND
DEED.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
COMPANY: EMPLOYEE:
DEBITFONE INTERNATIONAL, INC. ANTON SKELL
A Florida corporation
By: /s/ Merritt Jesson /s/ Anton Skell
---------------------------------- ----------------------------------------
Merritt Jesson Anton Skell
its: President/CEO
SATX, INC.
Nevada Corporation
By: /s/ Merritt Jesson
----------------------------------
Merritt Jesson
Its: President/CEO
Initials:
/s/ AS By: /s/ MJ
- -------- --------
Employee Company
AS EMPLOYMENT AGREEMENT
Page 8 of 8
<PAGE> 1
Exhibit 6.7
TERM SHEET
FOR
RESTATEMENT OF PROMISSORY NOTE
DATED
JUNE 21, 1999
Kosti Shirvanian, President of Komar Investments, LLC ("Holder"),
hereby agrees to restate that certain promissory note dated June 21, 1999 for
$400,000.00 executed by Satellite Control Technologies.
1. Principal Amount: $400,000.00
2. Maturity Date: April 12, 2000
3. Interest Rate: 10% per annum from June 21, 1999 until paid
4. All provisions related to Holder's right to additional shares of
common stock of the company are to be deleted.
5. The indebtedness shall be unsecured.
Dated: February 29, 2000
/s/ Kosti Shirvanian
-------------------------
Kosti Shirvanian
<PAGE> 1
EXHIBIT 6.8
SECURED PROMISSORY NOTE
$160,000.00 MAY 14, 1999
FOR VALUE RECEIVED, DebitFone International, Inc., ("Maker"), hereby promises
to pay to Komar Investments, LLC ("Lender"), or order, the principal sum of One
Hundred Sixty Thousand Dollars ($160,000.00), plus interest thereon as
hereinafter provided.
1. TERM OF NOTE
This Promissory Note shall mature and all unpaid principal and all accrued
and unpaid interest shall be due and payable on demand, but in no event shall
it be due before May 13, 2000 ("Maturity Date").
2. INTEREST
The principal amount of this Note shall bear interest from the date of
this Note, until repaid to Lender at a rate per annum equal to twelve percent
(12%).
3. PAYMENTS OF PRINCIPAL AND INTEREST
The principal and all accrued and unpaid interest due and payable pursuant
to this Promissory Note shall be paid on the Maturity Date. Maker shall pay to
Lender monthly interest payments of $1600.00 commencing on June 15, 1999 and
continuing on the 15th day of each month thereafter until the Note is paid. As
indicated below, Maker shall have the right to make principal payments at any
time. However, all payments made by Maker shall first be credited towards
unpaid and accrued interest and the remainder shall be credited towards unpaid
principal.
4. PREPAYMENT
Maker shall have the right at any time, to prepay in whole or in part, the
principal amount of this Note and any unpaid and accrued interest.
5. SECURITY
This Note shall be secured by a UCC-1 covering those certain cellular
telephones to be purchased from JRC from the cash supplied by this loan, the
cash proceeds from the sale of said phones and all other assets owned by Maker.
Maker shall cause said UCC-1 to be filed with the State of Florida. This Note
shall be further secured by the personal guaranty of Merritt Jesson executed
simultaneously herewith.
6. EVENTS OF DEFAULT
This Note, together with all costs incurred in the collection hereof
(including reasonable attorneys' fees), with interest due and accrued hereon,
shall except as otherwise provided, become at once due and payable in full
without notice of default, notice of nonpayment or dishonor, presentment,
demand for payment or protest, or other notices or demands of any kind, all of
which are expressly waived by Maker, subject
<PAGE> 2
Promissory Note
DebitFone International/Komar Investments
Page 2
to applicable law, upon the occurrence of any of the following events of
default ("Event of Default").
a. Failure of Maker to make any payment of principal or interest on this
Note when the same shall become due and payable.
b. The filing of any petition by the Maker under any chapter of the
federal bankruptcy laws or any state law relating to insolvency; or the filing
of any such petition against the Maker, unless such petition and all
proceedings thereunder are dismissed within thirty (30) days from the date of
such filing; or the appointment of a trustee or receiver for all or any assets
within thirty (30) days from the date of such appointment; or an adjudication
that the Maker is insolvent or bankrupt;
c. The insolvency of the Maker, or the execution by the Maker of an
assignment for the benefit of creditors.
The Maker further promises to pay to Lender interest on the amount not so paid
at the rate of 12% per annum from the date when such payment was first due and
not paid.
7. NOTICES
All notices, consents, requests and other communications required or
permitted hereunder shall be in writing and shall be personally delivered or
mailed by certified mail, return receipt requested, postage pre-paid to the
following addresses or to such other address as the parties hereto may
designate in writing
If to Lender:
Komar Investments, LLC
23 Corporate Plaza, Suite 247
Newport Beach, California 92660
If to Maker:
DebitFone International, Inc.
4710 Eisenhower Blvd., Suite E-1
Tampa, Florida 33634
All such notices, requests, consents and other communications shall be deemed
to be properly given if delivered personally or, if sent by mail, three (3)
business days after the same has been deposited in the U.S. Mail addressed and
postage pre-paid as set forth above.
<PAGE> 3
Promissory Note
DebitFone International/Komar Investments
Page 3
8. GOVERNING LAW
This Note is executed under and is to be construed and enforced in
accordance with the laws of the State of California, without regard to
principals of conflict, including matters of construction, validity and
performance. If any provision of this Note shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition by or invalidity, without invalidating the remainder of such
provision or any remaining provisions of this Note.
9. WAIVER
The rights, privileges, powers, and remedies of Lender shall be
cumulative; no single or partial exercise of any of them shall preclude any
further or other exercise of the same or any other of them. No delay or failure
of Lender in exercising any right, power or privilege or remedy hereunder shall
affect such right, power, privilege or remedies, nor shall any single or
partial exercise hereof or any abandonment or discontinuance of steps to
enforce any such right, power, privilege or remedy. Any waiver by Lender of any
default hereunder must be in writing and shall only be effective to the extent
set forth in writing.
10. ATTORNEYS' FEES
In the event of any dispute with respect to this Note, the prevailing
party in any litigation or arbitration shall be entitled to its reasonable
attorneys' fees and other costs and expenses incurred in resolving such dispute.
11. ASSIGNMENT
This Note is assignable without the consent of Maker and the successors
and assigns of Lender shall have all the rights inuring to Lender under this
Note.
IN WITNESS WHEREOF, Maker has caused this Note to be executed on the date first
above written.
"Maker"
DebitFone International, Inc.
By: /s/ Merritt Jesson
--------------------------------------
Merritt Jesson, President
<PAGE> 4
JANUARY 12, 2000
VIA FACSIMILE TRANSMISSION 511 943 7760
Mr. Robert White, CPA
White and Associates
Cincinnati, Ohio
Re: SATX, Inc.
Dear Mr. White:
This letter will serve to memoralize and confirm the discussions we had
this date with Mr. Kosti Shirvanian regarding modifying the terms of certain
loans SATX, Inc. has with Mr. Shirvanian.
LOAN FOR $100,000.00 DATED MAY 20, 1997 AND MODIFIED ON MAY 22, 1998.
Interest on this promissory note shall begin to accrue on January 1, 2000.
Section 5.1 is modified to permit conversion of the indebtedness only after
April 12, 2000. Section 5.3 is again modified and the conversion rate shall now
be $.10 per share. However, if the promissory note is not paid on or before
April 12, 2000, and remains unpaid beyond July 12, 2000 then the conversion
rate shall be $.01 per share.
LOAN FOR $160,000.00 DATED MAY 14, 1999. The interest on this
promissory note shall commence on January 1, 2000. The promissory note shall
not be due until January 12, 2001.
LOAN FOR $400,000.00 DATED JUNE 21, 1999. The interest on this
promissory note shall commence on January 1, 2000 and the promissory note shall
mature on January 12, 2001. Mr. Shirvanian shall forego the conversion
provision with respect to this note if it is paid in full prior to April 12,
2000.
Your truly,
Arnold J. Rothlisberger
cc: Kosti Shirvanian
Khoren Shaganian
Merritt Jesson
<PAGE> 1
Exhibit 6.9
TERM SHEET
FOR
RESTATEMENT OF PROMISSORY NOTE
DATED
JUNE 20, 1997
Kosti Shirvanian, President of the Shirvanian Family Investment Trust
("Holder"), hereby agrees to restate that certain promissory note dated June 20,
1997 and modified on May 22, 1998, for $100,000.00 executed by Satellite Control
Technologies.
1. Principal Amount: $100,000.00
2. Maturity Date: April 12, 2000
3. Interest Rate: 10% per annum from June 20, 1997 until paid
4. All provisions related to Holder's right convert all or a portion
of the indebtedness for shares of common stock of the company are
to be deleted.
5. The indebtedness shall be unsecured.
Dated: March 22, 2000
/s/ Kosti Shirvanian
-------------------------
Kosti Shirvanian,
Trustee
<PAGE> 1
Exhibit 6.10
TERM SHEET
FOR
RESTATEMENT OF PROMISSORY NOTE
DATED
JUNE 20, 1997
John Hartunian, Trustee of the Hartunian Family Trust ("Holder"),
hereby agrees to restate that certain promissory note dated June 20, 1997 and
modified on May 22, 1998, for $100,000.00 executed by Satellite Control
Technologies.
1. Principal Amount: $100,000.00
2. Maturity Date: April 12, 2000
3. Interest Rate: 10% per annum from June 20, 1997 until paid
4. All provisions related to Holder's right convert all or a portion
of the indebtedness for shares of common stock of the company are
to be deleted.
5. The indebtedness shall be unsecured.
Dated: March 22, 2000
/s/ John Hartunian
-------------------------
John Hartunian,
Trustee
<PAGE> 1
Exhibit 8.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is dated this 28th day of May 1999,
and is made by and among Merritt Jesson, a married man residing in the State of
Florida ("Seller") and Satellite Control Technologies Inc., a Nevada corporation
("Buyer").
The Seller owns ten thousand (10,000) shares of the common stock of DebitFone
International, Inc., a Florida corporation ("DebitFone") which constitutes all
of the issued and outstanding capital stock of DebitFone ("Stock").
The Seller desires to sell and the Buyer desires to purchase the Stock owned by
Seller pursuant to the terms of this Agreement as hereinafter set forth.
Purchase and Sale On the Closing Date, Seller shall sell, issue, transfer,
deliver and convey to Buyer the Stock, and Buyer shall purchase the Stock in
exchange for 2,900,000 unregistered shares of the common stock of Buyer and
100,000 registered and free trading shares of the Buyer. At the Closing Date,
the Seller shall deliver the share certificate(s) representing ownership of the
Stock to Buyer free and clear of all liens and encumbrances issued in the name
of Buyer. Simultaneously, Buyer shall deliver a share certificate(s)
representing ownership of 2,900,000 unregistered shares of Buyer's common stock
and 100,000 shares of registered and free trading share issued in the name of
Seller.
Closing Date. This transaction shall close on June 30, 1990 at 12:00 p.m,
(Pacific Daylight Time) in the offices of the Buyer or on such other date, time
and place agreed to by the parties in writing ("Closing Date").
Registration Rights. Buyer agrees that the unregistered stock issued to Seller
shall have "piggyback" registration rights meaning that if Buyer initiates a
procedure to register shares of its stock pursuant to a secondary offering or
other type of registration procedure prior to June 30, 2001, it shall include
Seller's stock in the registration along with the other shares.
Appointment to the Board of Directors. Immediately upon the Closing Date, the
Seller being the only member of the Board of Directors of DebitFone, shall
appoint Khoren Shaginian and Dennis Katangian, or such other individuals
selected by Buyer prior to the Closing Date, to the Board of Directors of
DebitFone.
Representations and Warranties of Seller. Seller, in his individual capacity and
as president of DebitFone hereby represents and warrants to the Buyer, as of the
Closing Date that:
<PAGE> 2
1. DebitFone is a "S" corporation duly organized, validly existing and
in good standing under the laws of the State of Florida, and has all requisite
corporate power and authority to conduct its business as now operated. Further,
DebitFone is duly qualified to do business in each jurisdiction in which the
nature of its business or character of its properties makes qualification
necessary.
2. DebitFone is authorized to issue ten thousand (10,000) shares of
common stock, of which ten thousand (10,000) shares are issued and outstanding.
At the Closing Date, there will be no other classes of stock authorized or
outstanding. All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof. Further, there are no outstanding
options, warrants and/or agreements obligating Seller to issue stock to any
individual or entity.
3. Seller has caused to be delivered to Buyer certain financial
statements for calendar years 1996, 1997 and 1998 and a balance sheet dated
April 30, 1999 which have been prepared by DebitFone's Certified Public
Accountant. The financial statements and balance sheet are in accordance with
the books and records of DebitFone, prepared in accordance with generally
accepted accounting principles consistently applied, are in all material
respects true, correct and complete and reflect all activities of DebitFone as
of the dates thereof.
4. DebitFone shall have arranged for the cancellation of any and all
debt owing to the Seller by DebitFone. Further, all obligations and indebtedness
owed by DebitFone to any and all other persons or entities as of May 31, 1999
shall have been paid. However, Seller shall be entitled to the deposit placed as
security on that certain lease entered into by DebitFone for the premises
located at 4710 Eisenhower Blvd, Suite E-1, Tampa, Florida at the expiration of
said lease.
5. As of the Closing Date, all of the assets of DebitFone, be they
fixed assets, personable property or real property shall be free and clear of
all encumbrances.
6. As of the Closing Date, DebitFone shall have no employees, employee
benefit plan or any labor or employment agreements except for that certain
agreement entered into by DebitFone to lease employees.
7. There is no suit action or legal, administrative, arbitration or
other proceeding pending, filed or initiated by or against Seller or DebitFone
or pending or threatened against Seller or DebitFone.
8. The business and operation of DebitFone have been and are being
conducted without violation of or in less than full compliance with all
applicable laws, ordinances, rules and regulations of all authorities, violation
of which, individually or in the aggregate, would materially and adversely
affect the business of DebitFone. The Seller and DebitFone
<PAGE> 3
have received no notice of any violation of any such law, ordinance, rule or
regulation from any governmental authority.
9. The current software to install codes ("airtime") for use in
DebitFone's products is properly copyrighted in accordance with law and is in
the name of DebitFone.
10. DebitFone has the means, rights and information required to have
manufactured, process, sell, offer for sale and use the items and perform the
services as presently being manufactured, processed, offered for sale, sold or
used or performed by DebitFone, including, without limitation the successful
operation of the DebitFone Management System; the addition of time to a user's
DebitFone by means of a credit card or by means of a prepaid cellular time card
and the integration of the DebitFone system into the carrier network obtained
for use by DebitFone.
11. The Seller and DebitFone have duly and timely filed all federal,
state and local tax returns required to be filed since the inception of
DebitFone and all such returns are complete and correct in all respects.
12. Seller will provide to Buyer a complete list showing the name of
each bank or other financial institution in which DebitFone has on account or
safety deposit box together with a list of all persons authorized to draw
thereon or have access thereto.
Survival of Representations. The representations and warranties of the Seller
contained in this Agreement shall survive the consummation of the transaction
contemplated herein and any examination on behalf of the Buyer in accordance
with the terms of this Agreement.
Indemnification. The Seller shall indemnify the Buyer in respect of all
liabilities of DebitFone of any nature, whether accrued, absolute, contingent,
or otherwise existing at the Closing Date, to the extent not reflected or
reserved against in DebitFone's balance sheet of that date including, without
limitation, any tax liabilities to the extent not so reflected or reserved
against, accrued in respect of, or measured by DebitFone's income up to and
including May 31, 1999.
Conditions Prior to Closing. The obligation of Buyer to consummate the
transaction set forth herein is expressly subject to satisfaction on or prior
to the Closing Date of each and every of the following conditions, any of which
may be waived in writing by the Buyer.
1. All representations and warranties by the Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date.
2. Prior to the Closing Date, Buyer shall conduct a customary due
diligence investigation and in its sole discretion elect to go forward with the
transaction after the completion of the investigation.
<PAGE> 4
3. There shall have been no material change in the financial condition,
business, prospects, assets, properties, results of operations or capitalization
of DebitFone from that reflected in the financial statements provided by Seller
to Buyer.
Severability. If any term, provision, covenant or condition of this Agreement is
held by a court of competent jurisdiction to be invalid or unenforceable, then
the remainder of the provisions shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
Waiver. Waiver of any default or breach of this Agreement or misrepresentation
of any warranty, representation, covenant or obligation contained herein shall
not be construed as a waiver of any subsequent breach, default or
misrepresentation.
Amendment. This Agreement cannot be modified or amended except by a writing
signed by all the parties hereto including the spouse of the Seller.
Counterparts. This Agreement may be executed in one or more counterparts, all of
which, together shall constitute a single agreement.
Attorneys' Fees. If any party hereto, including the spouse of Seller, bring an
action as a result of any breach by any other party of its warranties or
representation or such party's failure to fulfill or perform any of its
covenants or obligations hereunder, then in such event, the prevailing party in
any such action shall be entitled to its reasonable attorneys' fees in addition
to any other relief to which it may be entitled.
Successors. This Agreement shall be binding upon, and inure to the benefit of
the respective legal representatives, successors, and assigns of the parties.
Further Assistance. The parties hereto, including the spouse of Seller, hereby
agree to execute and deliver all such documents and provide such information and
to take any action necessary and required in order to effectuate the transaction
contemplated by this agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date
first above written.
(Signature page and consent follows on next page)
<PAGE> 5
SELLER
/s/ Merritt Jesson
- ----------------------------------------------------------
Merritt Jesson, individually and as President of DebitFone
SS# ###-##-####
CONSENT OF SPOUSE
I, Jeri Jesson, am the spouse of the Seller, Merritt Jesson. The shares of
DebitFone to be sold pursuant to the terms of this Agreement constitute
community property of our marital estate. I have read the terms of this
Agreement and consent to the sale of the stock to Seller on the terms and
conditions set forth herein.
/s/ Jeri Jesson
-------------------------
Jeri Jesson
SS# ###-##-####
BUYER
Satellite Control Technologies, Inc.
/s/ Kosti Shirvanian /s/ John Hartumian
- --------------------------------- -------------------------------
Kosti Shirvanian, Shareholder John Hartumian, Shareholder
/s/ Khoren Sheginian
--------------------------
Khoren Sheginian, Director
Khoren,
I do have issues with this contract. I will discuss them the week of 7-6-99, but
signed this agreement for everyone's comfort level.
/s/ Merritt Jesson
--------------------------
Merritt Jesson
<PAGE> 1
EXHIBIT 8.2
LETTER OF INTENT
This Agreement, effective 15 May, 1999, is between Digital Telecommunications,
Inc., with its headquarters in Oklahoma City, Oklahoma and major operation in
Antananarivo, Madagascar, including Digital Telecommunications, Inc.,
S.A.R.L.,, a limited Madagascar corporation with its headquarters in
Antananarivo, Madagascar (both entities hereafter referred to jointly as
"DIGITEL"), Satellite Control Technologies, Inc. ("SATX"), with its
headquarters in Newport Beach, California, and DebitFone International, Inc.
(hereafter referred to as "DFI"), with its headquarters and operations in
Tampa, Florida. This Agreement is created due to the Parties' mutual interest
in the development and expansion of the Madagascar Telecom Project currently
licensed by the Madagascar Government to DIGITEL, SATX's access to private and
public sourced funds, DIGITEL's business in the international
telecommunications market, and DIGITEL's requirement to raise funds to support
the furtherance of Telecom expansion in Madagascar.
Whereas DIGITEL has the necessary operating licenses and permits in Madagascar,
and has initiated service within the country, but needs investor support to
expand its services, whereas DFI has a prepaid cellular product with potential
application in Madagascar, and whereas SATX has sources of funds, and the
desire to participate in the international telecommunications marketplace, the
Parties hereby commit to attempt the creation of a joint relationship. It is
anticipated that SATX will become the principal investor in DIGITEL in exchange
for becoming the majority shareholder of DIGITEL and merging it into the SATX
public company. The parameters and details of this acquisition/merger will be
defined and mutually agreed during the next sixty (60) days set aside for all
Parties' due diligence and the development of mutually agreeable terms and
conditions for the final transaction at closing of this Agreement.
In recognition of DIGITEL's immediate need for interim funding during this
review and formalization process, the Parties agree that SATX will provide the
following DIGITEL operating funds. All of the funding generated by SATX and
received by DIGITEL will be covered by the execution of a Promissory Note to be
developed by the Parties during the next thirty (30) working days to ensure
repayment of the funds in the event this Agreement does not mature to a final
closing. The thirty (30) days is provided for the Parties to conduct the
minimum meetings and investigations as may be needed to be comfortable with the
business opportunity and the funding profile outlined herein.
Interim funds requirements for DIGITEL's operating use in satisfying short-term
accounts payable and normal routine business expenses is as follows:
o Due upon LOI execution $100,000
o Due 30 days after LOI execution 100,000
-------
$200,000
If during the 60-day term of this Agreement, or during any extension thereto,
any of the Parties decide to abandon the pursuit of the business combination
proposed herein, this Agreement can be terminated without cause. Repayment of
all funds, issued by SATX to DIGITEL, caused by such an event, may be in cash
or DIGITEL Common Stock at the mutual agreement of the Parties.
<PAGE> 2
Page-2 of -2-, Letter of Intent
It is understood by the Parties that funding in the amount of $200,000 is
considered to be a minimal level to create nominal levels of service in
Antananarivo and support in the United States during this initial due-diligence
period. A plan more in the long-term interest of both Paries would require the
infusion of an additional $250,000 within forty-five (45) days of the date of
this Agreement in order to allow some moderate level of interim expansion to
attract more business across DIGITEL's system. It is agreed by the Parties to
jointly review the risks and opportunities associated with increased funding
and mutually agree to a course of action.
It is also understood by the Parties that DIGITEL's current estimate of the
initial firm contractual funding commitment needed from an investor to
incentivize DIGITEL to relinquish a major equity interest in the Company and to
cover an 18-24 month commencement of the buildout of the Madagascar Project is
$8,500,000. The utilization of funds is defined in DIGITEL's current Business
Plan which will be available during the due-diligence process.
This Letter of Intent Agreement is the entire and only understanding between
the Parties. It is effective the date first entered above, and remains in
effect for the sixty-day period defined herein. The Agreement can be extended
with the mutual agreement of the Parties in writing as an Addendum to this LOI.
It is anticipated by the Parties that the Agreement will be replaced by a
formal and complete contract covering the desired business combination.
This Letter of Intent is a non-binding Agreement between the Parties. However,
in the event of misunderstandings any required legal remedies will be governed
by the laws of the State of Florida.
This Letter of Intent is approved and enacted as defined herein by the Parties.
DIGITEL Satellite Control Technologies, Inc.
By: /s/ By: /s/ Merritt Jesson
------------------------ ---------------------------------
Its: CEO Its: (Pending) CEO
----------------------- --------------------------------
DEBITFONE International, Inc.
By: /s/ Merritt Jesson
------------------------
Its: President/CEO
-----------------------
<PAGE> 1
Exhibit 8.3
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") is entered into on the 28th day of
October, 1999, by and between SATX, Inc. ("SATX"), a public Nevada corporation
with its principal place of business in Tampa, Florida and STOVEACT, Inc.
("STOVEACT"), a private California corporation with its principal places of
business in Greater Los Angeles, California.
WHEREAS, SATX is a telecommunications development, manufacturing and marketing
company with new and exclusive products being developed and introduced to
provide both prepaid cellular products and GPS-Paging location and tracking
devices for a wide variety of applications, and also holds existing patents
covering one and two-way paging signals used to activate remote devices, and
also desires to expand its market and business base; and
WHEREAS, Stoveact is a development, distribution and customer support company
with a broadening array of product applications for the anti-vehicle-theft
industry, and desires to expand the products' functionality to include GPS
tracking and monitoring in addition to other vehicle management functions;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants set
forth herein, and for other good, sufficient and valuable consideration, the
receipt of which is hereby specifically acknowledged, the Parties hereto agree
to provide their best efforts in a timely fashion to develop and execute a final
and formal agreement of technology cooperation and business combination to their
mutual best interests as follows:
SATX desires to make available to STOVEACT its patented technology of remote
signal activation via paging transmission in addition to its GPS-based tracking
products; and
STOVEACT desires to make available to SATX its technology and products
introduced for vehicle theft protection; and
BOTH PARTIES desire to define and develop a mutually agreeable business
combination which best benefits their stockholders and employees, and which
provides STOVEACT access to SATX's existing public-trading stock marketplace;
and
BOTH PARTIES desire to optimize the synergism that currently exists within their
developed business strategies and plans; and
BOTH PARTIES desire to cooperate in the common definition and maturation of
their respective product lines in addition to joint applications within the
marketplace; therefore,
IT IS INTENDED that the Parties mutually agree to a stock purchase action
resulting in the existing shareholders of STOVEACT becoming common shareholders
in SATX at an equitable exchange rate to be developed during the common due
diligence process to take place over the next 60 days, recognizing the assets,
obligations, benefits and advantages that each brings to this business
combination; and
<PAGE> 2
SATX-STOVEACT MOU, Page -2- of -2-
IT IS INTENDED that the resulting combined operation be organized to best take
advantage of the management expertise and experience of the individual entities,
including the consolidation of the Paging and GPS-based product lines within the
existing asset and management structure of STOVEACT in Los Angeles.
AS SUCH, the Parties agree to give their best and timely effort during the next
sixty (60) days to create a complete and formal agreement to be implemented
covering the intentions defined herein. As a part of that agreement, the Parties
will mutually agree to the financial parameters surrounding this intended
business combination.
IN ADDITION, the Parties agree to be bound by a separately initiated
Non-Disclosure Agreement to be issued in parallel with this MOU due to the very
sensitive and proprietary nature of the data to be shared during the due
diligence process.
IN WITNESS WHEREOF, the undersigned Parties hereto have exercised this
Memorandum of Understanding to be effective on the date first set forth above.
SATX, INC.
By: /s/ Merritt Jesson
- ---------------------------------
Name: Merritt Jesson
- ---------------------------------
Title: President & CEO
- ---------------------------------
STOVEACT, INC.
By: /s/ Joe Escarevo
Name: Joe Escarevo
- ---------------------------------
Title: President
- ---------------------------------
<PAGE> 3
MEMORANDUM OF UNDERSTANDING
&
STOCK PURCHASE AGREEMENT
SATX, Inc. (previously and hereinafter referred to as "Buyer"), and STOVEACT,
Inc. (previously and hereinafter referred to as "Seller") entered into a
Memorandum of Understanding on the 28th day of October, 1999 and have been
considering a draft Stock Purchase Agreement dated the 17th day of November,
1999 developed to consummate a business combination in the best interests of
both parties. Although the MOU had no official expiration date, its content
assumed closure within sixty (60) days. The Stock Purchase Agreement contained a
specific closing date of 29 December, 1999. In both cases an extension of time
requires mutual consent in writing.
Since it remains in the mutual best interests of the parties to finalize the
planned business combination, and since additional discovery is required in
order to complete the transaction, the parties, by their respective signatures
below, hereto agree to extend the effective dates of expiration on both
documents referred to herein through the 31st day of January, 2000. In the
interim the parties will provide their best efforts to conduct the necessary due
diligence and define the necessary contractual terms and conditions required to
satisfactorily finalize the intended business combination.
No terms of the MOU or the draft SPA, except for the expiration dates, are
revised or effected by this extension. Any further modifications or amendments
to either document referenced herein must continue to be accomplished in writing
and approved by both parties.
IN WITNESS WHEREOF, the parties have duly executed this extension agreement
effective 3 January, 2000.
BUYER: By: /s/ R. W. Ellis
---------------------------------
Name: R. W. Ellis
---------------------------------
Title: COO/CFO
---------------------------------
SELLER: By: /s/ Steven Strauss
---------------------------------
Name: Steven Strauss
---------------------------------
Title: C.O.O.
---------------------------------
<PAGE> 1
Exhibit 8.4
SUPPLEMENTAL AGREEMENT
SATX, INC. & PARADIGM MANUFACTURING, INC.
This Supplemental Agreement, entered into on this 3rd day of March, 2000, by
SATX, Inc. ("SATX"), located at 4710 Eisenhower Blvd., Tampa, Florida, and
Paradigm Manufacturing, Inc. ("PMI"), located at 4450 East Adamo Drive, Tampa,
Florida, documents the combined agreement between the parties regarding
Paradigm's Promissory Note to SATX dated 16 February, 2000, closure on the Stock
Purchase Agreement between the parties dated 15 October, 1999, and includes the
parties' concurrence to finish the development and tooling of the Prepaid Phone
Project. Actions required regarding GPS-Tracker development will be formulated
at a later date, under separate agreement.
The Promissory Note, executed and attached hereto as Exhibit A defines the
specific parameters for the repayment by Paradigm to SATX for advances made
during the June, 1999 to February, 2000 time period as documented by the Payment
History schedule attached hereto as Exhibit B. The Promissory Note includes the
terms and conditions under which the repayment is to be made in settlement, in
lieu of closure, of the 1999 Stock Purchase Agreement between the parties,
including the personal guarantees for the Note by the PMI principals, i.e.,
current directors and officers.
Exhibit B also displays monies spent by PMI in an effort to develop exclusively
for SATX, to SATX supplied specifications, an intelligent prepaid cellular phone
using Motorola's StarTac cellular product, and Paradigm's three-wire bus license
from Motorola, as a baseline. It is agreed by the parties that $120,000 in
previously furnished SATX funding was applied by PMI to the phone development
project authorized by SATX. It is further agreed by the parties that the phone
project shall be completed not later than 15 May, 2000 for an additional cost in
the total amount of $82,000 to be used by PMI to complete all necessary
development and production readiness labor and to acquire the necessary parts
and production tooling to complete operational test units and have the resultant
accepted product ready to enter production by 15 May, 2000. It is understood and
agreed between the parties that PMI's failure to complete the prepaid cellular
project to SATX's satisfaction consistent with prior and reasonable.
understandings between the parties, summarized herein as Exhibit C, by the date
agreed within this Agreement will constitute breach under the Promissory Note
and default under the terms of the Note. As such, all unpaid principal and
accrued interest will become immediately due and payable in full.
It is agreed between the parties that the baseline for the development of the
Motorola-based prepaid StarTac is the 3-wire bus license from Motorola held by
Paradigm subsidiary, Creative Engineering. As such, any portion of the
design/software/firmware (Intellectual Property) that includes CONTROLS to
directly operate a Motorola cellular transceiver is the sole property of
Paradigm Manufacturing, Inc., and its subsidiary, Creative Engineering Concepts,
as required under its bus license agreement with Motorola. SATX does not have
the rights to alter or decompile the software, and cannot modify the hardware
design, including values that could cause a change in amplitude of the signal,
or how interface protocol is handled. Should SATX alter, copy, or decompile
software, or change the interface in any way, without the express written
consent of Motorola, such action would negate the right to use the Motorola
cellular transceiver as modified for this application. Any such infraction would
require Paradigm, under its license, to immediately notify Motorola of the
breach.
All application specific features, including plastics, tooling, and other
specifically designed components for the prepaid application shall remain the
sole property of SATX, as full payment for the required work has been made via
the reduced repayment schedule defined under Exhibit B to this document. It is
also agreed between the parties that the "debit" portion of the software,
created in concert with DebitFone's specifications, previously issued to
Paradigm, remains the sole property of SATX, Inc., and DebitFone International,
Inc., and disclosure of any of its contents to any outside party is prohibited.
<PAGE> 2
Page-2-of-2-, Supplemental Agreement
In consideration for the remaining debit phone work to be funded by SATX, it is
agreed between the parties that such funding will be provided to Paradigm via
reduced payments to SATX from PMI necessary in satisfaction of the Promissory
Note. As such, the gross principal amount due for repayment to SATX in the
amount of $338,491 is reduced by $82,000 for the fixed price of the remaining
phone project work to yield a net revised repayment to SATX by PMI in the
principal amount of $256,491 plus interest accrued per the terms of the
Promissory Note. In reflection of said reduction the schedule for the net cash
principal repayment to SATX is as follows (replaces the Promissory Note
repayment schedule):
$ 50,000.00 by 1 April, 2000
50,000.00 by 1 May, 2000
55,000.00 by 1 July, 2000
55,000.00 by 1 September, 2000
46,491.00 by 1 November, 2000
------------
Total Net Pay $256,491.00 + accrued interest (to be included in the November,
2000 payment)
In the event of a default in payment to the above schedule, the default
provisions of the Promissory Note become immediately effective.
It is also understood by the parties that, upon completion of the prepaid
cellular project, all drawings, data, and source code representing the project
become the property of SATX, and a full documentation package, suitable for
reprocurement purposes, will be immediately delivered to SATX except as
constrained by the Motorola 3-Wire Bus License defined herein. It is further
understood that, in the event of default in payments or phone project scheduled
completion, all existing drawings, data packages, and source code listings at
the time of default will be immediately delivered to SATX by PMI.
It is also agreed that, upon satisfactory completion of the elements of this
Supplemental Agreement and its Exhibits, the Stock Purchase Agreement dated 15
October, 1999 will be terminated in full. The parties hereto, each to the other,
agree to the termination of the 15 October, 1999 Agreement, and of no force and
effect, upon completion of the tasks defined within tins Supplemental Agreement.
The parties also agree that they have no further obligations or responsibilities
to each other upon completion of the terms of this Agreement, and that they each
agree to release and hold harmless the other party from any liability associated
with the 15 October, 1999 Agreement provisions once the terms are fulfilled. The
parties also attest and warrant that they are duly authorized to execute this
document in its entirety,
This document and the related activity therein are governed and construed in
accordance with the laws of the State of Florida. The agreement cannot be
modified unless signed by both parties. In the event any term, provision,
covenant or condition of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, the remainder of the provisions
remain in full force and effect, as written.
ACCEPTED AND AGREED effective on the date first written above.
SATX, INC. PARADIGM MANUFACTURING, INC.
By: /s/ Merritt Jesson By: /s/ Steve Smith
--------------------------- --------------------------
Merritt Jesson Steve Smith
Its: CEO & President Its:
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EXHIBIT 10
ROBERT L. WHITE & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANT
988 OHIO PIKE, SUITE 2
CINCINNATI, OHIO 45245
- --------------------------------------------------------------------------------
TELEPHONE (513) 943-1040
FAX (513) 943-7760
CONSENT OF INDEPENDENT AUDITOR
I hereby consent to the use in the Form 10K-SB of my
report dated March 20, 2000.
/s/ ROBERT L. WHITE
- -----------------------------
Robert L. White
Certified Public Accountant
Cincinnati, Ohio
March 24, 2000
<PAGE> 1
Exhibit 12
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a "safe harbor" for "forward-looking statements" to encourage
companies to provide prospective information, so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the forward-looking statement(s).
SATX, Inc. (the "Company" or "SATX") desires to take advantage of the safe
harbor provisions of the Act.
Except for historical information, the Company's Form 10-SB, to which
this exhibit is appended, may contain forward-looking statements within the
meaning of the Act. In addition, representatives of the Company, from time to
time, participate in speeches and calls with market analysts, conferences with
investors and potential investors in the Company's securities, and other
meetings and conferences. Some of the information presented in such speeches,
calls, meetings and conferences may be forward-looking within the meaning of
the Act.
It is not reasonably possible to itemize all of the many factors and
specific events that could affect the Company and/or the industries in which
the Company operates. In some cases, information regarding certain important
factors that could cause actual results to differ materially from those
projected, forecasted, estimated, budgeted or otherwise expressed in
forward-looking statements made by or on behalf of the Company may appear or be
otherwise conveyed together with such statements. The following additional
factors (in addition to other possible factors not listed) could affect the
Company's actual results and cause such results to differ materially from those
projected, forecasted, estimated, budgeted or otherwise expressed in
forward-looking statements made by or on behalf of the Company:
SHORT COMPANY HISTORY
Both SATX and DebitFone business elements have essentially been in a
developmental stage, and are now in a position to emerge into product
marketing. The AlphaTrack locating and tracking portion of the business had been
primarily in a stagnate mode for more than a year until the Summer of 1999 due
to lack of final product development and needed functionality improvement. New
Management and funding sources since that time have re-activated the maturation
process in order to reenter the marketplace. DebitFone has been marketing only
limited numbers of product while developing a next-generation prepaid
intelligent cell phone and enhancing the management and control system that is
the heart of the process to ensure customer support and service. As such,
today's company lacks a history of proven product performance.
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MARKET UNCERTAINTY
The decision has been made to market the cellular handset primarily
through vending machines custom designed for the product. That sales tool has
been created and is in initial production. However, none of the core product
has a history of performance in marketplace; thus, there is no proven
acceptance by the consumer at this time. Significant market research and
feedback suggest that the defined Company programs for all products are created
consistent with consumer demand, but there is no absolute market acceptance to
prove that SATX and DebitFone are correct.
ECONOMICS
The goods and services that the Company provides, and intends to
provide, are not economic essentials to the buyer. They represent discretionary
purchases and, as such, their utilization is more sensitive to economic and
market conditions. Since the Company has no control over such conditions, a
significant downtown would likely affect resultant revenues during such a
period.
COMPETITION
Prepaid Cellular
The SATX offerings must offset the carrier-based switched
solutions currently in the market and accompanied by the massive market
exposure and pressure that the carriers can exert. However, it is generally
accepted within the prepaid cellular industry that the switch-based phones in
these offerings are much less desired by the end-user. Typically, they are
limited to calls placed within the phone's home area (i.e., no reaming), and
much of the time the cost of calls is higher. In addition, there are presently
three-to-five reasonably effective competitors in the "intelligent phone"
market where DebitFone competes. No one has a dominant share of the market
today, all tend to work reasonably well, and, clearly, the available market is
so large that all should be able to attain a satisfactory market share, even
without considering the vast potential international market in developing
countries. It is estimated that in the USA the market for prepaid cellular
exceeds thirty million potential subscribers at this time, and it is also
estimated by various industry groups that prepaid segments represent the
largest portion in cellular during the next two or three years.
Tracking Systems
Some products, although less functional and less flexible
than those being created by SATX, are already in the marketplace for vehicle
and cargo "tracking," and one product specializing in stolen auto recovery is
very well known as has a sizable user base in selected regions of introduction.
However, none have a strong market penetration, and none can offer the breadth
of functionality of SATX products. Vehicle and cargo solutions available use
satellite, or cellular, or paging signals for communications between the source
and the unit being located. In the case of paging solutions, the one deemed
most affordable and flexible, the Company has existing patents covering one and
two-way paging. Because of major problems around the world with auto theft and
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cargo theft or spoilage, the market for solutions is considered massive. The
technical solution now existent for two-way paging should make it the ideal
economic solution for most applications, and SATX does currently hold a US
Patent on that process.
THIRD-PARTY PROVIDERS
At least initially the Company must rely upon third-party service
providers for both cellular phone and tracking system elements. The basic
access and time renewal service for cell phones comes from independent
companies which DebitFone then resells. The paging service used in tracking
systems comes from the independent paging companies. Even though contracts
exist, a service provider termination or default would require immediate
development of new sources and contracts in order to continue uninterrupted
service to users.
TECHNOLOGY
The technologies associated with the telecommunications industry are
very rapidly changing, and product adaptation requires constant assessment and
preparation for a new directions and new offerings for both product lines.
Company solutions must stay consistent with the leading-edge technology and
with the offerings of the leading competitors. Although the Company has planned
for possible future events and products, the array of possibilities within the
industry leaves much to change. Reaction and realignment will be initiated, if,
and when, a need arises.
BUSINESS DEVELOPMENT
The Company intends to continue to pursue an aggressive growth
strategy, which will include significant marketing, advertising, promotional
programs and public relations activities, which will require significant
expenditures. These expenditures may not result in a sufficient increase in
revenues to cover such advertising and promotions expenses.
RISKS ASSOCIATED WITH ACQUISITIONS
In addition to the recent acquisition of DebitFone, the Company
intends to seek investments in complementary companies, products or
technologies. If we buy a company, we could have difficulty in assimilating
that company's personnel and operations. In addition, the key personnel of an
acquired company may decide not to work for us. If we make other types of
acquisitions, we could have difficulty in assimilating the acquired technology
or products into our operations. These difficulties could disrupt our ongoing
business, distract our management and employees and increase our expenses. In
addition, future acquisitions could have a negative impact on our business,
financial condition and results of operations. Furthermore, we may have to
incur debt or issue equity securities to pay for any future acquisition, the
issuance of which would be dilutive to our existing stockholders.
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