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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-15413
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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Nevada 95-3480640
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
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601 Cleveland Street, Suite 930
Clearwater, Florida 33755
(727) 466-9898
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock
$.001 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
On January 10, 2000, the aggregate market value of Progressive
Telecommunications Corporation, common stock held by non-affiliates was
approximately $23,976,042, based on a price per share of common stock of $4.31.
On January 10, 2000, 9,014,467 shares of the registrant's Common Stock were
outstanding.
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TABLE OF CONTENTS
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PART I
Item 1. Business ........................................................................... 3
Item 2. Properties ......................................................................... 22
Item 3. Legal Proceedings .................................................................. 23
Item 4. Submission of Matters to a Vote of Security Holders ................................ 23
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters .............. 24
Item 6. Selected Financial Data ............................................................ 26
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 28
Item 8. Financial Statements and Supplementary Data ........................................ 35
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 35
PART III
Item 10. Directors and Executive Officers of the Registrant ................................ 37
Item 11. Executive Compensation ............................................................ 38
Item 12. Security Ownership of Certain Beneficial Owners and Management .................... 40
Item 13. Certain Relationships and Related Transactions .................................... 40
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8- K ................. 42
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Note Concerning Forward-Looking Information
Some of the information in this report contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may," "will," "expect," "anticipate,"
"believe," "estimate" and "continue" or similar words. You should read
statements that contain these words carefully because they: (1) discuss our
future expectations; (2) contain projections of our future results of operations
or of our financial condition; or (3) state other "forward- looking"
information. We believe that it is important to communicate our future
expectations to our investors. However, there may be events in the future that
we have not accurately predicted or over which we have no control. These events
may include future operating results, our efforts to address Year 2000 issues
and potential competition, among other things. Cautionary language in this
report provides examples of risks, uncertainties and events that may cause our
actual results to differ materially from the expectations we describe in our
forward-looking statements. You should be aware that the occurrence of the
events described in this report could have a material adverse effect on our
business, operating results and financial condition.
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PART I
ITEM 1. BUSINESS
INTRODUCTION
Progressive Telecommunications Corporation ("Progressive" or the
"Company"), a Nevada corporation, is a fully-integrated provider of advanced
telecommunications, communications management and e-commerce services to
businesses. The Company plans to capitalize upon trends in technology
convergence, marketplace preference for single source suppliers and the advent
of e-commerce in several ways. First, it manages global telecommunications
services capable of transporting all types of voice, data and wireless
communications. This includes all aspects of network planning and management,
operation of switches, transmission capacity, enhanced service delivery
platforms, and billing systems. Second, it offers, through it's OPUS division, a
communications and messaging management service using human voice commands to
manage voice, fax and e-mail messaging and communications from North America.
Finally, the Company plans to offer an array of e-commerce applications enabling
businesses of all kinds to utilize the Internet and World Wide Web. Combined,
these capabilities enable Progressive to provide services in two areas to
growing companies: communications and e-commerce.
More specifically, Progressive's business strategy revolves around
four areas: Internet directory that targets small to medium businesses through
its subsidiary, The Yellow Page Directory.Com Corp. ("Yellow Page"); business
to business e-commerce through its subsidiary, BusinessMall.Com, Inc.;
traditional local, long distance and international telephone services,
including calling cards, wireless services and paging with integrated access
and data networks through its subsidiary, StormTel, Inc.; and Computer
Telephony (a unified messaging, voice activated virtual assistant) through its
subsidiary, OPUS(TM) Assistant, Inc.
On July 30, 1999 Progressive Telecommunications Corporation, a Florida
corporation ("Progressive Florida") and Marquee Entertainment, Inc. ("Marquee")
completed the first part of a transaction whereby Marquee acquired in excess of
82% of the issued and outstanding shares of Progressive Florida. As a condition
to consummating the transaction, Marquee amended its Certificate of
Incorporation so as to increase its authorized common shares from 25,000,000 to
50,000,000, authorized a 1 for 5 reverse stock split, changed its name to
Progressive Telecommunications Corporation and reduced its par value from $.04
to $.001.
As a direct result of the above described transaction, Harold Brown,
Harvey Seslowsky and David DeShay resigned as officers and directors of the
Company. Barry Shevlin, Dr. Howard Tackett, James C. Watson and Tom Chubokas
were elected directors in their place. Mr. Shevlin was appointed Chief
Executive Officer and Chairman, Mr. Chubokas was appointed President and Chief
Operating Officer, Mr. Watson was appointed Executive Vice President and Chief
Technology Officer and Dr. Tackett was appointed Vice President, Strategic
Support.
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On July 30, 1999 the Company discontinued its film distribution
business, in connection therewith Harold Brown forgave his unpaid salary
(approximately $400,000 as of March 31, 1999) through July 30, 1999 and agreed
to the cancellation of his employment contract in exchange for the Company's
film library. Mr. Brown also converted his 8% convertible Debenture in the
amount of $301,638 into 241,310 shares of the Company's post-split common stock.
TELECOMMUNICATIONS INDUSTRY OVERVIEW
The U.S. long distance telephone (direct dialed 1+ voice and fax)
service market generates approximately $71 billion dollars (1996, Yankee Group)
worldwide. This market is part of an overall communications equipment and
services market estimated to generate between $600 billion and $1 trillion
worldwide. The domestic long distance market is dominated by the three largest
long distance carriers, AT&T, MCI-WorldCom and Sprint. According to the FCC,
these three carriers accounted for approximately 83% of all revenues generated
by long distance carriers in 1996. The remaining revenues came from other
carriers; some with national or regional transmission networks, together with
non-facilities based distributors and resellers. A more meaningful measurement
is the number of access lines. The big three carriers held a 90% market share of
the nations 168-million access lines. Today there are more than 600 U.S. long
distance companies, most of which are small or mid-sized companies. The smaller
companies hold approximately 10% of this market. Progressive is one of those
companies. In addition, there are an estimated 800 to 1,200 companies engaged in
long distance resale on an agency basis
The generally accepted definitions of participants and competitors
within the distribution channel for domestic and international services include:
National, international and transnational facilities based carriers:
These companies own and operate much of their transmission and switching
networks. Many companies often serve a particular national market extensively,
such as AT&T, MCI or Sprint in the U.S., or British Telecom in the U.K. and
offer international service. Others are owned and/or controlled by government
authorities, or are government-owned monopolies in the countries in which they
reside. There are also other companies such as RSL-Comm USA, Inc., that operate
transnationally, emphasizing transoceanic, transcontinental and cross-border
connectivity between and among carriers and end user customers. Most sell to
business and residential end users and on a wholesale basis to other carriers as
well as to other resale distribution channel participants.
Facilities based carriers and resellers serving regional, vertical,
horizontal or wholesale markets: This category also includes mid-sized
facilities based carriers and resellers. These companies own and operate
switching facilities and/or transmission networks. In some cases they have back
office infrastructure, but also lease and resell significant amounts of their
capacity from other national, international and transnational carriers. Most
offer domestic and international calling service to end users under their brand.
Some focus on more specialized forms of domestic and/or international long
distance service, such as 10-10-XXX access and pre-paid calling card service.
Many of these companies resell capacity and capabilities to smaller distribution
channel participants using their switches and back office capabilities. Some
also provide network and other carrier services to other carriers, particularly
other regional, national,
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international or transnational carriers seeking termination within specific
domestic markets. Progressive through its subsidiary StormTel, Inc. is included
in this category, as are many of its wholesale customers. This segment of the
carrier services is expanding rapidly as markets throughout the world
deregulate.
Switchless resellers and rebillers: These companies do not own their
own facilities, they purchase switching and transmission capacity from larger
participants then resell to end users under their brand names. They generally
provide their own billing and customer service. This is a rapidly growing
segment of the domestic distribution channel and the international carrier
services market as new intermediaries link customer demand with facility
owner/operators in newly deregulated and deregulating markets world wide. Their
income is derived from the difference between the cost of proprietary and leased
capacities, together with their internal operating costs, such as billing and
customer service, and the rates charged to their customers minus any commissions
paid to agents.
Independent agents and agencies: They represent carriers, resellers and
rebillers and are paid a commission and residual on the business they sell.
Non-telecom packagers and marketers: This segment packages and markets
long distance service, pre-paid calling cards and 10-10-XXX services. These
markets utilize the networks of underlying carriers as well as consumer product
and service companies marketing long distance service under their own brands or
in association with a major telecom brand. Examples include long distance
offered in conjunction with commercial credit card and airline frequent flier
programs, as well as those offered through affinity and membership programs.
This kind of bundling, co-promotion and cross marketing is a growing form of
long distance distribution.
In addition to these current industry participants, the regional Bell
operating companies have been filing for certification to provide long distance
services both inside and outside their own regions. They are expected to become
both long distance resale competitors and new suppliers of network capacity.
Facilities based carriers not only posses marketing and sales
capabilities, they also sell transmission and switching network capacity on a
wholesale basis to companies like Progressive. In turn, Progressive sells the
service to other carriers and various end users through their distributors,
resellers, agents and other carriers. The Company obtains significant pricing
discounts from facilities based carriers in exchange for call traffic volume
commitments. By utilizing various channels, the traffic of end user customers is
aggregated to meet the Company's commitment to its facilities based
carriers/suppliers; the net effect of this is significantly lower rates for the
customers.
Distribution of long distance service also entails the accomplishment
of various support functions beyond the switching and carriage of telephone
calls. These include the activation and provision of service by coordinating the
efforts of local telephone companies and the underlying long distance carrier,
as well as the rating, collection and collation of call traffic data, and
billing and collecting for charges. This can be done either through local
telephone companies or with a direct bill. Successful design, implementation and
management of these often complex elements of total service provisions are vital
to the Company's ability to provide the service it sells, bill and collect for
the services customers use and compensate members of the distribution channel
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accurately and in a timely fashion. Carriers, distributors and resellers
determine which of these capabilities to assume themselves and which should be
outsourced to third party providers.
This $61.3 billion (1996) market is comprised of all voice and data
transmissions originating in one country and terminating in another. The market
is expected to grow to $82.2 billion in 2000. During the decade 1987- 1996, the
market experienced a compound annual growth rate (CAGR) of 15.5% and is
projected to grow at a CAGR of 13% annually through 2000.
International long distance service providers can generally be
categorized by their ownership and use of switches and transmission facilities.
The largest U.S. Carriers, such as AT&T, MCI and Sprint, primarily utilize owned
transmission facilities but generally use other long distance providers to carry
overflow of traffic. Since only the very largest carriers have transmission
facilities covering the 200 countries normally served by major international
carriers, a significantly larger group of long distance service providers own
and operate their own switches. This group relies solely on resale agreements
with other long distance carriers to terminate their traffic, or they will use a
combination of resale agreements and owned facilities for termination. A new
class of multinational carriers has emerged to serve the needs of smaller
carriers seeking to enter the international market. In some cases, they have
built or share ownership in transoceanic, transcontinental and transnational
network facilities. In other cases, they aggregate the international traffic of
smaller carriers to obtain volume discounts from carriers with international
facilities.
The market is changing as a result of rapid deregulation in many
national markets, growth in international voice and data traffic driven by
global economic growth and globalization of world's economies, and rapid
proliferation of telephony, computing, messaging and other devices utilizing the
world's telecommunications networks. Deregulation and privatization have also
allowed new long distance providers to emerge in foreign markets. Deregulation
is providing U.S. based companies with the opportunity to negotiate more
favorable agreements by eroding traditional monopolies. These agreements are
with dominant carriers and emerging providers within each national market. In
addition, deregulation on certain foreign countries is enabling U.S. based
providers to establish local switching and transmission facilities in order to
terminate their own traffic. Now they can begin to carry international long
distance traffic originating in that country. The growth of traffic originating
in markets outside the U.S. is forecasted to be higher than the growth in
traffic originating in the U.S. due to deregulation, relative economic growth
rates and increasing access to telecommunications facilities and services in
emerging markets.
Progressive seeks to enhance the international service it already
provides to its existing customers and to serve the wholesale and international
carrier market. The Company will seek to offer U.S. termination to non-U.S.
carriers and international network services to U.S. carriers distributors and
resellers. It will also offer international services through its traditional
distribution channel partners - distributors, resellers, carriers and agents -
and to various end user markets.
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INTERNET INDUSTRY OVERVIEW
The Internet is a giant network that is composed of thousands of
smaller networks. It is an infrastructure that supports the transmission of
data. The World Wide Web is the substance of the Internet. The Web is
responsible for bringing the Internet into the homes and offices of millions of
people. It has been estimated that 97 million users worldwide have visited the
Internet since inception.
The Internet came to be in October 1969 with the first actual ARPANet
connection. This prototype system had been in the works since the early 1960's.
A man named Larry Robert developed the prototype network, worked through the
technical glitches and saw the connection come together. One of the biggest
discoveries during the early days occurred when an engineer sent the first
electronic mail over the ARPANet.
The biggest problem for the new Net was that the amount of traffic over
the Net was much heavier than expected. In 1974, Transmission Control
Protocol/Internet Protocol (TCP/IP) was developed. This set of protocols could
handle much heavier traffic. As a result, the new protocol was accepted as the
default transmission standard, and the Internet as we know it was born.
The Internet continued to grow and by 1990 there were over 100,000
hosts on the Internet, and the first web browser was launched. At first, the web
was only available to those who had access to the CERN (European Particle
Physics Laboratory) computer system, and it consisted of only one file, the CERN
phone book. In August of the following year, the Web officially hit the
Internet.
In 1993, the first graphical Web browser was introduced. This Web
browser was available as a free download and enabled individuals to view
graphics files and text documents. Traffic on the Web grew by an astounding
341,634%.
In 1994, the Yahoo! Directory and Excite entered the picture. These
quickly became the most popular search engines on the Internet. A user could now
sign onto their online services and use a search engine to link them directly to
the directory of Internet listings.
By 1995, the web was well on its way to becoming the most popular
source of information on the Internet. Two popular web browsers were released;
Netscape Navigator and Microsoft Explorer.
The Web as we know it today is growing by leaps and bounds. The Web is
starting to generate money in the form of online commerce. Individuals can use
the Internet not only to communicate but also to purchase goods and services.
Many businesses around the world are scrambling to get a presence on the
Internet.
The emergence of Web portals is an example of the enhanced changes that
are occurring almost daily on the Web. A portal, which is intended to be a
starting point for users who go online, combines a number of popular Internet
services, including new headlines, Web-search capabilities, and interactive
forums, into a single site. This one-stop convenience is valuable for busy
individuals who want to get information as quickly as possible.
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The future of the Internet lies in the convergence of Internet sites
with other media companies to provide extended Internet functionality and the
speed at which that convergence occurs. We are already seeing Internet sites
merging with television programming. Users with proper equipment can use the
Internet to access information that complements a participating television
program.
BUSINESS AND PRODUCT OVERVIEW
TELECOMMUNICATIONS
Progressive's evolution began in 1996, as a reseller of long distance
telephone service. On December 31, 1998, Progressive acquired 84% of CCC
Communications Corporation. As a result of this acquisition, we acquired
telecommunications equipment and leased telecommunications lines to provide
domestic and international long distance telecommunications services. In
addition, we connect to other telephone companies and resell their services to
destinations where we do not own equipment or lease lines. Our customers are
retail commercial and residential as well as other long distance telephone
companies that resell our services to their retail customers or other
telecommunications companies. We currently employ state-of-the-art digital
switching and transmission technology. This equipment, located in Kansas City,
Missouri, allows expanded network coverage through the Midwest. Our facilities
and industry agreements allow us to provide voice and facsimile
telecommunications services to every country in the world. As of September 30,
1999, 100% of our revenues are derived from domestic and international
telecommunications services.
The Company's services are designed to serve two distinct segments of
the telecommunications service industry. First is the wholesale market,
comprised of other carriers, rebillers and distributors. This marketplace
purchases the Company's network and infrastructure capacities at a discount,
along with various other support and infrastructure features, then remarkets
them to other users of various kinds. The second channel is comprised of
independent representatives ("IR") who resell the Company's turnkey end user
products on a commissioned or retail basis. The commercial and residential
customers are served directly by the company through these IR's. A common
infrastructure supports the services offered to both markets.
Our strategy is to develop and offer product and service
diversification via bundling and convergence-billing utilizing the Company's
proprietary convergence software. These services enable the Company to provide
one-stop, integrated communications packages to the wholesale and commercial
segments of the market. This delivers added convenience to customers and
generates additional revenue per account. It also enables the Company to develop
attractive services and pricing packages as well as creating a strong incentive
for customers to remain with Progressive. Multiple services allow the Company's
customers to select from an array of services.
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Progressive Wholesale Carrier and Commercial Services
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Carrier Services Commercial Services
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Transmission/switching network Long Distance
(1+,800,switched/dedicated) Local calling (CLEC) Services
International gateway/domestic termination OPUS(TM) Assistant
Proprietary billing systems and billing services Wireless Services/Cellular/Paging
Network engineering Travel and debit calling cards
Customer service and support Internet Access
Enhanced services (calling card) platform CPE/data network installation services
Computer-telephony integration Web Hosting
research and development
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StormTel: a wholly owned subsidiary of CCC Communications, vends its
network capacity and services of its suppliers, together with the Company's own
network capacities, to other carriers seeking economical access or additional
capacity to various, specific geographical markets. This allows for enhanced
profits and cost reductions for all parties involved. Domestic and international
long distance transmission and switching capacity, related network management,
service activation, account and information management, billing and support
functions to other carriers and resale market participants, are all provisions
that are included. Transmission and network services are sold primarily through
resale arrangements with other long distance providers, and involve the purchase
and sale of transmission and termination services on a per-minute basis.
Infrastructure and support services are purchased on a per-transaction basis. As
an adjunct to its own network design and development efforts, the Company offers
consulting and network engineering services to other carriers, including its
wholesale customers.
In a similar fashion, the Company vends access to the capacities and
capabilities of its enhanced services (pre-paid calling card) platform to
companies engaged in the distribution and marketing of calling cards via toll
free access and debit card services. Platform services include card account
assignment and activation, re-charging and re-activation of card accounts, and
termination of service.
COMMERCIAL BUSINESS AND RESIDENTIAL SERVICES
International and Domestic Long Distance Service: We provide outbound
1+ and 800 service, with calls terminating anywhere in the world and 800 toll
free service with calls originating anywhere in the North American continent. In
addition, the Company provides calling cards billed with long distance service
and promotional prepaid cards. The Company utilizes its own facilities
concentrated in the Midwest while the facilities of its underlying carriers in
areas not covered by its wholly owned network. The Company can originate and
terminate traffic throughout the contiguous 48 states and to and from Hawaii,
and can terminate international traffic originating from the U.S. in more than
247 countries.
A variety of plans offering competitive long distance rates are billed
in six-second increments with no per call surcharges. Service packages include a
free calling card with 800 access features. Some plans are bundled with the
Company's dial up Internet access with an
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unlimited use rate in addition to long distance charges, while some plans
require monthly fees in exchange for exceptionally lower per-minute rates.
Local Exchange Service: We have the regulatory certification to provide
local telephone service in Central Florida and New York. The Company has applied
for certification in Missouri and Kansas. We intend to provide our customers
with origination and termination of local area, local toll and intraLATA calling
service. We are planning to offer interconnection to long distance carrier
networks through agreements with Bell South of Florida and GTE of Florida. Local
service sales are expected to commence in the 4th quarter 2000.
Wireless Cellular and Paging Services: We provide retail cellular and
local paging services in Southwest Florida and Alabama, as well as nationwide
paging, through resale agreements and mobile users. The Company utilizes
multiple underlying service providers.
Pre-paid Calling Cards: We offer debit and pre-paid calling cards,
which enable users to place local, toll, long distance and international
calls. This enables card users to circumvent costly pay telephones, hotel
surcharges and high long distance rates, as well as the inconvenience of
carrying coinage. Payment for the card is made in advance and charges are
deducted from a pre-paid inventory of value stored at the platform, instead of
rendered on a phone bill for payment. This reduces the costs for both the user
and the Company, as costs associated with billing and collection are eliminated.
Revenue for the pre-paid calling cards is realized in advance of service
provision.
Data Network and Premise Equipment: We install and maintain private
telephone systems and data communications networks. Telephone systems, such as
PBXs, are installed and maintained by the Company in southwest and central
Florida, while the Company is capable of installing frame relay and
point-to-point data networks nationwide.
OPUS(TM) Assistant: We offer an advanced communications, messaging and
productivity management service capable of recognizing and responding to natural
human speech. The service is designed to help mobile workers access, review,
prioritize, manage, and respond to increasing volumes of phone calls, voice
messages, faxes and e-mail, whether from the home, office, or while traveling.
It effectively ties together multiple communication devices - office and home
phone, cell phone, pager, and electronic mail box - under a single phone number
accessed by service users and those attempting to communicate with them. It
allows for coordination of multiple productivity tools, such as appointment
books and phone directories, through simple telephone and Web site user
interfaces. We offer this product pursuant to a private label and reseller
agreement between Progressive and Webley Systems, Inc. This agreement allows us
to exclusively retail the OPUS(TM) brand.
OPUS(TM) is available to the customer wherever there is access to a
phone or computer with Internet capability. The system's ability to recognize
natural speech, as opposed to rigid spoken commands, simplifies the user
interface, requiring limited training of the user, accelerates user orientation
and familiarity, and encourages consistent use. More advanced features include
listening to e-mail, responding to e-mail messages with voice messages sent via
electronic mail, and accessing and dialing phone numbers using the spoken name
of the called party. OPUS(TM) works with all existing phone systems and
computers. There is no equipment or software to
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purchase, and the service is capable of synchronizing calendars and contacts
from PCs, laptops, handheld computers and PDAs, running popular software such as
Microsoft Outlook(TM).
Additional features include:
- - No long distance charges for calls made from the system by a user or to
locate a user
- - Call identification and screening according to user-defined criteria
- - "Follow-me" locator service - out dials to cell phone, office or home
phone, pager
- - Forwards voice mail messages as electronic mail
- - Unlimited use of the web site interface
- - Inbound call management: Routes and forwards calls according to user
parameters
- - Forwards messages to any phone, laptop, e-mailbox, PC
- - Collects and reads e-mail from one or more accounts
- - Re-routes e-mails to fax machines
- - Notifies pager upon receipt of voice mail, e-mail or fax
Users are provided with a personal system tutorial and have access to
around-the-clock support. Pricing is at one of five flat monthly rates, which
includes a pre-specified number of minutes, and billed to a credit card.
INTERNET BASED PRODUCTS
The Yellow Page Directory.com: A wholly owned subsidiary of Progressive
that intends to provide, directly and with its partners, bundled services such
as Internet service, web development, web hosting, custom web sites and e-mail
accounts. The directory will derive revenues by providing these bundled
services. The Yellow Page Directory.com intends to be in the business of
providing enhanced listings via the Internet, for small to medium-sized
businesses. This directory will provide a low cost, high quality web presence in
the web directory.
There are four distinct products that will be offered through The
Yellow Page Directory.com: Bronze, Silver, Gold and Platinum. Each package
provides the consumer with free hosting, free dial-up Internet access, and free
e-mail accounts.
The Bronze package includes a listing in The Yellow Page Directory that
includes the Company information, two e-mail accounts, and free Internet access
for 1 year.
The Silver package includes a bold listing in the directory, any one
graphical image like a business card or photo, up to 100 words of text, a
hyperlink from the directory listing to your expanded listing or existing web
site, three free e-mail accounts, free hosting, and free Internet access for 1
year.
The Gold package includes an enhanced bold listing, a one page
custom-built storefront web site, your own virtual host address, registration
over 800 search engines, a hyperlink from your directory listing, four free
e-mail accounts, free hosting, and free Internet service for 1 year.
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The Platinum package is a full custom site built to your specifications
by a development division. The package includes a super bold color listing, up
to a 5 page full company web site, initial consultation with the development
staff, up to 700 words of text and 5 graphic images, your own virtual host
address, one hour of design/textual changes, a hyperlink from the listing to
your custom options, free custom design, five free e-mail accounts, free
hosting, and free Internet access for 1 year.
Although The Yellow Page Directory.com is an Internet based product,
customers do not have to own a computer to utilize the services. A customer can
put a listing in the directory complete with a link to their e-mail. The Yellow
Page Directory.com has the ability to forward e-mails directly to a fax machine.
We will offer the enhanced listing utilizing the Company's
telemarketing center, which is currently under construction. The potential
customers will be targeted from existing yellow page directories currently
available over the Internet.
The key to The Yellow Page Directory.com is that, in addition to the
directory listings, and unlike other directory service providers, this call
center will be able to market the many other products that can be bundled along
with the directory services such as long distance, wireless service, credit
cards and Internet service.
BusinessMall.Com, Inc. ("BusinessMall"): A wholly owned subsidiary of
Progressive that intends to be a full-featured Internet business-to-business
("B-to-B") portal whose target customers will be small to mid-size service or
intellectually based companies that entrepreneurs can visit regularly to
conduct business.
BusinessMall intends to be a horizontal hub for virtual enterprise that
hopes to remove the two major impediments from doing business on the Internet:
1) fear of fraud; and 2) ignorance. BusinessMall is designed to provide a safe
and secure environment to conduct business on the Internet. BusinessMall intends
to offer office supplies, computer and computer related products, full and part
time virtual employees, graphic artists, designers, copywriters and accountants.
BusinessMall, acting as a Business-to-Business infomediary, will
employ a variety of mechanisms to generate transaction fees, including:
e-escrow; e-arbitration; Business-to-Business Market; Virtual Employee
Directory; Virtual Services Directory; Telecom Services; Information and
Education Services; Collections; Concierge; matching buyers and sellers through
request for proposals/quotation services; and direct sales of merchandise such
as computers, office supplies, books, Audible files and software through our
Marketing Partners. Members will have the ability to track their transactions,
organize them by project and receive detailed reports. Once set up as a client
company, a business owner can control the access and spending limits of their
employees as well as receive e-mail reports of all employee transactions.
All transactions are with the BusinessMall. If a member makes a
purchase from a BusinessMall partner site, the partner ships the product
directly to the member, but charges the sale to the BusinessMall. The member
pays the BusinessMall and the BusinessMall pays the partner. The member pays
nothing for this service; the price of the product or service is the same
through the BusinessMall as if it were purchased directly from the partner
site.
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THE MALL
The purpose of the virtual mall is to provide informative content that
will educate clients as well as market products and services. Businesses will
be able to purchase office products and equipment, discounted media time, quote
business insurance, access free real time stock quotes and financial services,
design personal portal sites for their business, access a business focused
search engine, and a whole lot more.
There will be three distinct sections to BusinessMall.Com: The
BusinessMall, BusinessMall Resources and BusinessMall Exchange.
Through the "Business Mall", businesses will have access to purchase a
wide variety of office products and services through either Company owned
on-line stores or approved BusinessMall partners. Businesses will have access to
over 200,000 computer and office related products. It is anticipated that
additional services will include virtual services provided by CorpHQ upon the
acquisition of this company, discount telecommunications services and employment
services, to name a few.
All financial transactions are performed through the BusinessMall; a
member's credit card information never leaves the BusinessMall whether the
purchase is from the BusinessMall or one of its partners.
In the "Business Mall Resources", members will have access to valuable
information to assist them in running their business more efficiently. An
extensive selection of BusinessMall Tutorials will be available for members to
learn how to best make use of the BusinessMall and its multitude of business
services. Members will also have access to personal financial tools. Data
available in the resources section will include free "streaming" real time stock
quotes, newspaper and periodical archives and educational materials.
The last component of BusinessMall is "Business Mall Exchange". The
BusinessMall Exchange is a place for buyers to meet sellers in a unique secure
atmosphere to do business. All buyers and sellers will be required to enter into
agreements with our e-escrow and e-arbitration services. These agreements allow
BusinessMall to collect all of the funds for products and services sold on the
exchange and only release the funds to the selling parties when the buyers are
satisfied with the product or service. This creates a safe and secure
environment for buyers.
e-escrow:
The National Consumers League 3-year-old Internet Fraud Watch cited
on-line auctions as the most popular and fastest growing segment of Internet
fraud, judging by the complaints that it received. Auctions accounted for 68% of
the complaints received in 1998, up 24% from 1997.
BusinessMall e-escrow attempts to solve this problem by acting as an
agent for both buyer and seller. Each enters into a membership agreement with
BusinessMall that empowers BusinessMall to act as a broker between them. The
money for the transaction is paid directly to BusinessMall where it is held
until both parties agree to the satisfactory completion of their transaction.
All correspondence is done through updated forms on the BusinessMall site and
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<PAGE> 14
through machine generated e-mail. Disputes between the parties are settled with
e-arbitration discussed next.
BusinessMall's e-escrow will be the engine that drives the BusinessMall
"B-to-B Market". The "Virtual Employee Directory" and "Virtual Services
Directory" will also benefit from the safety net of e-escrow allowing businesses
to hire employees and contract for services from people that they will never
meet. BusinessMall e-escrow creates a safe haven for business-to-business
transactions on the Internet.
BusinessMall e-escrow will accept Master Card, Visa, American Express,
Novus/Discover, Diners Club, and Carte Blanche via a Secure Socket Layer (SSL)
connection to our server. Credit Card payments can be faxed in after completing
the on-line form. Buyers may also be able to pay by Cashiers Check, Money Order,
Personal Check or Business Check made out to BusinessMall e-escrow, and through
Bank/Wire Transfer. Bank Fees incurred by BusinessMall e-escrow for Bank/Wire
transfers will be charged to the appropriate party requesting such an option.
e-arbitration:
BusinessMall e-arbitration provides a solution to on-line business
disputes. BusinessMall will provide real judges and lawyers to settle disputes
on-line. The charge for e-arbitration is 10% with a minimum of *$35.00 (*this
amount is arbitrary and subject to change) of which a percentage is paid to the
arbitrator. The disputed funds remain on deposit in the BusinessMall e-escrow
account for the duration of the arbitration, which should be limited to two
weeks.
Computer Store:
IMS Corp., (Information Management Systems) is under contract to build,
implement and operate our on-line computer store. IMS runs the whole back end
from procurement to fulfillment for Comp USA stores as well as the on-line
stores for as many as ten on-line retailers. They maintain direct API
connections to both Tech Data and Ingrahm Micro two of the nations largest
microcomputer distributors.
BusinessMall is presently concluding contract negotiations with Tech
Data to provide our private label fulfillment of over 200,000 computer and
related products. The dynamic API with IMS will give our members the benefit of
real time inventory confirmation and ordering.
Business-to-Business Market:
BusinessMall "B-to-B Market" will be a classified based market place
with the ability to make a best offer rather than an auction. Customers will be
able to purchase a used piece of equipment or appliance with the comfort of
knowing that their money will not be released until they have received the item
and are completely satisfied with it.
The Business-to-Business Market software module will be built with XML
in order to facilitate the most accurate searches. The Market will be search
driven with various categories for browsing. This search module will be closely
tied to our customer relationship management software, which should be able to
display a customized list of classified offerings based on a
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<PAGE> 15
member's purchasing and business profile. The level of business conducted on the
BusinessMall by the posting member will determine the hierarchy of the search
results. Vertical enterprises will be given their own custom front pages with
their industry specific categories. Commercial retailers just looking for a free
place to offer their inventory will not be allowed. There will be no charge to
list items for sale, but all sales must be settled with BusinessMall e-escrow.
Virtual Employee Directory:
Presently, there already exists a community of professionals that offer
their services virtually over the Internet as both full and part time employees.
Executive Assistants, Secretaries, Bookkeepers, Copywriters, Designers, and
Programmers are all currently available over the Internet. We are attempting to
centralize as many of theses people as possible in the BusinessMall Directory of
Virtual Employees. We will provide each a free listing and space for their
resume. Members can search the directory by various skill categories or
broadcast a targeted RFP (request for proposal). Once an agreement is reached
between the member and the virtual employee, they will use BusinessMall e-escrow
to insure a safe transaction.
Small and mid-sized companies can add employees without the added
burden of real estate. Employees retained either hourly or on a fee per project
basis can enjoy the freedom of working from their homes.
Virtual Services Directory:
As with virtual employees, there are also established companies that
can provide their services virtually. This directory will work essentially the
same as the Virtual Employee Directory only its listings will contain companies
rather than individuals. All transactions will also be through BusinessMall
e-escrow.
Virtual Office:
Through our intended acquisition of CorpHQ, BusinessMall will be able
to offer our members virtual office space as well as a host of virtual services
managed by CorpHQ.
CorpHQ operates as a "Virtual Corporation," employing a core management
team and transacting business exclusively through the use of outside businesses.
These businesses, known as "Members" provide detailed registration information
to CorpHQ in order to participate in its operations. Each CorpHQ Member is able
to purchase products and services from CorpHQ; provide its product or service to
be marketed by CorpHQ; and market the products and services of other Members, to
its own clientele. CorpHQ aggregates the capabilities of its Members, creating a
large and varied product line. The Company manages the production and delivery
of these products to its customers, using a proprietary business process and
online management system.
CorpHQ is responsible for all management and financial aspects of each
transaction. CorpHQ's virtual organization and business process allow its
customers to enjoy the flexibility, efficiency and innovation of multiple
entrepreneurial relationships, with the consistency and quality inherent in a
single, major-vendor relationship. The Company's method of operation has been
widely accepted by large and small organizations alike in the Southern
California area, and provides numerous competitive advantages at the
point-of-sale.
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Telecom Services:
Telecom service will be provided by our parent company Progressive
Telecommunications.
- - Discount long distance
- - Opus(TM) Virtual Assistant
- - High tech phone systems
- - Virtual call routing to route callers anywhere by using their voice
commands
- - Calling cards
- - Conference calling
These services will be provided transparently through a dynamic link with
the www.Progressive.Net Website. Third party commissions should be paid to
BusinessMall.
Streaming Real-Time Stock Quotes:
Management believes BusinessMall will be the first portal that will
offer free streaming real-time stock quotes charts and graphs for all NYSE and
NASDAQ listed securities. While many web sites offer real time stock quotes,
they do not provide streaming quotes. By updating the last sale, bid and ask on
an ongoing basis, we are able to offer a more reliable source for receiving
market data. Our customers will not have to keep hitting the refresh button to
get an updated quote, which should allow us to become a popular tool for the
growing number of people that watch the stock market on a daily basis.
Members will be able to access the real time quotes upon receiving a
username and password. Members will be required to fill out an online
application giving us their personal information and verifying that they are
non-professionals before receiving their username and password.
The first phase for the streaming quotes, launching in the first
quarter of 2000, will include the following information for any security listed
on the NYSE or NASDAQ:
Last Trade, Change from previous trade, Daily Volume, the day's high
and low trades, the current bid and ask, the opening price, the previous closing
price, the size of the last trade and the 52 week range.
The second phase for BusinessMall's streaming quotes will allow
individuals to create and monitor a portfolio of up to 20 securities. The
portfolio will be customizable to the individual and include as many of the
fields as the individual wishes to monitor all dynamically updating. Additional
information available in the portfolio will be a position monitor that will show
the member their profit and or loss in any open position.
The major cost for providing the service to the members is the fees
that are to be paid to the stock exchanges. BusinessMall is currently
negotiating with several on-line brokerage firms to assist us with paying the
exchange fees in exchange for a license to be the exclusive on-line broker for
BusinessMall.Com.
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Partners:
The first generation of sharable services were rooted in "affiliate
programs," and involved placing a link that could eventually lead to a
transaction at the affiliates Website with a commission code pointing back to
the originator. BusinessMall is a next generation service. When our members
click on a partnered service, that service is provided within an integrated
co-branded window and our members never leave the BusinessMall Website. The
partners' server provides the content but the transactions are completed on the
BusinessMall.
All revenues for partner provided services will be billed by the
BusinessMall with payments made to the partners by us after we deduct our
percentage. All partners will be required to include links to the BusinessMall
on their Websites. Marketing partners will be required to incorporate
BusinessMall into their advertising.
What BusinessMall offers its partners is a business-to-business "hub"
of electronic market activity. The BusinessMall "hub" will redirect our partners
on-line business services to available e-businesses that match their
requirements.
BusinessMall.Com will seek out partnerships in the following areas:
Credit Services
Although BusinessMall's "Collection Services" will ultimately include a
number of local and national collection solutions, BusinessMall is seeking a
partnership with National Credit Service (NCS) allowing us to offer a national
product immediately. NCS is an Accounts Receivable Management firm, with over
11,000 companies, institutions, and medical practices as clients. NCS offers a
collection system that increases recovery rates, lowers collection costs, and
improves cash flow.
NCS charges a fee of $20 or less per account instead of a percentage of
the money collected. Also, debtors send all delinquent money directly to the
client, not to NCS. NCS' unique flat-rate system enables members to recover up
to twice as much money as compared with percentage-based agencies. This is
mainly due to the flat fee charge per account regardless of the balance
outstanding or how old the claim is. The fixed fee structure permits NCS members
to turn over accounts at a significantly earlier aging period that substantially
increases recovered dollars.
All recovered money is sent directly from the delinquent customer to
our member. Members supply only the debtor's name, address and balances due
either online through the BusinessMall or through NCS Claim Forms. No cumbersome
copies or backups are required. NCS also provides members with monthly progress
reports on all active accounts.
If members wish, NCS will report persistent debtors to Experian
(formerly TRW), Transunion, and Equifax credit bureaus. The debtors will be
given ample warning prior to reporting. There is no extra fee charged for this
additional service.
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Press Release Services
BusinessMall is seeking a partnership with BusinessWire.Com to offer
press releases as well as a variety of targeted press related services. By
using BusinessMall "Press Services" any business can send a targeted press
release to over 5,400 media organizations around the world.
The Internet provides every business professional an unparalleled
opportunity to communicate with every conceivable target market in any
geographic location worldwide. Business wire is the only news wire to post every
news release to the Internet for fast, easy and free access. News releases will
also be posted to other strategic sites, including YAHOO, AOL, PointCast,
nasdaq.com and Wall Street Journal Interactive.
Prices for this service start at $75 for most statewide releases and
goes up to $525 for U.S. national release. Prices vary for international
releases that includes translation.
BusinessMall through agreements with online virtual copywriters will
provide a sister service offering to write press releases for our membership.
Media professionals are very selective about which press releases they will
publish. If a release is not well written and in the correct press release
format, it will likely end up in the trash. BusinessMall can create a press
release for our members that will help them capture the attention of the media.
Using information provided by our members, our virtual copywriters
would craft a well-written press release that will convey the message in a
newsworthy context. A draft of the release will then be sent to the member for
approval. If there are changes, the release will be revised to reflect the
member's input. Once the member is satisfied, the release can then be forwarded
to our "send a press release service" for targeted distribution.
The price of this "write a press release service" is $149.00, of which
a percentage will be used to pay the on-line virtual copywriter.
Tutorial Services
Through a partnership with Learning University, BusinessMall will offer
the latest on-line multimedia training services. Learning University's on-line
multimedia tutorials deliver continuous learning directly to the desktop for a
fraction of the cost of traditional training methods. This service will help our
members inexpensively train both themselves and their workforce in many popular
business software applications. Over 150 interactive, multimedia tutorials with
audio and video are available for immediate access via the Internet, in a wide
selection of popular categories, including desktop computing, Microsoft
products, networking and programming.
By providing these courses to their employees on-line, our members can
save up to 90% over purchasing CD-ROMs and traditional training methods. Our
customers only pay for training content; hosting, maintenance and administration
of the courses are all included. Volume discounts are also available.
Members are free to view a tutorial once or several times over the
course of a subscription. They can always test drive a demo or view the course
outline before ordering.
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Once a course is ordered and paid for, it is available for training 24 hours a
day, seven days a week.
Recorded Content
Through a partnership with Audible, Inc., BusinessMall will be able to
provide its members with the Internet's largest and most diverse collection of
premium spoken-audio content for playback on personal computers and mobile
devices. Audible's content partners include more than 100 leading audio book
publishers, broadcasters, magazine and newspaper publishers, business
information providers, and educational and cultural institutions. BusinessMall
members can browse, sample, purchase, subscribe to, schedule and download more
than 17,000 hours of audio content.
Audible's content will play on any hand held or palm device running
Windows CE, Diamond Rio mobile MP3 player and any PC through a free RealPlayer
or AudiblePlayer. The Audible format is very compact and delivers an hour of
clear spoken audio for every 2 Megs of available memory.
Programs include a broad array of business programming, including
management and industry specific audio journals, newsletters, audiobooks, news
programs, conference proceedings and lectures as well as essential investment
advice and commentary.
Audible, Inc.'s partners consist of more than 100 leading audiobook
publishers, broadcasters, magazine and newspaper publishers, business
information providers, and educational and cultural institutions. Partners
include The Wall Street Journal, The New York Times, Harvard Business School
Publishing, The Economist magazine, Worth magazine, Nightly Business Report,
DemoLetter, Gartner Group, Technologic Partners, Harper Audio/Caedmon, Random
House AudioBooks, Bantam Audio, Time Warner AudioBooks, Simon & Schuster Audio,
Books on Tape, Penguin Audiobooks, Recorded Books, Dove Audio, Stanford
University, and public radio programs such as Sound Money, Fresh Air, Car Talk,
Marketplace, and Garrison Keillor's monologues from A Prairie Home Companion.
Pricing varies with content though Audible offers notable savings on
all programs; audiobooks, for instance, are priced up to 60% less than cassette
versions.
On-Line Back-Up
BusinessMall is seeking a partnership with Safeguard Interactive to
provide our members on-line backup capabilities to securely store their computer
data in case of fire, theft, or computer disk crashes. BusinessMall "Backup
Services" allows members to backup any or all of the files on their computer
hard drive to Safeguard's secure servers. Thus protecting their data from fire,
theft, or disk crashes.
Members can schedule the backups to automatically start at any time
that is convenient (e.g., in the middle of the night). Safeguard BACKUP selects
the files the member has chosen to backup, encrypts them using a pre-selected
password, compresses them and then dials the connection to Safeguard Interactive
through a standard Internet connection.
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The price of this service is $9.95/month or $99.95/year. Members can
try the service free for the first 30 days.
REGULATORY ENVIRONMENT
Certain components of our data and telephony products and services are
regulated as telecommunications services and are subject to federal, state, and
local regulation.
Federal Regulation. Progressive, like all carriers providing interstate
or international service, must comply with the Communications Act of 1934, and
the regulations of the Federal Communications Commission. The Communications Act
of 1934 was comprehensively amended by the Telecommunications Act of 1996, which
assist them in competing in the telecommunications market, particularly in the
sale of local telephone service.
The FCC classifies competitive carriers like us as non-dominant, which
means that we are not subject to the onerous regulations imposed on dominant
carriers possessing market power. As a non-dominant carrier, we are subject to
only minimal FCC regulation of our sale of data products. Likewise, we are
subject to only minimal FCC regulation over our sale of enhanced services or
information services. However, the FCC regulates what products may be connected
to the public switched telephone network, and those products we install must
meet the FCC's standards.
Our voice services are more extensively regulated. Although we provide
local and long-distance telecommunications services through resale of services
purchased from, or as an agent on behalf of, other carriers, we are still
subject to various regulations. We must file tariffs with the FCC where we
resell regulated interstate phone service, and, in most cases, must file tariffs
with state public utility commissions where we resell intrastate phone service.
Website Hosting. We provide website hosting for our customers. The FCC
does not regulate website hosting, although the transmission of data through the
Internet is within the jurisdiction of the FCC. We cannot predict what effect
any new regulations would have on this portion of our business. Potential
negative impacts could include the increased costs to comply with any
regulations which are imposed and delays in getting new products and services to
market.
State Regulation. Some of our resold local and long-distance services
are classified as intrastate and therefore subject to state regulation. In most
states in which we do business, we are required to obtain a certificate of
public convenience and necessity and operating authority for the sale of local
phone services. In addition, we are often required to file tariffs setting forth
the terms, conditions, and prices for services which are classified as
intrastate.
Our Regulatory Status. We are authorized by the FCC to provide resold
international services. We also have tariffs on file with the FCC for interstate
interexchange carrier services. In addition to these federal authorizations, we
are authorized to provide intrastate interexchange services in 45 states.
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COMPETITION
The telecommunications industry is highly competitive. We expect that
we will face substantial and growing competition from a number of providers of
data networking, data transport, and telephony services. Although we do not
believe that a significant number of other companies are providing Enterprise
Network Services solutions or a comparable range of integrated data networking,
data transport, and telephony outsourcing services to small and medium-sized
businesses, we do face intense competition in each of our individual product and
service offerings. Our competitors include incumbent local exchange carriers
(including the regional bell operating companies ("RBOCs" and GTE), traditional
and wireless competitive local exchange carriers, long distance carriers (such
as AT&T and MCI WorldCom), and data integrators and providers of network
services and customer premises equipment (such as Williams Telecommunications,
Inter-Tel and Claricom).
With respect to any individual product or service we offer, we do not
necessarily enjoy any particular competitive advantage over other industry
participants. Indeed, some of these competitors or potential competitors are or
will be able to bundle the same types of product and service components offered
by us. In particular, any telecommunications carrier that offers both local and
long-distance telecommunications services, including any incumbent local
exchange carrier permitted to offer in-region long-distance services, will be
able to offer these services as a single-source provider to customers. Because
we have no present intention of owning fiber optic cable or last mile
connections, some of our competitors will have a lower cost than we do for long
distance or local services.
The RBOCs are also moving more aggressively into data transport. They
have filed petitions seeking to have the FCC deregulate immediately the
provision of packet-switched transport services. Although the FCC denied these
petitions, the FCC has proposed permitting incumbent local exchange carriers to
offer interLATA (local access and transport area) data services through a
separate affiliate. Moreover, Bell Atlantic has petitioned to be allowed to
provide interLATA data transport services in West Virginia; SBC Communications
and Bell Atlantic have announced that they intend to provide more data
networking services to commercial customers; and a number of RBOCs have begun
offering digital subscriber line services.
A continuing trend toward business combinations and alliances in the
telecommunications industry may create significant new competitors with
resources far greater than ours. These business combinations include the merger
of AT&T and Tele-Communications, Inc. ("TCI"), which will allow the resulting
entity to bundle products from each of these companies. The AT&T-TCI merger
follows AT&T's successful acquisition of Teleport Communications Group, a large
competitive local exchange carrier. In addition, several of the largest local
phone companies have proposed to merge, including Bell Atlantic with GTE and SBC
Communications with Ameritech.
Technological developments may allow other companies to provide a
single-source solution in competition with our product offerings. For example,
Sprint has announced its development of an "Integrated-On-Demand Network" which
if viable will allow customers to simultaneously use the Internet, telephone,
and fax machine through use of the same phone line. Hardware manufacturers are
also designing multi-function switching platforms similar to our E-
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POP(TM), possibly allowing other start up providers to use a similar lower-cost
architecture. We would also, however, intend to take advantage of these
developments in technology.
To the extent that competitors begin bundling components of the
Enterprise Network Services (including data networking and the provision of
customer premises equipment) into their own product offerings, we will face
additional competition as a single-source provider of services. Most of our
existing and potential competitors have financial and other resources far
greater than ours, have long-standing relationships with their customers, and
have greater name recognition than we do.
There are several companies who provide directory services over the
Internet. The following is a representative list of other providers with the
same or similar services:
AnyWho Directories allows you to search for numbers of individuals,
businesses, and government offices. It also has the added feature of reverse
search, where you enter a phone number and receive a name.
At Hand Network Yellow Pages allows you to search by business name,
type, and city for quick results, or browse any of the categories to what you
are looking for, including Airlines Apartments, Attorneys, Banks, and
Restaurants.
Big Yellow helps you find the businesses and services you are looking
for on the Web, by type in a geographic location, a category, or a company name.
Big Yellow also has other resources, such as their Legal Directory and shopping
links.
Bizee.com contains information about thousands of businesses in several
areas, or use their extensive category list to browse. These lists are broken
down into Industry Portals, Government Portals, and Resource Portals.
Search-it-all allows you locate a long-lost relative, check movie
listings, and look for a job. Search-It-All has gathered a grab-bag of links to
some of the reference sites on the Web. It is a useful tool with multiple
reference tasks for time-constrained people.
EMPLOYEES
The Company, as of December 15, 1999, has 63 full time employees. Of
these employees four were executives, three operation managers, two in
accounting, 20 sales and marketing, 13 in technical support and 21 in office
administration. None of the Company's employees are covered by a collective
bargaining agreement. The Company believes its relations with its employees are
good.
ITEM 2. PROPERTIES
We lease sales and support facilities in several locations. Our
principal corporate and support facilities are also leased, and are located as
follows:
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<TABLE>
<CAPTION>
Location Size (sq. ft.) Lease Expiration Annual Rent
-------- ------------- ---------------- -----------
<S> <C> <C> <C>
Clearwater, Florida 4,927 12/31/02 $ 78,832
Clearwater, Florida 52,000 10/31/02 $ 292,110
Cape Coral, Florida 2,758 7/31/00 $ 20,352
Pacific, Missouri 1,200 1/31/00 $ 5,400
Kansas City, Missouri 1,700 3/31/01 $ 18,000
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
We are involved in legal proceedings from time to time, none of which
we believe, if decided adversely to us, would have a material adverse effect on
our business, financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to written consent of a majority of the Company's
shareholders, the Company amended its Certificate of Incorporation so as:
- - to increase its authorized shares of common stock from 15,000,000 to
50,000,000
- - to authorize a 1 for 5 reverse stock split;
- - to change the Company's name to Progressive Telecommunications
Corporation; and
- - to reduce the par value of the Company's common stock from $.04 to
$.001
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Company's Common Stock is traded over-the-counter on the
OTC-Bulletin Board under the symbol "PTCI". Prior to August 4, 1999 the Company
symbol was "MQUE".
The following table sets forth the range of high and low bid quotations
for the Company's Common Stock for the periods indicated as reported by the OTC
bulletin Board. The Company's common stock was reverse split 1 for 5 effective
August 4, 1999 and such change is reflected in the table below.
<TABLE>
<CAPTION>
Fiscal 1999 High Low
----------- ---- ---
<S> <C> <C>
First Quarter $1.25 $1.09
Second Quarter $1.09 $ .94
Third Quarter $6.25 $ .94
Fourth Quarter $5.63 $3.91
<CAPTION>
Fiscal 1998 High Low
----------- ---- ---
<S> <C> <C>
First Quarter $2.20 $.95
Second Quarter $2.20 $.50
Third Quarter $1.50 $.50
Fourth Quarter $1.00 $.75
</TABLE>
The foregoing quotations reflect inter-dealer prices without retail
mark-up, mark-down or commissions, and may not necessarily represent actual
transactions.
As of January 10, 2000, the Company had approximately 750 holders of
record of its common stock.
The Company has not paid any dividends since its inception and
presently anticipates that all earnings will be retained.
In order to consummate the acquisitions of the minority interests of
Progressive-Florida and CCC Communications, the Company will tender an aggregate
of approximately 2,035,000 shares to the minority shareholders of both
companies. These shares will be offered to the respective minority shareholders
upon the effectiveness of a registration statement registering these shares.
In connection with the acquisition of CCC Communications there were
705,000 warrants to purchase CCC Communications common stock at prices ranging
from $.67 to $1.80 per share, expiring from July 2000 to February 2001. The
issuances underlying these warrants have been assumed by the Company, however,
based on the exchange formulas as part of the Securities Exchange Agreement
between the Company and Progressive-Florida and the Merger Agreement
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between Progressive-Florida and CCC Communications, the number of warrants
equals an aggregate of 124,720 with exercise prices ranging from $3.79 to $10.17
per share.
RECENT SALES OF UNREGISTERED SECURITIES
In August 1999 the Company issued an aggregate of 6,663,513 to the
shareholders of Progressive-Florida in connection with the acquisition of that
Company. the issuance was a non-public offering exempt from registration
pursuant to Section 4(2) of the Act.
On August 27, 1999 the Company issued 250,000 shares to the partners of
Sommer & Schneider LLP. This transaction was a settlement of outstanding legal
fees, new retainer and other consideration. The issuance was a non-public
offering exempt from registration pursuant to Section 4(2) of the Act.
On August 27, 1999 the Company issued 241,300 shares to Mr. Harold
Brown, the former Chairman and President. The shares were issued upon the
conversion of outstanding convertible debentures owned by Mr. Brown.
On August 27, 1999 the Company issued 8,600 to a financial consultant.
The issuance was a non-public offering exempt from registration pursuant to
Section 4(2) of the Act.
From August 27, 1999 through November 4, 1999 the Company sold an
aggregate of 363,400 shares to 35 accredited investors for an aggregate offering
price of $908,500 or $2.50 per share. The offering was made pursuant to Section
4(2) and Rule 506 of Regulation D of the Act.
On January 10, 2000 the Company sold an aggregate of 338,470 units each
consisting of one share of common stock and one warrant. The offering price was
$2.50 per unit and the Company received an aggregate of $846,175. Each warrant
entitles the holder to purchase a share of the Company's common stock at the
rate of $2.50 per share. The Warrants expire on December 31, 2000. The units
were sold to 32 accredited investors in a non-public offering exempt from
registration pursuant to Section 4(2) and Rule 506 of Regulation D of the Act.
On January 7, 2000 the Company commenced a private placement offering
consisting of a 9% Convertible Debenture due December 1, 2001 (the "Debentures")
and warrants. For each $50,000 invested, the purchaser will receive 33,333
warrants. The Debenture allows the investor to convert into common stock at the
rate of $1.50 per share. The warrants are exercisable at the rate of $1.50 per
share and expire December 31, 2002. The units are being sold solely to
accredited investors. To date, the Company has received an aggregate of $682,500
principal amount of the Debentures and issued 455,000 warrants to eight
investors. These securities are being sold in a non-public offering exempt from
registration pursuant to Section 4(2) and Rule 506 of Regulation D of the Act.
On December 13, 1999 the Company issued 50,000 shares to HCS Financial
pursuant to a financial consulting agreement. The issuance was a non-public
offering exempt from registration pursuant to Section 4(2) of the Act.
25
<PAGE> 26
Item 6. Selected Financial Data
The following selected consolidated financial data as of and for each
of the period ended September 30, 1999 and years ended August 31, 1998 and 1997
have been derived from the audited consolidated Financial Statements of the
Company. Since, as a result of the July 30, 1999 merger, the former stockholders
of Progressive Telecommunications Corporation acquired a controlling interest in
Marquee Entertainment, Inc., the acquisition has been accounted for as a
"reverse acquisition". Accordingly, for financial statement presentation
purposes, Progressive Telecommunications Corporation was, for periods prior to
July 30, 1999, viewed as the continuing entity and the related business
combination was viewed as a recapitalization of Progressive Telecommunications
Corporation, rather than an acquisition by Marquee Entertainment, Inc. The
financial data presented below, for accounting purposes, reflects the relevant
Statement of Operations data and Balance Sheet of Progressive Telecommunications
Corporation for periods before the merger on July 30, 1999 and reflect the
consolidated results of Progressive Telecommunications Corporation and its
subsidiaries, Marquee Entertainment, Inc. after the merger. The following data
should be read in conjunction with the Consolidated Financial Statements and the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included herein.
26
<PAGE> 27
<TABLE>
<CAPTION>
September 30, August 31,
------------------------------
1999 1998 1997
Statement of Operations Data:
<S> <C> <C> <C>
Revenues $ 4,541,768 $ 184,499 $ 26,918
Cost of services 3,614,779 87,331 5,465
Operating expenses 5,950,489 1,355,532 209,682
----------- ----------- -----------
Operating (loss) (1) (5,023,500) (1,258,364) (188,229)
Operating (loss) per common share (0.61) (0.18) (0.03)
Other income (expense) (138,981) (29,459) --
----------- ----------- -----------
Net loss $(5,162,481) $(1,287,823) $ (188,229)
=========== =========== ===========
Net loss per common
share-basic and diluted(2) $ (0.63) $ (0.18) $ (0.03)
Weighted average shares outstanding 8,177,529 7,175,837 7,175,837
=========== =========== ===========
Balance Sheet data:
Goodwill $ 4,348,039 $ --
----------- -----------
Total assets $ 6,382,144 $ 364,752
=========== ===========
Long-term liabilities,
net of current maturities $ 207,334 $ --
Obligations under capital lease,
net of current maturities 56,886 28,774
----------- -----------
Stockholders' equity $ 1,915,915 $ (669,442)
=========== ===========
</TABLE>
- --------------
(1) The loss from operations of $5,162,481 incurred during the period ended
September 30, 1999 is primarily attributable to stock issued for services of
$2,214,880 and is included in operating expenses.
(2) Diluted net loss per share does not reflect the inclusion of common share
equivalents which would be antidilutive.
27
<PAGE> 28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This annual report on Form 10-K contains both historical and
forward-looking statements. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of Progressive to be different from any future
results, performance and achievements expressed or implied by these statements.
You should review carefully all information, including the financial statements
and the notes to the financial statements included in this annual report on Form
10-K. The following important factors could affect future results, causing the
results to differ materially from those expressed in the forward-looking
statements in this registration statement:
- the timing, impact and other uncertainties related to pending
and future acquisitions by Progressive;
- the impact of new technologies;
- changes in laws or rules or regulations of a governmental
agency, including the Federal Communications Commission;
- changes in tax requirements, including tax rate changes, new
tax laws and revised tax law interpretations; and
- interest rate fluctuations and other capital market
conditions.
These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in the
forward-looking statements in this report. Other unknown or unpredictable
factors also could have material adverse effects on the future results of
Progressive. The forward-looking statements in this report are made only as of
the date of this report and, under Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, Progressive does not have
any obligation to publicly update any forward-looking statements to reflect
subsequent events or circumstances. Progressive cannot assure you that projected
results will be achieved.
OVERVIEW
Progressive is a holding company for its technologically related
subsidiaries. Progressive's mission is to become a leading consolidator of the
emerging high technology industries through an aggressive acquisition strategy.
Reductions in operating costs are expected to be achieved through the
integration of the operations and systems of acquired businesses, including
centralization of billing, customer support services, marketing and advertising.
Revenues are expected to increase by making available to customers fully
integrated advanced telecommunications management enhanced software and related
e-commerce products and services.
The consolidated financial statements, as of September 30, 1999,
include the accounts of the Progressive and its subsidiaries: CCC Communications
Corporation and OPUS(TM) Assistant
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<PAGE> 29
Inc., CCC Communications Corporation's subsidiaries include StormTel and
Eclectic Enterprises Inc.
BUSINESS PLAN
ACQUIRING AND CONSOLIDATING INDEPENDENT TELECOMMUNICATIONS, COMMUNICATIONS
MANAGEMENT AND RELATED E-COMMERCE PRODUCTS AND SERVICES BUSINESSES.
We expect to acquire businesses that will enable us to provide a
comprehensive range of telecommunications, communications management and related
e-commerce products and services. Although we expect most businesses will be
profitable, the implementation of new services will require substantial
expenditures for software research and development, hardware infrastructure for
e-commerce solutions and telecommunications equipment in the field. This
generally will result in negative cash flow for at least the first year of
operations for each acquisition.
STANDARDIZING AND CENTRALIZING OPERATIONS TO CAPTURE EFFICIENCIES OF SCALE.
LOCAL PRESENCE. Progressive will attempt to retain key employees of acquired
companies to ensure a smooth transition and maintain local institutional
knowledge. This will be important, as the local operating units will be required
to maintain local presence as the Company develops a national brand. We believe
that consolidation efforts by national telecommunications service providers have
been seriously flawed by a lack of sensitivity to the essentially local nature
of the telecommunications business. This has resulted in a sharp increase in
lost customers and a subsequent loss of revenue. Our integration and
consolidation efforts will be structured to retain the perception by our
customers that their telecommunications services company is a local business
providing superior service to that of our national competition.
INTEGRATION TEAMS. To help integrate operations the company will establish
integration teams. Each integration team will consist of skilled technical and
marketing personnel. The integration team will have the responsibility to help
with the overall centralization, standardization, and eventual branding of the
local company as a part of the Company's network. Additionally the Company's
accounting staff will work with the integration team to centralize the
accounting and billing systems promptly upon closing of the acquisition. Upon
completion of the initial integration process, the operating units will begin
executing the marketing and branding programs established by the company to
expand its customer base and improve its customer retention.
CONSOLIDATION OF FUNCTIONS. The two major expenses are administrative (primarily
personnel) and technical (including technical support for hardware and
e-commerce and telecommunications specialist). These factors interact with
administrative elements including accounting, system administration, web hosting
and design, telephone and technical support. To the extent these common elements
are consolidated and standardized, significant savings will be recognized.
29
<PAGE> 30
- ACCOUNTING: A high priority for the company is the
installation of a common accounting platform. Management
currently is evaluating accounting and billing platforms. The
selected platform will be flexible enough to include on one
bill all products and services we may choose to offer in the
future and be scalable to include any number of customers.
- TECHNICAL SUPPORT: The Company plans to maintain regional
telephone technical support centers to handle all consumer
problems, service inquiries and new customers. Such centers
will reduce the need for support staff at each location and
improve service.
- WEB DESIGN AND STORAGE: It is our goal to maintain all ISP web
design, maintenance and hosting on an outside ASP. Such a
strategy should eliminate the need for programmers within the
company.
- SYSTEMS ADMINISTRATION: Consolidation of telecommunications is
a challenging goal because of the number of factors that must
be considered for each acquisition. Prior to acquisition, each
ISP maintains its own modem banks, LAN, and routing to the
Internet. Platforms range from UNIX to NT to others. In
addition, each ISP may have its own upstream as well as an
LEC. The company will use care and caution so that the quality
of service is not jeopardized while consolidation is
implemented.
IMMEDIATELY BUNDLING VIDEO, VOICE, AND DATA PRODUCTS AND SERVICES.
Increasingly, businesses and consumers are drawn to ISPs that can meet all of
their telecommunications needs. Bundling services provides the ability to become
a "one stop shop" for all customers' needs. We expect bundling to assist us in
retaining existing customers and attracting additional customers.
DEVELOPING AND OFFERING VALUE-ADDED PRODUCTS AND SERVICES. In some
segments of our business, the ability to offer value-added products and services
provides a tremendous competitive advantage. By delivering value-added services,
the Company will attract and retain customers.
UNIFIED BRANDING. We intend to use the same brand name in marketing our products
and services. Unified branding should solidify our customer base, ensure
customer loyalty, help us to gain market share and enable us to benefit from the
efficiencies of centralization. In addition, it should enhance our market
visibility and perception. Branding also should enhance our ability to sell
additional products and services. In addition, past industry experience
indicates that unified branding should significantly reduce customer churn.
The ability of Progressive to remain in business and implement its
business plan depends upon a variety of factors, primarily financing and the
ability to attract and retain employees having the necessary skills. Funding
operations and acquisitions has been and is expected to continue to be the major
impediment to implement its business plan. We need capital to sustain operations
and to consummate acquisitions. Management can give no assurance that the
company's capital requirements can be satisfied at all or on reasonable terms.
30
<PAGE> 31
COMBINED RESULTS OF OPERATIONS
REVENUES. Progressive and its subsidiaries have historically derived their
revenues from domestic and international telecommunications services primarily
through StormTel Inc, one of its subsidiaries. The Company's long distance
revenues as services are provided and billed to subscribers, the terms of which
are specific to each customer agreement.
COSTS. Our direct costs of sales consist primarily of the costs of direct labor
program, network costs and agent commissions.
Selling expenses consist primarily of advertising and marketing
expenses, expenses for participation in trade shows, and consulting expenses.
Operating expenses consist primarily of the salaries and benefits of
our employees, temporary labor, depreciation and amortization, accounting and
legal fees and other operational expenses including but not limited to
utilities, insurance, supplies and other.
We expect general, administrative and other costs to increase to
support our growth, particularly as we establish a network operations center,
telemarketing center and implement common billing and financial reporting
systems in the near term. Over time, we expect these relatively fixed expenses
to decrease as a percentage of revenues. Additionally as a result of
consolidation of the traditional back office activities such as help desk,
technical support, and centralized billing we anticipate the reduction of labor
costs for our acquisitions. However, we will incur substantial costs and
expenses in connection with our integration and consolidation efforts, including
salaries, travel, software and equipment.
Amortization expense primarily relates, to the amortization of goodwill
acquired in business acquisitions. We expect amortization expense to increase as
additional acquisitions are closed and to vary according to the purchase price
and tangible assets involved in the acquisition. Our policy is to amortize the
portion of the acquisition purchase price attributable to goodwill and other
intangible assets over three to five years. This amortization will reduce
income. Therefore, as we expand our subscriber base through acquisitions, we
will experience increasing amortization expense.
Depreciation primarily relates to our technology and office equipment
and is provided over the estimated useful lives of the assets ranging from five
to ten years using the straight-line method. We expect depreciation expense to
increase as we grow through acquisitions.
Operating results in the future may fluctuate significantly depending
upon a variety of factors, including capital costs and costs associated with the
introduction of new products and services. Additional factors that may cause
operating results to vary include:
- the pricing and mix of services provided;
- customer acquisition and retention rates;
- changes in pricing policies and product offerings by
competitors;
- demand for Internet access services;
- general telecommunications services, performance and
availability.
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<PAGE> 32
DISCUSSION OF THE OPERATIONS OF PROGRESSIVE
The Company has engaged independent legal counsel to prepare standard
form documents and due diligence procedures. Such legal counsel also conducts
the legal (as opposed to financial and operational) due diligence, assists in
the negotiation of, and prepares, definitive agreements, and prepares closing
documents. To facilitate the acquisition process, the Company generally agrees
to pay the cost of obtaining audit reports and opinions for target companies.
Such audits are performed by the Company's independent certified public
accountants.
Between September 1999 and January 2000 the Company entered into a
letter of intent for the acquisition of one company, CorpHQ, Inc.
If justified by the volume of acquisitions and subject to the
availability of capital, the Company plans to expand its legal and accounting
departments to reduce the substantial expense for outside attorneys and
auditors. As the company grows, its need for audited financial statements of
acquired businesses may, in many cases, be deferred to a point in time
subsequent to closing of the acquisition. In addition, the company will proceed
with two types of acquisitions. One will be smaller companies which may not
require audited financial statements. These companies will be offered standard
acquisition terms with little or no negotiation. Management believes such
acquisitions will be possible at substantially reduced costs. The other type of
acquisition will be the larger and/or more complex companies where specialized
documents and procedures may be required. This type of transaction will continue
to be largely handled by the outside attorneys and auditors.
On July 30, 1999, the Company elected to change the date of its fiscal
year-end from August 31 to September 30. Thus, a thirteenth-month transition
period followed the end of the 1998 fiscal year. The addition of the one-month
period for Progressive was considered to be immaterial therefore, there is no
requirement to present the one-month period separately in the consolidated
financial statements.
For the period ended September 30, 1999, the Company had revenues of
$4,541,768. For the year ended August 31, 1998 and 1997, the Company had
revenues of $184,499 and $26,918 respectively. The Company attributes the
increase of its revenues in 1999 primarily to the acquisition of StormTel, Inc
as part of the CCC Communications acquisition. 1998 and 1997 revenues were
derived from long distance services from Progressive.
Cost of sales was $3,614,779, $87,331 and $5,465 for the period ended
September 30, 1999 and for the years ended August 31, 1998 and 1997,
respectively. Cost of sales for the 1999 transition period consisted of the
costs to provide the long-distance services paid to major carriers.
Operating expenses were $5,950,489 and $1,355,532 and $209,682 for the
period ended September 30, 1999 and the years ended August 31, 1998 and 1997,
respectively. General and administrative expenses consist primarily of the cost
of common stock issues for services, salaries and benefits, temporary labor,
depreciation and amortization, accounting and legal fees and other operational
expenses including but not limited to utilities, insurance, supplies and other.
32
<PAGE> 33
For the period ended September 30, 1999, interest expense was $149,372
as compared to $29,459 for the year ended August 31, 1998. Interest expense was
primarily comprised of interest on investor notes payable issued in 1998 and
interest on the long-term debt.
LIQUIDITY AND CAPITAL RESOURCES
Our auditors have raised the issue that there is substantial doubt that
we will be able to continue as a going concern as a result of significant losses
and negative working capital. A significant amount of capital has been expended
towards building corporate infrastructure and operating and capital expenditures
in connection with certain acquisitions and the establishment of our programs.
These expenditures have been incurred in advance of the realization of revenue
that may occur as a result of such programs. As a result our Liquidity and
capital resources have diminished significantly. Liquidity and capital resources
could improve with in the short term by a combination of any one or more of the
following factors: (I) an increase in revenues and gross profit from operations;
and (ii) financing activities. An inability to generate cash from either of
these factors within the short term could adversely affect our operations and
plans for future growth. If these issues are not addressed, we may have to
materially reduce the size and scope of our overhead and planned operations.
Progressive had a negative cash flow from operations of $2,033,483,
$926,469 and $138,777 for the period ended September 30, 1999, and the years
ended August 31, 1998 and 1997, respectively. Cash flow used in investing
activities was primarily for the purchase of equipment and acquisition costs
offset by payments from notes receivable from related parties. Cash flow
generated by financing activities was primarily from funds received under a
line-of-credit in the amount of $1,108,155, the issuance of common stock in the
amount of $920,500 and deposits on un-issued common stock in the amount of
$97,000 and the issuance of long-term debt in the amount of 100,000.
Substantial additional cash will be required to implement our business plan.
Since January 1999, we have funded our operations and working capital
needs primarily through private placement of the Company's equity securities and
short-term debt instruments as well as vendor financing.
The Company has adopted a three-pronged financing plan:
- Seek mergers, joint ventures or financing arrangements with
larger private or public entities in related industries. These
entities may/or may not have ISP operational infrastructures
already in place and/or may require a source of acquisitions.
- Seek short- and long-term financing through private placements
of debt and equity securities in the capital markets. If
possible, the company will seek to finance its longer term
requirements with debt rather than equity so as to reduce
dilution to stockholders of Progressive.
- Mount an aggressive campaign to acquire companies for cash, if
available, and otherwise for registered Progressive common
stock. This will require substantial working capital to fund
operating and merger and acquisition expenses and to pay the
significant cost of compliance with applicable securities
laws.
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<PAGE> 34
There can be no assurance that financing will be available in amounts
or on terms acceptable to Progressive, if at all. Should the Company be
unsuccessful in its efforts to raise capital, it may be required to curtail
operations.
SUBSEQUENT EVENTS
From October 8, 1999 through December 17, 1999, Mr. James Wallace, a
director of the Company, has funded the Company in the amount of $600,000, which
had been evidenced by five promissory notes bearing interest at the rate of 12%.
The notes become due one year from the date of issuance.
From August 27, 1999 through November 4, 1999 the Company sold an
aggregate of 363,400 shares to 35 accredited investors for an aggregate offering
price of $908,500 or $2.50 per share.
On January 10, 2000 the Company sold an aggregate of 338,470 units each
consisting of one share of common stock and one warrant. The offering price was
$2.50 per unit and the Company received an aggregate of $846,175. Each warrant
entitles the holder to purchase a share of the Company's common stock at the
rate of $2.50 per share. The Warrants expire on December 31, 2000.
On January 7, 2000 the Company commenced a private placement offering
consisting of a 9% Convertible Debenture due December 1, 2001 (the "Debentures")
and warrants. For each $50,000 invested, the purchaser will receive 33,333
warrants. The Debenture allows the investor to convert into common stock at the
rate of $1.50 per share. The warrants are exercisable at the rate of $1.50 per
share and expire December 31, 2002. The units are being sold solely to
accredited investors. To date, the Company has received an aggregate of $682,500
principal amount of the Debentures and issued 455,000 warrants to eight
investors.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting guidelines for
derivatives and requires an establishment to record all derivatives as assets or
liabilities on the balance sheet at fair value. Additionally, this statement
establishes accounting treatment for four types of hedges: hedges of changes in
the fair value of assets or liabilities, firm commitments, forecasted
transactions and hedges of foreign currency exposures of net investments in
foreign operations. Any derivative that qualifies as a hedge, depending upon the
nature of that hedge, will either be offset against the change in fair value of
the hedged assets, liabilities or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. SFAS No. 133 is effective for years beginning after June 15, 2000. The
Company does not currently participate in these types of financing activities
and does not anticipate that the adoption of this statement will have a material
impact on its consolidated balance sheets, statements of operations, or cash
flows.
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<PAGE> 35
YEAR 2000 READINESS
Year 2000 readiness is the result of computer programs using two digits
rather than four to define the applicable year. As a result, date sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculation causing disruptions
of operations. We have received representations from each company we have
acquired and expect to acquire that it does not face material unresolved year
2000 issues. To the extent these representations are breached and we suffer
damages, our operating results and financial condition may be adversely
affected.
We have also contacted each of these companies to determine its Year
2000 readiness. None of them expect significant Year 2000 problems. We have
conducted limited tests regarding Year 2000 readiness and have not located any
material deficiencies. To a limited extent, these companies also have contacted
their major vendors to assess their Year 2000 readiness. Any failure by these
vendors or service providers to resolve any Year 2000 issues on a timely basis
or in a manner that is compatible with the systems of our subsidiaries could
adversely affect our ability to provide services to ISP subscribers and ASP
customers. We do not have any contingency plans for handling Year 2000 problems
that are not detected and corrected prior to their occurrence.
Based upon current information, we do not anticipate any additional
costs associated with the Year 2000 issue to have a material financial impact on
us. However, our expectations are limited by uncertainties that could cause
actual results to have a greater financial impact than currently anticipated.
Moreover, as stated above our Year 2000 examination of companies acquired and to
be acquired has been limited and their investigations of Year 2000 readiness by
their suppliers and vendors likewise has been limited.
IMPACT OF INFLATION
The Company is subject to normal inflationary trends and anticipate
that any increase costs would be passed on to its customers.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is found immediately following
the signature page of this report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(a) At it's board meeting on October 1, 1999, the Board of Directors of
Progressive engaged the accounting firm of Meeks, Dorman & Company, P.A. as
independent accountants for the Company for 1999, subject to approval of
shareholders. The work of Jay J. Shapiro, C.P.A. was terminated on October 1,
1999. Mr. Shapiro resigned by letter dated September 24, 1999 which the Company
received on October 1, 1999. The Company intended to terminate Mr. Shapiro and
replace him with Meeks Dorman & Company, P.A. in connection with the Company's
acquisition of Progressive Telecommunication Corporation.
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<PAGE> 36
(b) During the two most recent fiscal years and interim period
subsequent to September 30, 1998, there have been no disagreements with Jay J.
Shapiro, C.P.A. on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure or any reportable events.
(c) Discharged's reports on the financial statements for the past two
years contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
However, the audit report of Jay J. Shapiro C.P.A. dated December 23, 1998 for
the year ended September 30, 1998 did raise concerns as to the Company's ability
to continue as a going concern during fiscal 1999 based on its current cash
position being inadequate to meet its operating needs and significant losses
incurred during fiscal year 1998.
(d) Jay J. Shapiro C.P.A. furnished the Company with a letter addressed
to the Securities and Exchange Commission stating that he agreed with the
statement that there had been no disagreements with the Company.
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<PAGE> 37
PART III
Item 10. Directors and Executive Officers of the company
Our executive officers and directors as of December 20, 1999 are set
forth below:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Barry Shevlin 28 CEO and Chairman of the Board
Tom Chubokas 41 President, Director
James C. Watson 44 Executive Vice President, Chief Technology
Officer and Director
Dr. Howard Tackett 56 Vice President, Strategic Support, Director
James Wallace 51 Director
</TABLE>
BARRY SHEVLIN, CHIEF EXECUTIVE OFFICER: Mr. Shevlin is the founder of
Progressive. In addition to the day-to-day executive responsibilities, he has
the authority for all corporate finance and investor relations matters. Prior to
founding Progressive, he was a contractor to Time Warner engaged in marketing
and satellite services in Florida. While at Time Warner, he designed marketing
programs for the State of Florida. These programs were among the most successful
in the country. Prior to consulting for Time Warner, Mr. Shevlin served as a
consultant to Intellectual Properties Associates in Florida. Mr. Shevlin played
a key role in the development of software for small business customers. He also
gained extensive experience in the management and administration of small to
mid-sized companies.
TOM CHUBOKAS, PRESIDENT AND DIRECTOR: Mr. Chubokas was a founder and officer of
CCC Communications, which merged with Progressive at the end of 1998. Mr.
Chubokas was elected a director and appointed President of Progressive in
January 1999, upon th consummatin of the merger. With Progressive, his
responsibilities include all contract negotiations with carriers and other
service providers. Prior to founding CCC Communications, Mr. Chubokas was
founder and president of Communications Group of America, a nationwide
independent telecommunications services sales organization. From 1981 to 1989,
he owned Marshall Corporation, the largest investigative security firm in
Cleveland Ohio. Clients included Revco Drug, Rite-Aid Drug, F.W. Woolworth and
I.J. Fox Furriers, among others. He is a graduate of Cleveland State in
Cleveland Ohio, with a Bachelor of Arts degree in Political Science and English.
JAMES C. (CHRIS) WATSON, EXECUTIVE VICE PRESIDENT AND CHIEF TECHNOLOGY OFFICER:
Mr. Watson is responsible for design, development and management of
Progressive's technology and infrastructure, including its network, new service
and billing and support systems. He is a specialist in advanced communications
systems, networks and applications. Mr. Watson has extensive experience in the
operation of interexchange carrier platforms, billing systems and facilities. He
was a co-founder and officer of CCC Communications. Prior to CCC
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<PAGE> 38
Communications, Mr. Watson owned a telecommunications consulting agency
specializing in the technology, operational and regulatory issues affecting
carriers.
DR. HOWARD TACKETT, VICE PRESIDENT, STRATEGIC SUPPORT: Dr. Tackett has assisted
the Company in the development of its key infrastructure and support systems. He
has also provided the Company with the benefit of his extensive executive-level
management experience. He is a graduate of Palmer College, Davenport, Iowa with
a Doctor of Chiropractic Degree. In 1980, he founded Tackett Chiropractic
Clinics, which grew to become the largest multi-office group of Chiropractic
Clinics in southeastern Virginia. He served as CEO of Tackett Chiropractic
Clinics and has been a member of the Board of Managed Care of Virginia. Dr.
Tackett devoted his time to customer support for Progressive Telecommunication's
plans and programs.
JAMES WALLACE, DIRECTOR: Mr. Wallace was elected to the Board of Progressive
Telecommunications November 4, 1999. Prior to joining Progressive Mr. Wallace
was founder and president of Wallace Insurance Agency, an independent insurance
agency specializing in the administration of Health, Life and Disability
benefits for National and publicly traded companies. In 1975, Mr. Wallace
founded Wallace Development Company, a real estate developing company
specializing in the rental properties. Mr. Wallace still owns and operates both
companies. He was educated at the University of Georgia, majoring in Risk
Management, Insurance and Finance.
Item 11. Executive Compensation
The following table sets forth in summary form the compensation earned
by our Chief Executive Officer and our four other highest paid executive
officers (the "Named Officers").
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Long-Term
Compensation
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary(1) Bonus(2) Compensation Options Compensation
- --------------------------- ---- --------- -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Barry Shevlin 1999 $156,153(3) -- -- -- --
CEO& President 1998 $110,577 -- -- -- --
Tom Chubokas 1999 $133,970(4) $ 50,000 -- -- --
Former President 1998 $ 60,100 -- -- -- --
James C. Watson 1999 $115,492(5) $ 50,000 -- -- --
Executive Vice President 1998 $ 60,100 -- -- -- --
Dr. Howard Tackett 1999 $104,039(6) -- -- -- --
Vice President 1998 $ 60,577 -- -- -- --
</TABLE>
- --------
(1) Includes salaries paid to each person by Progressive Florida or CCC
Communications, which were paid to the respective person prior to the
acquisition by Marquee.
(2) Does not include 50,000 shares of the Company's Common Stock paid each to
Mr. Tom Chubokas and Mr. James C. Watson as a signing bonus to their
respective employment agreements.
(3) Includes $26,923 of accrued salary.
(4) Includes $17,016 of accrued salary.
(5) Includes $8,077 of accrued salary.
(6) Includes $1,346 of accrued salary.
38
<PAGE> 39
Employment Agreements
The Company entered into an employment agreement with Mr. Shevlin for a
term of five years with an option of additional one-year terms. The agreement
provides for annual compensation of $140,000 during the term of the employment
and entitles Mr. Shevlin to certain fringe benefits, including an automobile
stipend equal to $600 per month, medical insurance, disability benefits and life
insurance coverage. The agreement also provides certain incentive compensation
if the Company achieves certain sales levels. Mr. Shevlin has agreed during the
term of his agreement and one (1) thereafter (unless the agreement is terminated
without cause), he will be subject to non-competition provisions. Upon
termination of employment without cause Mr. Shevlin will be entitled to a lump
sum payment of $75,000 times the number of years of employment by the Company.
The Company entered into an employment agreement with Dr. Tackett for a
term of five years with an option for additional one-year terms. The agreement
provides for annual compensation of $85,000 during the term of the employment
and entitles Dr. Tackett to certain fringe benefits, including medical
insurance, disability benefits and life insurance coverage. the agreement also
provides certain incentive compensation if the Company achieves certain sales
levels. Dr. Tackett has agreed during the term of his agreement and one (1)
thereafter (unless the agreement is terminated without cause), he will be
subject to non-competition provisions. Upon termination of employment without
cause Dr. Tackett will be entitled to a lump sum payment of $50,000 times the
number of years of employment by the Company.
The Company entered into an employment agreement with Mr. Chubokas for
a term of three years with an option for an additional two years. Upon signing,
Mr. Chubokas received a signing bonus of $50,000 and 50,000 shares of the
Company's common stock. The agreement provides for annual compensation of
$140,000 during the term of the employment and entitles Mr. Chubokas to certain
fringe benefits, including an automobile stipend equal to $600 per month,
medical insurance, disability benefits and life insurance coverage. The
agreement also provides certain incentive compensation if the Company achieves
certain sales levels. Mr. Chubokas has agreed during the term of his agreement
and one (1) thereafter (unless the agreement is terminated without cause), he
will be subject to non-competition provisions. Upon termination of employment
without cause Mr. Chubokas will be entitled to a lump sum payment of $75,000
times the number of years of employment by the Company.
The Company entered into an employment agreement with Mr. Watson for a
term of three years with an option for an additional two years. Upon signing,
Mr. Watson received a signing bonus of $50,000 and 50,000 shares of the
Company's common stock. The agreement provides for annual compensation of
$120,000 during the term of the employment and entitles Mr. Watson to certain
fringe benefits, including an automobile stipend equal to $500 per month,
medical insurance, disability benefits and life insurance coverage. The
agreement also provides certain incentive compensation if the Company achieves
certain sales levels. Mr. Watson has agreed during the term of his agreement and
one (1) thereafter (unless the agreement is terminated without cause), he will
be subject to non-competition provisions. Upon termination of employment without
cause Mr. Watson will be entitled to a lump sum payment of $75,000 times the
number of years of employment by the Company.
39
<PAGE> 40
Item 12. SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding beneficial
ownership of the Corporation's Common Stock as of December 27, 1999 by (i) each
director of the Company; (ii) each executive officer of the Company (iii) each
beneficial owner of more than 5% of the Common Stock of the Company; and (iv)
all directors and executive officers of the Company as a group. This table is
based on information provided by the Company's directors, executive officers and
beneficial owners of more than 5%. Unless otherwise indicated in the footnotes
below, and subject to community property laws where applicable, each of the
named persons exercises sole voting and disposition power of his or her shares.
<TABLE>
<CAPTION>
Percentage of
Amount of Outstanding
Name of Beneficial Owner Beneficial Ownership(1) Common Stock
- ------------------------ ----------------------- ------------
<S> <C> <C>
Barry Shevlin 864,398 9.6%
Tom Chubokas 1,450,645(2) 16.1%
James C. Watson 796,084 8.8%
Dr. Howard Tackett 232,153 2.6%
James Wallace 109,500 1.2%
First Dominion 493,942 5.5%
Robert Thompson 499,896 5.5%
All directors and executive
officers as a group (5 persons) 3,452,780 38.3%
</TABLE>
- --------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
regulations promulgated under the Securities Exchange Act of 1934 and
accordingly may include securities owned by or for, among others, the
spouse and/or minor children of an individual, as well as other securities
as to which the individual has or shares voting or investment power or
which each person has the right to acquire within 60 days of the date
hereof through the exercise of options, or otherwise. Beneficial ownership
may be disclaimed as to certain of the securities. This table has been
prepared based on 9,014,467 shares of common stock outstanding as of
January 10, 2000.
(2) Includes 35,385 shares for which Mr. Chubokas acts as a custodian.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From October 8, 1999 through December 17, 1999, Mr. James Wallace, a
director of the Company, has funded the Company in the amount of $600,000 which
has been evidenced by five promissory notes bearing interest at the rate of 12%.
The notes become due one year from the date of issuance.
From February 28, 1998 through March 20, 1998, Mrs. Faith Shevlin
loaned the Company $60,000 which has been evidenced by two promissory notes,
bearing interest at the rate of 9%. The notes have not been repaid and are past
due. Mrs. Shevlin is the mother of Barry Shevlin, the Company's CEO.
40
<PAGE> 41
From March 30, 1998 through April 6, 1998, Dr. Howard Tackett, an
officer and director of the Company, loaned the Company $50,000 which has been
evidenced by two promissory notes, bearing interest at the rate of 9%.
The notes have not been repaid and are past due.
From time to time the Company has made loans to Mr. Barry Shevlin, the
Company's CEO, aggregating approximately $34,000. As of September 30, 1999, this
loan was forgiven due to the fact that Mr. Shevlin was not compensated by the
Company in 1997.
From April 1999 through September 30, 1999 Mr. Shevlin has loaned the
Company an aggregate of $44,500. The largest amount outstanding at any given
time during that period was $27,500. As of September 30, 1999, the Company was
indebted to Mr. Shevlin in the amount of $27,500.
As of September 30, 1999, the Company had a note payable to
Communications Group of American ("CGA") for $26,000 with interest at 12% per
annum. The note payable was due January 2, 1999 and has been extended. As of
September 30, 1999, all interest due under this note payable has been forgiven.
CGA is a company owned by the wife of Mr. Tom Chubokus, the Company's President.
In addition, the Company pays commissions to CGA which is a
telecommunications sales organization. Commissions paid to CGA for the period
ended September 30, 1999 were $143,101 and accounts payable to CGA was $20,895
as of September 30, 1999.
41
<PAGE> 42
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
3.1 Articles of Incorporation and Amendments thereto --
incorporated by reference to Form S-18 filed November 10,
1986, SEC File #33-10084-LA.
3.2 By-Laws -- incorporated by reference to Form S-18 filed
November 10, 1986, SEC File #33-10084-LA.
3.3 Certificate of Amendment to the Certificate of Incorporation
filed with Secretary of State of Nevada on August 3, 1999 --
incorporated by reference to Form 8-K dated July 30, 1999.
4.1 Form of 9% Convertible Subordinated Debenture due December 1,
2001, filed herewith.
4.2 Form of Common Stock Purchase Warrant exercisable at $1.50 and
expiring on December 31,2002, filed herewith.
4.3 Form of Common Stock Purchase Warrant exercisable at $2.50 and
expiring on December 31, 2000, filed herewith.
4.4 Form of Registration Rights Agreement, filed herewith.
4.5 Form of CCC Communications Corporation Subordinated Note,
filed herewith.
4.6 Form of Common Stock Purchase Warrant of CCC Communications
Corporation, filed herewith.
10.1 Securities Exchange Agreement dated as of June 7, 1999 --
incorporated by reference to Form 8-K dated June 15, 1999.
10.2 Assignment of Film Library dated July 29, 1999 transferring
film library to Harold Brown -- incorporated by reference to
Form 8-K dated July 30, 1999.
10.3 Employment Agreement by and between the Company and Tom Chris
Chubokas dated May 15,1999, filed herewith.
10.4 Employment Agreement by and between the Company and James
"Chris" Watson dated May 15, 1999, filed herewith.
10.5 Employment Agreement by and between the Company and Barry
Shevlin dated February 2, 1998, filed herewith.
10.6 Employment Agreement by and between the Company and Dr. Howard
Tackett dated February 2, 1998, filed herewith.
42
<PAGE> 43
10.7 Office Lease Agreement by and between Atrium At Clearwater,
Limited and Progressive Telecommunications Corporation dated
December 27, 1997, filed herewith.
10.8 Shopping Center Lease by and between Barrett Family
Partnership I d/b/a The Commonwealth Center and Progressive
Telecommunications Corporation dated November 3, 1999, filed
herewith.
10.9 Office Lease Agreement by and between Devic Rentals and CCC
Communications Corp. dated May 14, 1997, filed herewith.
10.10 1993 Incentive Stock Option Plan -- incorporated by reference
to Exhibit B to Proxy Statement dated April 2, 1993, SEC File
# 0-15413.
10.11 1993 Non-Qualified Stock Option Plan -- incorporated by
reference to Exhibit C to Proxy Statement dated April 2, 1993,
SEC File # 0-15413.
10.12 Employment agreement by and between the Company and James
Maguire dated November 8, 1999 --incorporated by reference to
Form S-8 filed November 16, 1999, SEC File # 333-91023.
10.13 Form of Promissory Note between the Company and James Wallace,
filed herewith.
11 Statements re computation of per share earnings
21 List of Subsidiaries
27.1 Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed by the Company dated as of June 7, 1999 and file
June 16, 1999.
A Form 8-K was filed by the Company dated July 30, 1999 and filed
August 16, 1999.
An Amendment to Form 8-K was filed by the Company dated as of July 30,
1999 and filed October 13, 1999.
A form 8-K was filed by the Company dated as of October 1, 1999 and
filed October 6, 1999.
An amendment to Form 8-K was filed by the Company dated as of October
1, 1999 and filed November 15, 1999.
43
<PAGE> 44
The registrant has not sent to security holders any annual report covering the
registrant's last fiscal year or any proxy material relating to a meeting of
security holders. Copies of such annual report and proxy will be furnished to
the Commission when it is sent to security holders.
44
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on January 11, 2000.
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
By: /s/ Barry L. Shevlin
-------------------------------
Barry L. Shevlin, Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
By: /s/ Barry L. Shevlin CEO and Chairman of January 11, 2000
---------------------- the Board
Barry L. Shevlin
By: /s/ Tom Chubokas President, Director January 11, 2000
----------------------
Tom Chubokas
By: /s/ James C. Watson Executive Vice President, January 11, 2000
---------------------- Chief Technology Officer
James C. Watson and Director
By: /s/ Dr. Howard Tackett Vice President, Strategic January 11, 2000
----------------------- Support, Director
Dr. Howard Tackett
By: /s/ James Wallace Director January 11, 2000
----------------------
James Wallace
</TABLE>
45
<PAGE> 46
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 1999
AND
YEARS ENDED AUGUST 31, 1998 AND 1997
<PAGE> 47
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
TABLE OF CONTENTS
================================================================================
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Stockholders' Equity (Deficit) F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 to F-22
</TABLE>
<PAGE> 48
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Progressive Telecommunications Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Progressive
Telecommunications Corporation and Subsidiaries as of September 30, 1999, and
August 31, 1998, and the related consolidated statements of operations,
stockholders' equity and cash flows for the period ended September 30, 1999 and
years ended August 31, 1998 and 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Progressive Telecommunications
Corporation and Subsidiaries as of September 30, 1999 and August 31, 1998, and
the results of its operations and its cash flows for the period ended September
30, 1999 and years ended August 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has experienced significant losses and has
negative working capital at September 30, 1999. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Meeks, Dorman & Company, P.A.
Meeks, Dorman & Company, P.A.
Longwood, Florida
December 3, 1999, except for Note 19,
as to which the date is January 10, 2000
<PAGE> 49
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
==============================================================================================================
September 30, August 31,
1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 33,346 $ 7,730
Certificates of deposit 52,133 --
Note receivable (Note 5) 100,000 --
Accounts receivable, net (Note 2) 541,545 71,468
Due from stockholders -- 83,367
Inventory 35,478 --
Prepaid and other assets 45,035 113,966
- --------------------------------------------------------------------------------------------------------------
Total current assets 807,537 276,531
- --------------------------------------------------------------------------------------------------------------
Property and equipment, net (Note 6) 944,392 70,351
- --------------------------------------------------------------------------------------------------------------
Other assets:
Goodwill, net (Note 7) 4,348,039 --
Other intangible assets, net (Note 8) 205,174 17,070
Deferred charges (Note 9) 50,000 --
Deposits 27,002 800
- --------------------------------------------------------------------------------------------------------------
Total other assets 4,630,215 17,870
- --------------------------------------------------------------------------------------------------------------
$ 6,382,144 $ 364,752
==============================================================================================================
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 1,380,378 $ 126,766
Accrued liabilities:
Payroll and related taxes 567,378 101,304
Other 599,064 52,724
Notes payable to related parties (Note 10) 441,200 256,200
Lines of credit (Note 11) 32,834 400,000
Current maturities of long-term debt (Note 12) 139,386 --
Current maturities of obligations under capital lease (Note 13) 143,466 14,426
Deposits on unissued common stock 151,000 54,000
- --------------------------------------------------------------------------------------------------------------
Total current liabilities 3,454,706 1,005,420
- --------------------------------------------------------------------------------------------------------------
Long-term debt, net of current maturities (Note 12) 207,334 --
Obligations under capital lease, net of current maturities (Note 13) 56,886 28,774
- --------------------------------------------------------------------------------------------------------------
Total liabilities 3,718,926 1,034,194
- --------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes 17 & 18)
Minority interest 747,303 --
- --------------------------------------------------------------------------------------------------------------
Stockholders' equity (deficit) (Note 15):
Non-voting cumulative preferred stock, $.01 par value,
1,000,000 shares authorized, 0 and 4,500 issued and outstanding at
September 30, 1999 and August 31, 1998, respectively -- 45
Common stock $.001 par value; 50,000,000 shares authorized;
8,222,122 and 7,175,837 shares issued and outstanding
at September 30, 1999 and August 31, 1998 , respectively 8,222 7,176
Additional paid-in capital 8,546,226 799,389
Accumulated deficit (6,638,533) (1,476,052)
- --------------------------------------------------------------------------------------------------------------
Total stockholders' equity (deficit) 1,915,915 (669,442)
- --------------------------------------------------------------------------------------------------------------
$ 6,382,144 $ 364,752
==============================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 50
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
================================================================================================
September 30, August 31, August 31,
For the period and years ended, 1999 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 4,541,768 $ 184,499 $ 26,918
Cost of sales 3,614,779 87,331 5,465
- ------------------------------------------------------------------------------------------------
Gross profit 926,989 97,168 21,453
- ------------------------------------------------------------------------------------------------
Operating expenses 5,950,489 1,355,532 209,682
- ------------------------------------------------------------------------------------------------
Operating loss (5,023,500) (1,258,364) (188,229)
- ------------------------------------------------------------------------------------------------
Other income (expense):
Other income 10,391 -- --
Interest expense (149,372) (29,459) --
- ------------------------------------------------------------------------------------------------
Total other income (expense) (138,981) (29,459) --
- ------------------------------------------------------------------------------------------------
Net loss $(5,162,481) $(1,287,823) $ (188,229)
================================================================================================
Net loss per share $ (0.63) $ (0.18) $ (0.03)
================================================================================================
Weighted average number of shares and share
equivalents outstanding 8,177,529 7,175,837 7,175,837
================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 51
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
===============================================================================================================
Preferred Stock Common Stock
--------------------------------------------------------------------
Shares Par Value Shares Par Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Date of inception, July 10, 1996 -- $ -- -- $ --
- ---------------------------------------------------------------------------------------------------------------
Shares issued to Progressive
shareholders in reverse merger -- -- 6,663,513 6,664
Shares issued to Marquee
shareholders in reverse merger -- -- 512,324 512
Issuance of common stock
for cash -- -- 1,577,300 1,577
Issuance of preferred stock
for cash 111,500 1,115 -- --
Conversion of Progressive shares
to Marquee shares -- -- (1,577,300) (1,577)
Net loss -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Balance, August 31, 1997 111,500 $ 1,115 7,175,837 $ 7,176
- ---------------------------------------------------------------------------------------------------------------
Issuance of preferred
stock for cash 118,820 1,188 -- --
Issuance of common stock
for cash -- -- 100,000 100
Conversion of preferred stock
to common stock (225,820) (2,258) 451,640 452
Issuance of common stock
for services -- -- 126,000 126
Conversion of debt into
common stock -- -- 511,000 511
Conversion of Progressive shares
to Marquee shares -- -- (1,188,640) (1,189)
Net loss -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Balance, August 31, 1998 4,500 45 7,175,837 7,176
- ---------------------------------------------------------------------------------------------------------------
Issuance of common
stock for cash -- -- 423,600 424
Issuance of common
stock for services -- -- 755,595 755
Conversion of debt into
common stock -- -- 1,102,605 1,102
Issuance of stock for
acquisitions -- -- 2,535,738 2,536
Conversion of preferred
stock to common stock (4,500) (45) 9,000 9
Elimination of accumulated
deficit in Marquee -- -- -- --
Conversion of Progressive
shares to Marquee shares -- -- (3,780,253) (3,780)
Net loss -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Balance, September 30, 1999 -- $ -- 8,222,122 $ 8,222
===============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===============================================================================================
Additional
Paid-in Accumulated Total
Capital Deficit Equity (Deficit)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Date of inception, July 10, 1996 $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------
Shares issued to Progressive
shareholders in reverse merger (6,664) -- --
Shares issued to Marquee
shareholders in reverse merger (512) -- --
Issuance of common stock
for cash 89,143 -- 90,720
Issuance of preferred stock
for cash 104,565 -- 105,680
Conversion of Progressive shares
to Marquee shares 1,577 -- --
Net loss -- (188,229) (188,229)
- -----------------------------------------------------------------------------------------------
Balance, August 31, 1997 $ 188,109 $ (188,229) $ 8,171
- -----------------------------------------------------------------------------------------------
Issuance of preferred
stock for cash 210,762 -- 211,950
Issuance of common stock
for cash 900 -- 1,000
Conversion of preferred stock
to common stock 1,806 -- --
Issuance of common stock
for services 314,934 -- 315,060
Conversion of debt into
common stock 81,689 -- 82,200
Conversion of Progressive shares
to Marquee shares 1,189 -- --
Net loss -- (1,287,823) (1,287,823)
- -----------------------------------------------------------------------------------------------
Balance, August 31, 1998 799,389 (1,476,052) (669,442)
- -----------------------------------------------------------------------------------------------
Issuance of common
stock for cash 920,076 -- 920,500
Issuance of common
stock for services 1,589,125 -- 1,589,880
Conversion of debt into
common stock 2,065,076 -- 2,066,178
Issuance of stock for
acquisitions 3,801,071 -- 3,803,607
Conversion of preferred
stock to common stock 36 -- --
Elimination of accumulated
deficit in Marquee (632,327) -- (632,327)
Conversion of Progressive
shares to Marquee shares 3,780 -- --
Net loss -- (5,162,481) (5,162,481)
- -----------------------------------------------------------------------------------------------
Balance, September 30, 1999 $ 8,546,226 $(6,638,533) $ 1,915,915
===============================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 52
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
=========================================================================================================
September 30, August 31, August 31,
For the period and years ended, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(5,162,481) $(1,287,823) $ (188,229)
Adjustments to reconcile net cash
used by operating activities:
Depreciation and amortization 368,130 11,945 6,441
Bad debt expense 12,857 14,299 --
Common stock issued for services 1,589,880 315,060 --
Changes in assets and liabilities:
Certificates of deposit (1,485) -- --
Accounts receivable (24,893) (85,767) --
Inventories (21,708) -- --
Prepaid expenses and other 69,378 (113,966) --
Bank overdraft -- (9,332) 9,332
Other assets 360 -- --
Accounts payable 424,216 102,460 24,306
Accrued payroll and related taxes 466,074 -- --
Accrued other 246,189 126,655 9,373
- ---------------------------------------------------------------------------------------------------------
Net cash used by operations (2,033,483) (926,469) (138,777)
- ---------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Issuance of notes receivable (100,000) -- --
Purchase of intangible assets (890) (18,651) (765)
Purchase of property and equipment (168,978) (6,117) (37,074)
Decrease (increase) in loans to stockholders 83,367 (68,020) (15,347)
(Increase) decrease in deposits 1,285 3,637 (4,437)
Cash acquired from merger 21,709 -- --
- ---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (163,507) (89,151) (57,623)
- ---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 100,000 -- --
Proceeds from stockholder loans 159,000 356,400 90,720
Net proceeds from issuance of preferred stock -- 211,950 105,680
Net proceeds from issuance of common stock 920,500 1,000 --
Proceeds from line of credit 1,108,155 400,000 --
Principal payments on long term debt (74,614) -- --
Principal payments on capital leases (87,435) -- --
Proceeds from deposits on unissued common stock 97,000 54,000 --
- ---------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,222,606 1,023,350 196,400
- ---------------------------------------------------------------------------------------------------------
Net increase in cash 25,616 7,730 --
Cash, beginning of period 7,730 -- --
- ---------------------------------------------------------------------------------------------------------
Cash, end of period $ 33,346 $ 7,730 $ --
=========================================================================================================
Supplemental disclosure:
Interest paid during the period $ 142,214 $ 1,129 $ --
Income taxes paid during the period -- -- --
Conversion of debt into common stock 2,066,178 82,200 --
Purchase of equipment through
capital lease obligation -- 43,200 --
Stock issued for goodwill $ 4,517,443 $ -- $ --
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 53
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION
Progressive Telecommunications Corporation and Subsidiaries (the "Company" or
"Progressive") was incorporated on July 10, 1996 under the laws of the State of
Florida. On July 30, 1999, the Company entered into a reverse acquisition
agreement with Marquee Entertainment, Inc. ("Marquee") to become a publicly
traded company incorporated under the laws of the State of Nevada (see Note 4).
The Company generates the majority of its revenue as a provider of long distance
telephone service. The Company has been in the development stage to become a
fully integrated provider of telecommunications and e-commerce services to
businesses. The start up of these additional businesses is discussed further in
Note 19. Currently, the Company utilizes independent representatives ("IRs") to
market its long distance service to residential and small business subscribers
throughout the United States. The Company completes subscriber calls to all
directly dialable locations worldwide utilizing network switching and
transmission facilities provided by other companies.
The Company's other subsidiaries consist of Opus Assistant, Inc., CCC
Communications Corporation ("CCC"), and CCC's wholly owned subsidiaries,
Storm-tel, Inc., Eclectic Enterprises, Inc., and Like-tel, Inc. All significant
intercompany accounts and transactions have been eliminated upon consolidation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Company conform with generally
accepted accounting principles. The policies that materially affect the
financial position and results of operations are as follows:
MAJOR CUSTOMERS - On December 31, 1998, the Company acquired CCC Comminications
Corporation and its client base which included one major customer. For the
period ended September 30, 1999, 24% of the Company's revenue was generated from
this one customer.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of cash, certificates
of deposit, notes receivable, accounts receivable, accounts payable, notes
payable, debt and obligations under capital lease approximate fair value due to
the short maturity of these instruments.
ACCOUNTS RECEIVABLE - Gross accounts receivable of $960,486 and $85,767 at
September 30, 1999 and August 31, 1998, respectively, are net of an allowance
for doubtful accounts of $418,941 and $14,299, resulting in net accounts
receivable of $541,545 and $71,468, respectively. The Company establishes an
allowance for doubtful accounts and anticipated revenue adjustments based upon
factors surrounding the credit risk of specific subscribers, historical trends,
and other information. The Company also reserves specific accounts when
considered appropriate.
F-6
<PAGE> 54
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT - Fixed assets are carried at cost and consist of
furniture, equipment and telecommunication switches. Depreciation is provided
for financial reporting purposes over the estimated useful lives of the assets,
which range from five to ten years, using the straight-line method for book
purposes. The modified accelerated cost recovery system is used for federal
income tax purposes.
INVENTORY - Inventories are carried at the lower of cost or market using the
first-in, first-out method. The Company's inventories consist of pagers,
cellular telephones, phone system parts, and spare parts held for sale.
INTANGIBLE ASSETS - Intangible assets consist of various start-up costs of the
organization, a purchased customer base, a non-compete agreement, and customized
software. These items are carried at cost, and are amortized on a straight-line
basis over the estimated useful lives of the assets, which range from three to
ten years.
REVENUE RECOGNITION - The Company's long distance revenues are recognized as
services are provided and billed to subscribers, the terms of which are specific
to each customer agreement. Revenue for pre-paid calling cards is realized in
advance of service provision.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SIGNIFICANT ESTIMATES - Significant estimates used in preparing these financial
statements include $325,000 in estimated credits due from the Company's long
distance providers for errors in billing. This amount has been recorded as a
reduction in cost of sales and accounts payable. It is at least reasonably
possible that the estimates used will change within the next year.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid financial
instruments purchased with an initial maturity of three months or less to be
cash equivalents.
F-7
<PAGE> 55
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES - The Company follows the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for expected future tax
consequences of events that have been included in the Company's financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between financial statement
and tax basis of assets and liabilities using enacted tax rates in effect when
these differences are expected to reverse. Valuation allowances are established,
when appropriate, to reduce deferred tax assets to the amount expected to be
realized.
CONCENTRATION OF CREDIT RISK - Concentration of credit risk is limited to trade
receivables and is subject to the financial conditions of certain major clients.
As a general practice, the Company does not require collateral or other security
to support client receivables. The Company conducts periodic reviews of its
customer payment practices to minimize collection risks on trade receivables.
The majority of the Company's subscribers are wholesale and commercial
subscribers and are primarily located in seven states, which are not
concentrated in any specific geographic region of the United States.
RECLASSIFICATION - Certain reclassifications have been made in the prior year's
financial statements to conform to the fiscal year 1999 presentation.
LONG-LIVED ASSETS - The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 121, ("SFAS No. 121") "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
and determined that no impairment loss needs to be recognized for applicable
assets. SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used or disposed of by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
STOCK-BASED COMPENSATION - The Company has adopted the provisions of Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which encourages companies to record compensation cost for
stock-based employee compensation plans at fair value.
F-8
<PAGE> 56
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE - The Company has adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," which requires presentation of basic
earnings per share ("Basic EPS") and diluted earnings per share ("Diluted EPS").
The computation of Basic EPS is computed by dividing income available to common
stockholders by the weighted average number of outstanding common shares during
the period. Diluted EPS gives effect to all dilutive potential common shares
outstanding during the period. The computation of Diluted EPS does not assume
conversion, exercise or contingent exercise of securities that would have an
anti-dilutive effect on earnings.
The shares used in the computations are as follows:
<TABLE>
<CAPTION>
====================================================================================
September 30, August 31, August 31,
1999 1998 1997
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS 8,177,529 7,175,837 7,175,837
Diluted EPS 8,177,529 7,175,837 7,175,837
====================================================================================
</TABLE>
CAPITAL STRUCTURE - The Company has adopted Statement of Financial Accounting
Standards No. 129, "Disclosure of Information about Capital Structure," ("SFAS
No. 129"), which is applicable to all companies. Capital structure disclosures
required by SFAS No. 129 include liquidation preferences of preferred stock,
information about the pertinent rights and privileges of the outstanding equity
securities, and the redemption amounts for all issues of capital stock that are
redeemable at fixed or determinable prices on fixed or determinable dates. The
Company has no items which would be affected by this disclosure requirement.
COMPREHENSIVE INCOME - The Company has adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," which requires that changes
in amounts of certain items, including foreign currency translation adjustments
and gains and losses on certain securities be shown in the financial statements.
The Company has no items that represent comprehensive income, and therefore, has
not included a schedule of comprehensive income in the financial statements.
F-9
<PAGE> 57
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION - The
Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information," ("SFAS
No. 131"). SFAS No. 131 changes the way public companies report information
about segments of their business in annual financial statements. It also
requires entity-wide disclosures about the products and services an entity
provides, the material countries in which it holds assets and reports revenues,
and its major customers. The Company has no significant segments that would
require separate disclosure.
IMPACT OF YEAR 2000 ISSUE - During the period ended September 30, 1999, the
Company conducted an assessment of issues related to the Year 2000 and has made
necessary modifications needed in order to ensure that its computer systems will
properly utilize dates beyond December 31, 1999. The Company is in the process
of updating its switch equipment to be compliant. At this time, the Company
cannot determine the impact the Year 2000 will have on its key customers or
suppliers. If the Company's customers or suppliers do not convert their systems
to become Year 2000 compliant, the Company may be adversely impacted. The
Company is addressing these risks in order to reduce the impact on the Company.
NEW ACCOUNTING PRONOUNCEMENTS - The American Institute of Certified Public
Accountants' Executive Committee issued Statement of Position Number 98-1 ("SOP
98-1"), "Accounting for the Cost of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 is effective for fiscal years beginning after December
15, 1998. Management believes that the Company is substantially in compliance
with this pronouncement and that the implementation of this pronouncement will
not have a material effect on the Company's financial position, results of
operations or cash flows.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," ("SFAS No. 133"). This statement establishes accounting
and reporting guidelines for derivatives and requires an establishment to record
all derivatives as assets or liabilities on the balance sheet at fair
value. Additionally, this statement establishes accounting treatment for four
types of hedges: hedges of changes in the fair value of assets or liabilities,
firm commitments, forecasted transactions and hedges of foreign currency
exposures of net investments in foreign operations. Any derivative that
qualifies as a hedge, depending upon the nature of that hedge, will either be
offset against the change in fair value of the hedged assets, liabilities or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. SFAS No. 133 is effective for
years beginning after June 15, 2000. The Company does not currently participate
in these types of financing activities and does not anticipate that the adoption
of this statement will have a material impact on its consolidated balance
sheets, statements of operations, or cash flows.
F-10
<PAGE> 58
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 3 - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred net
losses of approximately $5,162,000, $1,288,000 and $188,000 during the period
ended September 30, 1999 and years ended August 31, 1998, and 1997,
respectively. The Company's current liabilities exceeded its current assets by
$2,727,000 and $729,000 as of September 30, 1999 and August 31, 1998,
respectively. These factors create substantial doubt about the Company's
ability to continue as a going concern. As discussed in Note 19, the Company
has planned a private offering to raise $3,000,000 in connection with the
start-up of its two new subsidiaries. The Company also plans to generate
immediate revenue from the start-up of these new subsidiaries. The financial
statements do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern.
NOTE 4 - ACQUISITIONS
In December 1997, under a reorganization agreement, CCC Communications
Corporation acquired 100% of the common stock of Eclectic Enterprises, Inc., in
exchange for 250,000 shares of common stock. Assets of Eclectic Enterprises,
Inc. were then transferred to Storm-tel, Inc.
In December 1997, CCC Communications Corporation also acquired certain assets of
Midwest Telephone Service, Inc. a telephone communications service company,
through a sale and purchase agreement. CCC received equipment, a customer base,
and non-compete agreements for a cash purchase price of $129,000.
On March 4, 1998, CCC Communications Corporation, acquired certain assets of
TelCentral, a telecommunications company. CCC issued 200,000 shares of common
stock valued at $2.11 per share, $70,000 in cash and notes totaling $137,418 to
the two shareholders of TelCentral who entered into five-year non-compete
agreements. The total purchase price was $630,000. TelCentral's stock was
cancelled upon the merger.
On August 1, 1998, CCC Communications Corporation acquired certain assets and
assumed certain liabilities of Mobile Communications Systems ("MCS"), a company
offering cellular and paging services in the Tampa Bay area. CCC issued 35,000
shares of stock to the stockholders of MCS in exchange for certain assets and
liabilities netting to $4,700. In settlement of two notes assumed in the
purchase, CCC issued an additional 15,000 shares of stock to two individuals.
F-11
<PAGE> 59
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 4 - ACQUISITIONS (CONTINUED)
On December 31, 1998, the Company acquired CCC Communications Corporation, a
telecommunications company located in Cape Coral, Florida. The Company issued
2,535,738 shares of common stock to 84% of the shareholders of CCC. It is the
Company's intent to issue a total of 3,033,940 shares of common stock and own
100% of the stock of CCC, however, not all of the stock had been issued as of
the date of these financial statements. The transaction has been accounted for
as a purchase. The shares of common stock issued and to be issued are valued at
$4,550,910 for the purchase of CCC. CCC's net book value as of the date of
acquisition was $33,467 with the difference of $4,517,443 being recorded as
goodwill. The financial statements presented include the results of operations
from January 1, 1999 through September 30, 1999.
On July 30, 1999, the Company entered into a reverse acquisition agreement with
Marquee Entertainment, Inc. to become a publicly traded company. In the
transaction, Marquee acquired all of the outstanding common stock of
Progressive. Marquee was incorporated on July 26, 1979 under the laws of the
State of Nevada, and had previously been in the film distribution business. Upon
completion of the merger, Marquee Entertainment, Inc. ceased operations and was
renamed Progressive Telecommunications Corporation. For accounting purposes, the
acquisition has been treated as a recapitalization of Progressive, with
Progressive as the acquirer. The historical financial statements prior to July
30, 1999 are those of Progressive. The Nevada corporation is the surviving legal
entity, and the stock of Progressive has been retroactively adjusted for a
common stock split reflecting the legal entity's stock balance as of September
30, 1999.
The Company has elected to keep the year end of the publicly traded Company,
which results in the presentation of 13 months of income by Progressive. The
inclusion of one additional month of losses from Progressive was approximately
$125,000, which was 2% of total losses, and deemed immaterial to the
presentation of the Company as a whole.
The transaction called for the issuance of 9,000,000 shares of Marquee common
stock to the holders of Progressive common stock. As of the date of these
financial statements, 6,663,513 shares had been issued to 82% of the holders of
Progressive common stock. The Company also recorded the net liabilities assumed
in the merger of $632,327 as a reduction in additional paid-in capital.
F-12
<PAGE> 60
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 5 - NOTE RECEIVABLE
Notes receivable consists of a $100,000 loan to Yellow Page Directory.com.,
Inc. Interest is payable monthly at 12%, with the balance due on December 1,
1999. The note is personally guaranteed by the owner of the company.
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
======================================================================================
September 30, August 31,
1999 1998
--------------------------------------------------------------------------------------
<S> <C> <C>
Furniture and fixtures $ 21,502 $ 43,833
Leasehold improvements 3,566 --
Office equipment 123,233 42,558
Computer equipment 100,055 --
Switches 891,528 --
--------------------------------------------------------------------------------------
1,139,884 86,391
Less - Accumulated depreciation (195,492) (16,040)
--------------------------------------------------------------------------------------
Net property and equipment $ 944,392 $ 70,351
======================================================================================
</TABLE>
Depreciation expense for property and equipment was $149,087, $9,738, and $6,301
for the period ended September 30, 1999, and years ended August 31, 1998, and
1997, respectively.
NOTE 7 - GOODWILL
Goodwill is being amortized on a straight-line basis over 20 years. As of
September 30, 1999, the components of goodwill were as follows:
<TABLE>
<CAPTION>
======================================================================================
September 30, August 31,
1999 1998
--------------------------------------------------------------------------------------
<S> <C> <C>
Goodwill $ 4,517,443 $ --
Less - Accumulated amortization (169,404) --
-------------------------------------------
$ 4,348,039 $ --
======================================================================================
</TABLE>
Amortization expense was $169,404, $0, and $0 for the period ended September 30,
1999 and years ended August 31, 1998 and 1997, respectively.
F-13
<PAGE> 61
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 8 - OTHER INTANGIBLE ASSETS
Other intangible assets consisted of the following:
<TABLE>
<CAPTION>
====================================================================================
September 30, August 31,
1999 1998
------------------------------------------------------------------------------------
<S> <C> <C>
Organization costs $ 136,601 $ 765
Customer base 88,366 --
Non-compete covenant 55,000 --
Custom software 19,141 18,651
------------------------------------------------------------------------------------
299,108 19,416
Less - Accumulated amortization (93,934) (2,346)
------------------------------------------------------------------------------------
Net intangible assets $ 205,174 $ 17,070
====================================================================================
</TABLE>
Amortization expense was $50,159, $2,206, and $140 for the period ended
September 30, 1999 and years ended August 31, 1998 and 1997, respectively.
NOTE 9 - DEFERRED CHARGES
The Company has a note payable to a leasing company in the amount of $62,500
(see Note 11). The Company received $12,500 from the leasing company and a
guarantee on a $50,000 letter of credit issued to one of its long distance
carriers. The leasing company was owned by a former board member of CCC
Communications Corporation. The guarantee on the letter of credit is recorded as
a deferred charge in the amount of $50,000.
F-14
<PAGE> 62
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 10 - NOTES PAYABLE TO RELATED PARTIES
As of September 30, 1999, notes payable to related parties consisted of $415,200
of notes to various stockholders issued in conjunction with private placements.
The notes accrue interest at 9% and are all due within the next three months.
As of September 30, 1999, the Company also had a note payable to Communications
Group of America ("CGA") for $26,000 with interest at 12% due January 2, 1999.
CGA is a telecommunications sales organization owned by the wife of an officer
and director of the Company. As of September 30, 1999, all interest due had been
forgiven.
<TABLE>
<CAPTION>
====================================================================================
September 30, August 31,
1999 1998
------------------------------------------------------------------------------------
<S> <C> <C>
Notes payable to stockholders $ 415,200 $ 256,200
Note payable to CGA 26,000 -
------------------------------------------------------------------------------------
$ 441,200 $ 256,200
====================================================================================
</TABLE>
NOTE 11 - LINES OF CREDIT
The Company has lines of credit available with two banks. The first line has
$36,000 available at an interest rate of prime plus 0.5%. At September 30, 1999,
the Company had an outstanding balance of $32,834.
The Company also has a line of credit with a bank in the amount of $35,000. The
line of credit is collateralized by a $35,000 certificate of deposit and
supports a $35,000 letter of credit issued to a supplier (see Note 17).
Principal and interest payments are due within 30 days of a draw, with an
interest rate set at prime. At September 30, 1999, the Company had not borrowed
against the line of credit.
F-15
<PAGE> 63
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 12 - LONG-TERM DEBT
<TABLE>
<CAPTION>
======================================================================================================================
September 30, August 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Amount payable to an individual under a collateralized note agreement, principal
payable in equal monthly installments consistent with note terms, plus annual
interest at 12%, due January 1, 2000, collateralized by
equipment purchased $ 21,134 $ --
Amount payable to a leasing company under a note agreement, principal payable in
equal monthly installments consistent with note terms, plus
annual interest at 12%, due January 31, 2000 62,500 --
Amount payable to a company under a convertible debenture, due April 1,
2001, plus interest at 6% 100,000 --
Amount payable to an individual under a note agreement, principal payable in
equal monthly installments consistent with note terms, plus annual interest
at 5.64%, due April 30, 2001 56,681 --
Amount payable to an individual under a note agreement, principal payable in
equal monthly installments consistent with note terms, plus annual interest
at 5.64%, due April 30, 2001 18,905 --
Subordinated notes payable to individuals, annual interest at 12%, payable
quarterly, principal due upon maturity with maturity dates between July 15,
2001 and August 19, 2001 87,500 --
- ---------------------------------------------------------------------------------------------------------------------
Total long-term debt 346,720 --
- ---------------------------------------------------------------------------------------------------------------------
Less current maturities (139,386) --
- ---------------------------------------------------------------------------------------------------------------------
$ 207,334 $ --
======================================================================================================================
</TABLE>
At September 30, 1999 future maturities on long-term debt are as follows:
=========================================
2000 $ 139,386
2001 207,334
----------------------------------------
Total $ 346,720
========================================
Interest expense for the period ended September 30, 1999 was $22,261 and $0 for
the years ended August 31, 1998 and 1997.
F-16
<PAGE> 64
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 13 - OBLIGATIONS UNDER CAPITAL LEASE
<TABLE>
<CAPTION>
=====================================================================================================================
September 30, August 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Principal payable in equal monthly installment consistent with amended lease
terms, no interest rate specified, due January 1, 2001,
collateralized by telecommunications equipment $ 80,297 $ --
Principal payable in equal monthly installments consistent with amended lease
terms, no interest rate specified, due March 1, 2001, collateralized by
telecommunications equipment
89,211 --
Principal payable in 24 equal monthly installments of $2,175, with interest at
12% beginning December 1998 and ending November 2000, collateralized by
equipment 30,844 43,200
- ---------------------------------------------------------------------------------------------------------------------
Total obligations under capital lease 200,352 43,200
- ---------------------------------------------------------------------------------------------------------------------
Less current maturities (143,466) (14,426)
- ---------------------------------------------------------------------------------------------------------------------
$ 56,886 $ 28,774
=====================================================================================================================
</TABLE>
At September 30, 1999 present value of minimum capital lease payments
approximated the following:
========================================================
2000 $ 165,464
2001 59,236
--------------------------------------------------------
224,700
Less amount representing interest (24,348)
--------------------------------------------------------
Net capital lease obligation $ 200,352
========================================================
Interest expense for the period ended September 30, 1999 was $29,301, and $0 for
the years ended August 31, 1998 and 1997.
F-17
<PAGE> 65
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 14 - INCOME TAXES
The significant components of the net deferred tax assets consist of the
following:
<TABLE>
<CAPTION>
==========================================================================================
September 30, August 31,
1999 1998
------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 4,204,000 $ 490,000
Bad debt 178,000 5,000
Accrued expenses 42,000 5,000
------------------------------------------------------------------------------------------
Gross deferred income tax assets 4,424,000 500,000
Valuation allowance (2,712,000) (498,000)
------------------------------------------------------------------------------------------
Total deferred income tax assets 1,712,000 2,000
------------------------------------------------------------------------------------------
Total deferred income tax liabilities-Goodwill (1,712,000) (2,000)
------------------------------------------------------------------------------------------
Net deferred income tax assets $ -- --
==========================================================================================
</TABLE>
The following summary reconciles differences from taxes at the statutory rates
with the effective rate:
<TABLE>
<CAPTION>
================================================================================
September 30, August 31, August 31,
1999 1998 1997
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes at statutory rates (34.0%) (34.0%) (34.0%)
State taxes, net of federal benefit (5.0%) (5.0%) (5.0%)
Losses without tax benefits 39.0% 39.0% 39.0%
--------------------------------------------------------------------------------
Income taxes at effective rates 0% 0% 0%
================================================================================
</TABLE>
Unused net operating losses for income tax purposes, expiring in various amounts
from 2002 through 2019 of approximately $10,800,000 are available at September
30, 1999 for carryforward against future years' taxable income. Under Section
382 of the Internal Revenue Code, the annual utilization of this loss may be
limited due to changes in ownership. The tax benefit of these losses of
approximately $4,204,000 has been offset by a valuation allowance due to it
being more likely than not that the deferred tax assets will not be realized.
The valuation allowance for deferred tax assets increased by $2,214,000 during
1999.
NOTE 15 - STOCKHOLDERS' EQUITY
In connection with the Company's reverse merger (see Note 4), the Company's
stock has been retroactively adjusted for a forward split to equal the Marquee
stock that was issued in the merger. Par value of common stock has also been
adjusted from $.01 to $.001 per share. All common stock information included in
the accompanying financial statements has been retroactively adjusted to give
effect to the stock split and the change in par value.
F-18
<PAGE> 66
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 15 - STOCKHOLDERS' EQUITY (CONTINUED)
The Company had 705,000 options and warrants outstanding at September 30, 1999
which were reserved for future issuances of common stock. CCC issued 175,000
warrants in connection with a subordinated note offering. Each warrant carries
the right to purchase a share of common stock for $0.67 through January 15, 2000
and for $1.00 from January 15, 2000 through July 15, 2001. CCC issued warrants
to a noteholder to purchase 125,000 shares of common stock at an exercise price
of $0.67 per share through February 1, 1999 and $1.00 for 18 months thereafter.
The same noteholder was issued an option to purchase 155,000 shares of common
stock at $0.67 per share through February 1, 1999 and $1.00 per share thereafter
until the note is paid in full. The noteholder has the right to acquire the
balance of the shares which were not acquired with the proceeds of the note for
cash at the option prices. In relation to an acquisition agreement, two
individuals purchased an aggregate of 200,000 warrants at $0.01 each. Each
warrant is exercisable for one share of common stock at $1.20 per share through
February 20, 2000, and $1.80 per share expiring February 20, 2001. The Company
also issued a $100,000 convertible debenture with the right to convert to common
stock at a price of $2.00 per share, or 50,000 shares through April 30, 2001.
The issuances underlying these warrants have been assumed by the Company,
however, based on the exchange formulas as part of the Securities Exchange
Agreement between the Company and Progressive-Florida and the Merger Agreement
between Progressive-Florida and CCC Communications, the number of warrants
equals an aggregate of 124,720 with exercise prices ranging from $3.79 to
$10.17 per share.
NOTE 16 - OTHER RELATED PARTY TRANSACTIONS
The Company pays commissions to Communications Group of America ("CGA"), which
is a telecommunications sales organization owned by the wife of an officer and
director of the Company. Commissions paid to CGA for the period ended September
30, 1999 were $143,101 and accounts payable to CGA was $20,895 as of September
30, 1999.
NOTE 17 - COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AGREEMENTS - The Company has written employment agreements with
certain key employees. The documents set forth terms of employment, termination,
compensation, etc. The employment terms range from two to five years. Annual
base salaries range from $30,000 to $140,000 for the year ended September 30,
1999. All agreements provide for additional employee benefits. Certain of the
agreements also contain covenants-not-to-compete for two years following
termination of the agreements.
LONG DISTANCE CARRIER AGREEMENTS - CCC has entered into agreements with various
wholesale long distance carriers to procure service for wholesale and retail
resale. The terms of the agreements vary. In certain agreements, CCC has
committed to maintaining minimum monthly usage levels or pay the difference
between the agreed upon minimum and the actual usage.
F-19
<PAGE> 67
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 17 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
INDEPENDENT AGENT AGREEMENTS - CCC has signed independent agent (IA) agreements
with various parties, authorizing them to sell phone service to customers. The
agreements specify various rates of commission at which the IA will be paid, as
well as the circumstances and timing of payment. CCC agrees to continue paying
an agent commission on customer usage, even if the agreement is terminated.
LETTERS OF CREDIT - The Company has three unused letters of credit totaling
$250,000 at September 30, 1999 for its long distance and wireless carriers. One
letter of credit is supported by a $35,000 and a $15,000 certificate of deposit.
The Company has $50,000 in deferred charges related to a second letter of credit
(see Note 9). Finally, the Company pays a minimum monthly charge of $3,000 to a
third party in exchange for a $150,000 letter of credit.
OPERATING LEASES - The Company leases office space at six locations throughout
the United States. These leases contain various renewal terms and escalation
clauses with lease terms expiring through December 2002. Total rent expense was
$169,798, $68,415, and $12,307 in 1999, 1998, and 1997, respectively. Future
minimum rental commitments due under operating leases with initial or remaining
terms greater than 12 months as of September 30, 1999 are as follows:
<TABLE>
<CAPTION>
=====================================================
Minimum
Year ending September 30, Commitments
----------------------------------------------------
<S> <C>
2000 $ 117,865
2001 96,836
2002 91,346
2003 23,058
-----------------------------------------------------
Total $ 329,105
=====================================================
</TABLE>
CONSULTING AGREEMENT - On June 8, 1997, the Company entered into a consulting
agreement with a financial consultant as part of their efforts to raise capital
for the Company. The agreement provided for fees based on capital raised and
the issuance of stock options. On April 1, 1998, a new service agreement was
written with the consultant for services to be paid through the issuance of
50,000 shares of common stock and a one-time cash payment of $45,000. As of
September 30, 1999, performance on the above agreement was in dispute, and no
liability has been recorded in these financial statements. The financial
consultant retained an attorney and alleged breach of contract. No suit had
been filed as of the date of these financial statements, however, the
consultant has demanded arbitration under the terms of the agreement.
F-20
<PAGE> 68
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 18 - LITIGATION, CLAIMS AND ASSESSMENT
During 1999, a lawsuit was filed against the Company and the two principals of
the Company, individually, alleging breach of fiduciary duties while the two
principals were employees of a cable television and satellite installation
company. In addition, the suit alleges usurped corporate opportunities belonging
to the other company, tortious interference with business relations,
misrepresentations, and the taking of business belonging to the other company,
resulting in the ultimate demise of the cable television and satellite
installation company. It is management's belief that the allegations are without
merit, that the outcome appears to be favorable, and they intend to vigorously
defend and/or prosecute these matters.
On June 28, 1999, the Company entered into a settlement agreement, which was the
result of a lawsuit filed by a stockholder. Under the terms of the agreement,
the Company is to pay a total of $52,372 in equal installments over a ten-month
period commencing June 28, 1999. This agreement settles liabilities associated
with a $30,000 note originally issued as part of a subscription agreement due
February 17, 1999, as well as $18,000 originally provided by the stockholder to
facilitate a marketing campaign which never commenced. The Company is behind on
payments per the settlement agreement and the claimants are seeking to enforce
the agreement. The Company is seeking to negotiate a resolution of the matter.
In the event a resolution is not agreed upon, it is probable that a judgment
will be entered against the Company.
NOTE 19 - SUBSEQUENT EVENTS
From October 8, 1999 through December 17, 1999, a stockholder director of
the Company, has funded the Company in the amount of $600,000, which had been
evidenced by five promissory notes bearing intrest at the rate of 12%. The
notes become due one year from the date of issuance.
On November 1, 1999, the Company furthered its plans to expand from a
telecommunications company to a fully integrated provider of telecommunications
and e-commerce services to businesses through the incorporation of two new
subsidiaries, The Yellow Page Directory.com Corp. and Businessmall.com Inc.
Yellow Page Directory.com will be in the business of providing an internet
directory targeting business owners. Businessmall.com will be an internet site
focused on providing businesses with one stop for business products, services
and information.
In connection with the start-up of these entities, the Company has planned a
private offering to raise $5,000,000, selling up to 2,000,000 units at $2.50 per
unit. Each unit would consist of one share of $.001 par value common stock and a
one-year warrant to purchase one share of $.001 par value common stock for $2.50
share.
F-21
<PAGE> 69
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 19 - SUBSEQUENT EVENTS (CONTINUED)
As of January 10, 2000, the Company raised $846,175 and issued 338,470 shares
and warrants pursuant to this offering and the Company elected to terminate this
offering.
On December 13, 1999, the Company issued 50,000 shares of common stock to a
third party pursuant to a financial consulting agreement.
On December 22, 1999, the Company commenced a $3,000,000 private offering
consisting of 60 units (the "units") for $50,000 per Unit, each consisting of a
9% Convertible Subordinated Debenture in the principal amount of $50,000 due
December 1, 2001 (the "Debenture") and 33,333 three year warrants to purchase
shares for $1.50 per share. Each Debenture is convertible into the Company's
common stock at the rate of $1.50 per share. As of January 10, 2000, the Company
raised $682,500 and issued 455,000 warrants pursuant to this offering. As of the
date hereof, this offering is ongoing.
On December 29, 1999, the Company entered into a letter of intent to acquire all
of the outstanding shares of CORPHQ, Inc. at the rate of $1.50 per share payable
in shares of the Company's common stock. Subject to due diligence, it is
anticipated that the acquisition will be completed during the Company's second
fiscal quarter.
F-22
<PAGE> 1
Exhibit 4.1
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
9% CONVERTIBLE SUBORDINATED DEBENTURE
DUE DECEMBER 1, 2001
Number: _____________
Principal: $3,000,000.00
Original Issue Date: December 22, 1999
Registered Holder(s): _______________
Progressive Telecommunications Corporation, a Nevada corporation (the
"Company") with principal offices at 601 Cleveland Street, Suite 930,
Clearwater, Florida 33755, for value received, hereby promises to pay the
registered holder hereof (the "Holder") the principal sum set forth above on
December 1, 2001 (the "Maturity Date"), in such coin or currency of the United
States of America as at the time of payment shall be the legal tender for the
payment of public and private debts, and to pay interest, less any amounts
required by law to be deducted or withheld, computed on the basis of a 360-day
year, on the unpaid principal balance hereof from the date hereof (the
"Original Issue Date"), at the rate of 9% per year, until such principal sum
shall have become due and payable, or has been converted by the Holder pursuant
to Section 5, below. Interest payments will be made in such number of shares of
the Company's common stock, $.001 par value ("Common Stock"), computed in
accordance with Section 5.1 below and shall be paid semi-annually commencing
June 15, 2000, or if the principal of the debenture is earlier converted, upon
conversion pursuant to Section 5, below. All references herein to dollar
amounts refers to U.S. dollars.
By acceptance and purchase of this Debenture, the registered holder
hereof agrees with the Company that the Debenture shall be subject to the
following terms and conditions:
1. Authorization of Debentures. The Company has authorized the issue
and sale of its 9% Convertible Subordinated Debentures due December 1, 2001
(the "Debentures," such term includes any debentures which may be issued in
exchange or in replacement thereof) in the aggregate principal amount of not
more than U.S. $3,000,000, issued in multiples of $50,000 in principal amount.
2. Warrants. For each one dollar and fifty cents ($1.50) invested, the
Company shall issue the Holder one (1) Common Stock Purchase Warrant (up to
2,000,000). Each Warrant shall be exercisable for a period of three years from
the date of issuance at the rate of $1.50 per share.
1
<PAGE> 2
3. Transfer or Exchange. Prior to due presentation to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat
the person in whose name this Debenture is duly registered on the Company's
Debenture Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes. Neither the Debenture nor the
shares issuable upon conversion hereof may not be offered, sold, pledged or
otherwise transferred unless and until registered under the Securities Act of
1933, as amended (the "Act") or unless the Company has received an opinion of
counsel acceptable to it that such registration is not required.
4. Current Market Price:
4.1 For purposes of this Debenture, "Current Market Price" of the
Common stock means:
(a) If traded on a securities exchange or the NASDAQ National
Market, the closing price of the Common Stock on such exchange;
or
(b) If traded over the counter, the high closing bid price reported
by Bloomberg from the NASDAQ the Small Cap Market OTC Bulletin
Board or pink sheets (as the case may be);
In all other events, the market price determined by the Board of
directors of the Company in good faith.
5. Conversion of Debentures.
5.1 Right to Convert the Debenture: The record holder of this
Debenture shall be entitled, on or after the Date of Original Issuance, at the
option of the Holder, to convert this Debenture, in whole or in part, into the
number of fully-paid and non-assessable shares of Common Stock determined by
dividing the amount or principal or interest to be converted by $1.50
("Conversion Price").
5.2 Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the Holder shall surrender such Debenture, together with
the Notice of Conversion annexed hereto as Exhibit 1 appropriately endorsed to
the Company at its principal office, accompanied by written notice to the
Company (a) stating that the Holder elects to convert the Debenture or a
portion thereof, and if a portion, the amount of such portion in multiples of
$1,000 in principal amount, and (b) setting forth the name or names (with
address) in which the certificate or certificates for shares of Common Stock
issuable upon such conversion shall be issued. Provided the Debenture is
received properly endorsed promptly by the Company, the date of conversion of
such Debenture shall be deemed to be the date of receipt of Notice of
Conversion, even if the Company's stock transfer books are at that time closed,
and the converting Holder shall be deemed to have become, on the date of
conversion, the record holder of the shares of Common Stock deliverable upon
such conversion. If the Debenture is not received, properly endorsed by the
fifth business day following the date the Company receives
2
<PAGE> 3
Notice of Conversion, the date of conversion shall be deemed to be the date the
Debenture is received, provided that such later receipt will not lower the
Conversion Price stated in the Notice of Conversion.
Within five business days after the date of conversion, the Company
shall issue and deliver to such converting Holder a certificate or certificates
for the number of shares of Common Stock due on such conversion. No adjustments
in respect of interest or cash dividends shall be made upon the conversion of
any Debenture or Debentures.
Upon conversion of the Debenture in part, the Company shall execute
and deliver to the Holder thereof, at the expense of the Company, a new
Debenture, in aggregate principal amount equal to the unconverted portion of
such Debenture. Such new Debenture shall have the same terms and provisions
other than the principal amount as the Debenture or Debentures surrendered for
conversion.
5.3 Duration of Conversion Privilege. The right to subscribe for
and purchase shares of Common Stock pursuant to the Conversion privilege
granted herein shall commence on the Original Issue Date and shall expire at
5:00 p.m., New York time on December 1, 2001.
5.4 Stock Fully Paid; Not Restricted. The Company convenants and
agrees that:
(a) all shares which may be issued upon the exercise of the
conversion privilege granted herein will, upon issuance in
accordance with the terms hereof, be fully paid, nonassessable,
and free from all taxes, liens and charges (except for taxes,
if any, upon the income of the Holder) with respect to the
issue thereof, and that the issuance thereof shall not give
rise to any preemptive rights on the part of the stockholders;
and
(b) all shares issued after the effective date of the Registration
Statement (defined below) which will be issued upon the
conversion privilege granted herein will be free of all
restrictions under the Securities Act of 1933; and will not
bear any legends or be the subject of any stop transfer
restrictions;
5.5 Antidilution Provisions. The following provisions apply to the
Debenture:
(a) In case the Company shall (i) pay a dividend or make a
distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of
shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
(iv) make a distribution on its Common Stock in shares of its
capital stock other than Common Stock, or (v) issue by
reclassification of its Common Stock other securities of the
Company, the conversion privilege of the Debenture and the
Conversion Price then in effect immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive the
kind and number of shares of Common Stock and
3
<PAGE> 4
other securities of the Company which it would have owned or
would have been entitled to receive after the happening of any
of the events described above, had the Debenture been converted
immediately prior to the happening of such event or any record
date with respect thereto. Any adjustment made pursuant to this
paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if
any, for such event.
(b) In case the Company shall distribute to all holders of its
shares of Common Stock (i) debt securities or other evidences
of its indebtedness which are not convertible into Common Stock
or (ii) assets (excluding cash dividends or distributions out
of earnings), then the Conversion Price shall be determined by
dividing the then current Conversion Price by a fraction, of
which the numerator shall be the higher of the then Current
Market Price, or the Conversion Price on the date of such
distribution, and of which the denominator shall be such
Current Market Price, or such Conversion Price on such date
minus the then fair value of the portion of the assets or
evidences of indebtedness so distributed applicable to one
share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective on the
date of distribution retroactive to the record date for the
determination of stockholders entitled to receive such
distribution. The fair value of such assets shall be determined
in good faith by the Board of Directors of the Company.
(c) No adjustment in the Conversion Price shall be required in the
following events:
(i) If the amount of such adjustment would be less than $.05
per share; provided, however, that any adjustment which by
reason of this paragraph 5.5(c)(i) is not required to be
made immediately shall be carried forward and taken into
account in any subsequent adjustment; or
(ii) The issuance of options under the Company's existing stock
option plans and future stock option plans approved by the
Company's shareholders.
(d) When the number of shares of Common Stock or the Conversion
Price is adjusted as herein provided, the Company shall cause
to be promptly mailed to the Holder by first class mail,
postage prepaid, notice of such adjustment or adjustments and a
certificate from the Company's Chief Financial Officer setting
forth the number of shares of Common Stock and the Conversion
Price after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such
adjustment was made.
4
<PAGE> 5
(e) For the purpose of this Section 5.5, the following shall apply:
(i) The term "Common Stock" shall mean (A) the class of stock
designated as the Common Stock of the Company at the date
of this Debenture or (B) any other class of stock
resulting from successive changes or reclassification of
such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par
value to par value. In the event that any time, as a
result of an adjustment made pursuant to this Section 5.5,
the Holder shall become entitled to receive any securities
upon conversion of the Company other than shares of Common
Stock thereafter the number of such other securities and
the Conversion Price of such securities shall be subject
to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in this Section 5.5.
(ii) If the Common Stock is traded on a securities exchange or
over the counter, the "Current Market Price: for purposes
of this section 5.5 shall mean the average of the Current
Market Prices for the five consecutive trading days
immediately prior to the date of the event which
necessitates an adjustment to the Conversion Price.
5.6 No Adjustment for Dividends. Except as provided in Section 5.5,
no adjustment in respect to any dividends paid shall be made during the term of
the Debenture or upon the Exercise of the Debenture.
5.7 Preservation of Purchase Rights Upon Reclassification
Consolidation, etc. In the case of any consolidation of the Company with or
merger of the Company into another corporation or in the case of any sale or
conveyance to another corporation of all or substantially all of the property,
assets or business of the Company, the Company or such successor or purchasing
corporation, as the case may be, shall provide that the Holder shall have the
right thereafter upon payment of the Conversion Price in effect immediately
prior to such action to purchase upon conversion of the Debenture the kind and
amount of shares and other securities and property which the Holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the Debenture been converted
immediately prior to such action. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 5. The provisions of this Section 5.7 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
5.8 Par Value of Common Stock. Before taking any action which would
cause an adjustment reducing the Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Debenture, the
Company will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may
5
<PAGE> 6
validly and legally issue fully paid and nonassessable shares of Common Stock
at such adjusted Conversion Price.
5.9 Statement on Debenture Certificates. Irrespective of any
adjustments in the Conversion Price or the number of securities convertible,
this Debenture certificate or any certificates hereafter issued may continue to
express the same price and number of securities as are stated in this Debenture
certificate. However, the Company may at any time in its sole discretion (which
shall be conclusive) make any change in the form of the Debenture certificate
that it may deem appropriate and that does not affect the substance thereof;
and any Debenture certificate thereafter issued, whether upon registration or
transfer of, or in exchange or substitution for, an outstanding Debenture
certificate, may be in the form so changed.
6. Registration Rights: Liquidated Damages. The Holder will be
entitled to registration rights in respect of the shares of Common Stock
issuable upon conversion of the Debentures and exercise of the Warrants (the
terms of which are set forth below) as follows: (1) The Company shall prepare
and file, within 90 days of the initial Closing Date, Registration Statement on
Form S-3, if eligible, or Form S-1 or SB-2, whichever is applicable (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") covering the resale of the shares of Common Stock issuable upon
conversion of the Debentures and issuable upon the exercise of the Warrants.
The Company shall use its best efforts to cause the Registration Statement to
be declared effective by the Commission no later than 150 days following the
initial Closing Date and shall promptly deliver to Holder copies of all
amendments to such Registration Statement and correspondence with the
Commission with respect thereto. The Company shall maintain the effectiveness
of the Registration Statement until all of the Common Stock issuable or issued
upon conversion or exercise of the Warrants has been sold. The Company shall
pay all expenses of registration (other than underwriting fees and discounts in
respect of shares of Common Stock offered and sold under such Registration
Statement by the Holder, if any). (2) If the Registration Statement is not
declared effective by the Commission during the 150 day period mentioned above,
the Company shall pay promptly in cash or free trading common stock valued at
the Conversion Price, as hereinafter defined, to the Holder, as liquidated
damages and not as a penalty, an amount equal to one percent (1%) per month
commencing 150 and ending 180 days after the initial Closing of the outstanding
principal amount of the Debentures, in the event that the Registration
Statement is not declared effective by the Commission by the 180th day,
liquidated damages shall be increased to two percent (2%) per month from 180
days after the Closing date until the Registration Statement is declared
effective.
7. Fractional Shares. No Fractional shares of Common Stock will be
issued in connection with any conversion hereunder but in lieu of such
fractional shares, the Company shall make a cash payment therefor equal in
amount to the product of the applicable fraction multiplied by the Conversion
Price then in effect.
8. Subordination. Any right of the Holder to payment of principal or
interest from the Company shall be subordinated to the claims and rights of the
holders of the Senior Debt ("Senior Debt Holders"), "Senior Debt" means all
Indebtedness of the Company other than the Debentures, whether outstanding on
the date of execution of this Debenture or thereafter created,
6
<PAGE> 7
incurred or assumed, except (x) any such Indebtedness that by the terms of the
instrument or instruments by which such Indebtedness was created, assumed or
incurred expressly provides that it (i) is junior in right of payment to the
Debentures or (ii) ranks pari passu in right of payment with the Debentures and
(y) any amendments, modifications or supplements to, or any renewals,
extensions, deferrals, refinancing and refunding of, any of the foregoing. Any
cash payment of principal or interest to the Holder shall be collected,
enforced or received by the Holder as trustee for the Senior Debt Holders and
paid over to the Senior Debt Holders. The Holder agrees that in the event of
any payment of principal or interest by the Company to the Holder by reason of
any receivership, insolvency or bankruptcy proceeding, or proceeding for
reorganization or readjustment of the Company or its properties, or otherwise,
then, in any such event, the Senior Debt Holders shall be preferred in the
payment of their claims over the claim of the Holder to payment of principal or
interest against the Company or its properties, and the claims of the Senior
Debt Holders shall be first paid and satisfied in full before any payment or
distribution of any kind or character, whether in cash or property, shall be
made to the Holder. Provided, however, that this Section 8 shall not apply to
any payment of principal or interest made to the Holder while the Company is
solvent and not in default with respect to its Senior Debt.
9. Replacement of Debenture Certificate. Upon receipt of evidence
satisfactory to the Company of the certificate loss, theft, destruction or
mutilation of the Debenture certificate and, in the case of any such loss,
theft or destruction, upon delivery of a bond of indemnity satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and
cancellation of the Debenture certificate, the Company will issue a new
Debenture certificate, of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Debenture certificate.
10. Covenants of the Company. So long as any of the Debentures remain
outstanding, the Company shall not, without the consent of the holder hereof,
which consent will not be unreasonably withheld:
(a) At all times keep reserved the total number of shares of Common
Stock necessary for the conversion of all of the then
outstanding Debentures at the then current Conversion Rate;
(b) Not pay any dividends in cash and/or property or other assets
of the Company in respect of its Common Stock or otherwise.
(c) Not issue any debentures of the Company other than the
Debentures unless the rights of the holders of such debentures
are pari passu or subordinate to the Debentures;
(d) Not without the consent of Holder enter into a loan secured by
the property and/or assets of the Company or any of its
subsidiaries with (i) any director, officer or 5% stockholder
of the Company, (ii) any entity in which a director, officer of
5% stockholder has an interest as an officer,
7
<PAGE> 8
director, partner, beneficiary of a trust or is a 5% or more
equity holder of such entity, or (iii) any parent, spouse,
child or grandchild of an officer, director or 5% stockholder
of the Company upon terms no less favorable to the Company than
those which could be obtained from an "arms-length" lender; and
(e) Not redeem, repurchase or otherwise acquire any shares of the
common or preferred stock of the Company.
11. Default. If any of the following events (herein called "Events of
Default") shall occur:
(a) if the Company shall default in the payment or prepayment of
any part of the principal of any of the Debentures after the
same shall become due and payable, whether at maturity or at a
date fixed for prepayment or by acceleration or otherwise, and
such default shall continue for more than 30 days; or
(b) if the Company shall default in the payment of any installment
of interest on any of the Debentures for more than 30 days
after the same shall become due and payable; or
(c) if the Company shall make an assignment for the benefit of
creditors or shall be unable to pay its debts as they become
due; or
(d) if the Company shall dissolve; terminate its existence (except
in the case of a merger or consolidation); become insolvent on
a balance sheet basis; commence a voluntary case under the
federal bankruptcy laws or under any other federal or state law
relating to insolvency or debtor's relief; permit the entry of
a decree or order for relief against the Company in an
involuntary case under the federal bankruptcy laws or under any
other applicable federal or state law relating to insolvency or
debtor's relief; permit the appointment or consent to the
appointment of a receiver, trustee, or custodian of the Company
or of any of the Company's property; make an assignment for the
benefit of creditors; or admit in writing to be failing
generally to pay its debts as such debts become due; or
(e) if the Company shall default in the performance of or
compliance with any agreement, condition or term contained in
this Debenture or any of the other Debentures and such default
shall not have been cured within 30 days after such default; or
then and in any such event the Holder of this Debenture shall have the option
(unless the default shall have theretofore been cured) by written notice to the
Company to declare the Debenture to be due and payable, whereupon the Debenture
shall forthwith mature and become due and payable, at the applicable prepayment
price on the date of such notice, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived, anything
contained in this Debenture to the contrary notwithstanding. Upon the
occurrence of an Event of
8
<PAGE> 9
Default, the Company shall promptly notify the Holder of this Debenture in
writing setting out the nature of the default in reasonable detail.
12. Remedies on Default; Notice to Other Holders. In case any one or
more of the Events of Default shall occur, the Holder may proceed to protect
and enforce his or her rights by a suit in equity, action at law or other
appropriate proceeding, whether, to the extent permitted by law, for the
specific performance of any agreement of the Company contained herein or in aid
of the exercise of any power granted hereby. If any Holder of one or more of
the Debentures shall declare the same due and payable or take any other action
against the Company in respect of an Event of Default, the Company will
forthwith give written notice to the Holder of this Debenture, specifying such
action and the nature of the default alleged.
13. Amendments. With the consent of the Holders of more than 50% in
aggregate principal amount of the Debentures at the time outstanding, the
Company, when authorized by a resolution of its Board of Directors, may enter
into a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Debenture
or of any supplemental agreement or modifying in any manner the rights and
obligations of the holders of Debentures or Common Stock issued upon conversion
of the Debentures, and of the Company, provided, however, that no such
supplemental agreement shall (a) extend the fixed maturity of any Debenture, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or alter or impair the right to convert the same
into Common Stock at the rates and upon the terms provided in this Debenture,
without the consent of the Holder of each of the Debentures so affected, or (b)
reduce the aforesaid percentage of Debentures, the Holders of which are
required to consent to any supplemental agreement, without the consent of the
Holders of all Debentures then outstanding.
14. Changes, Waivers, etc. Neither this Debenture nor any provisions
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in Section 13 of this Debenture.
15. Entire Agreement. This Debenture embodies the entire agreement and
understanding between the Holder and the Company and supercedes all prior
agreements and understandings relating to the subject matter hereof.
16. Governing Law, Jurisdiction, etc.
(a) It is the intention of the parties that the laws of the State
of Florida shall govern the validity of this Debenture, the
construction of its terms and the interpretation of the rights
and duties of the parties.
(b) In the event of any dispute, question, controversy or claim
arising among the parties hereto which shall arise out of or in
connection with this Debenture, the parties shall keep the
proceeding related to such controversy in strict confidence and
shall not disclose the nature of said dispute, the status of
the proceeding or any testimony, documents or
9
<PAGE> 10
information obtained or exchanged in the course of said
proceeding without the express written consent of all parties
to such dispute.
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION
(Corporate Seal)
By:
-------------------------------------
Barry L. Shevlin, CEO
ATTEST:
By:
-------------------------------
Dr. Howard Tackett
Number: 1
Name of Holder:
-------------------------------------
Principal: $3,000,000.00
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<PAGE> 11
EXHIBIT 1
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert
$___________________ of the above Debenture No. _________ into
_________________ shares of Common Stock of Progressive Telecommunications
Corporation (the "Company") according to the conditions set forth in such
Debenture, as of the date written below.
The undersigned confirms the representations and warranties set forth
in the Subscription Agreement.
-----------------------------------------
Date of Conversion*
-----------------------------------------
Applicable Conversion Price
$
-----------------------------------------
-----------------------------------------
Signature
-----------------------------------------
Name
-----------------------------------------
Address
-----------------------------------------
* The original Debenture and this Notice of Conversion must be received by the
Company within five business days following the date of Conversion.
11
<PAGE> 1
Exhibit 4.2
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THE EXERCISE OF THIS WARRANT ARE TRANSFERABLE
ONLY IN ACCORDANCE WITH PARAGRAPH H HEREOF.
Void after 5:00 P.M., New York Time, on December 31, 2002
Warrant to Purchase
__________ Shares
of Common Stock
WARRANT TO PURCHASE COMMON STOCK
This is to Certify That, FOR VALUE RECEIVED, __________________________________,
a____________________________________________________________, having an office
at ________________________________________________________________________(the
"Holder") is entitled to purchase, subject to the provisions of this Warrant,
from Progressive Telecommunications Corporation, a company organized under the
laws of the State of Nevada, having an office at 601 Cleveland Street, Suite
930, Clearwater, Florida 33755 (the "Company"), the number of shares set forth
above (the "Warrant Shares") of the Company's Common Stock, $.001 par value
("Common Stock") at a price of $1.50 per share (or such other price computed by
applying all adjustments made on or before December 31, 2002, in accordance
with Section F hereof, to $1.50 as if it had been the initial Exercise Price
per share hereunder) at any time on or after December 31, 1999 until 5:00 P.M.
New York Time, on December 31, 2002. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for a share
of Common Stock may be adjusted from time to time as hereinafter set forth. The
shares of Common Stock deliverable upon such exercise, and as adjusted from
time to time, are hereinafter sometimes referred to as "Warrant Shares" and the
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price."
The Warrants represented by the Certificate are part of an authorized class of
2,000,000 Warrants.
A. EXERCISE OF WARRANT. Subject to the following conditions precedent and the
provisions of Section H hereof, this Warrant may be exercised in whole or in
part at any time or from time to time on or after December 31, 1999, and
before 5:00 P.M. New York Time on December 31, 2002, or, if either such day
is a day on which banking institutions are authorized by law to close, then
on the next succeeding day which shall not be such a day, by presentation
and surrender hereof to the Company at any office maintained by it in
Clearwater, Florida, or at the office of its Warrant Agent, if any, with
1
<PAGE> 2
the Purchase Form annexed hereto duly executed and accompanied by payment of
the Exercise Price for the number of shares specified in such form. If this
Warrant should be exercised in part only, the Company shall, upon surrender
of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company of this Warrant at
its office, or by the Warrant Agent of the Company at its office, in proper
form for exercise, the Holder shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificate representing such shares of Common Stock shall not then be
actually delivered to the Holder.
B. RESERVATION OF SHARES. The Company hereby agrees that at all times there
shall be reserved for issuance and/or delivery upon exercise of this Warrant
such number of shares of its Common Stock as shall be required for issuance
of delivery upon exercise of this Warrant.
C. FRACTIONAL SHARES. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon exercise hereof, the Company shall
issue to the Holder the next whole share.
D. EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of the Warrant Agent for
other Warrants of different denominations entitling the holder thereof to
purchase in aggregate the same number of shares of Common Stock purchasable
hereunder. The term Warrant as used herein includes any Warrants into which
this Warrant may be divided or exchanged. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date. Any such new warrant executed
and delivered shall constitute an additional contractual obligation on the
part of the Company, whether or not this Warrant so lost stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
E. RIGHTS OF THE HOLDER. The Holder shall not, by virtue here of, be entitled
to any rights of a shareholder in the Company, either at law or equity, and
the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth
herein.
F. STOCK DIVIDENDS, RECLASSIFICATION, REORGANIZATION, ANTI-DILUTION PROVISIONS,
ETC. This Warrant is subject to the following further provisions:
2
<PAGE> 3
1. In case, prior to the expiration of this Warrant by exercise or by its
terms, the Company shall issue any shares of its Common Stock as a stock
dividend or subdivide the number of outstanding shares of Common Stock
into a greater number of shares, then, in either of such cases, the
Exercise Price per share of the Warrant Shares purchasable pursuant to
this Warrant in effect at the time of such action shall be
proportionately reduced and the number of Warrant Shares at that time
purchasable pursuant to this Warrant shall be proportionately increased;
and conversely, in the event the Company shall contract the number of
outstanding shares of Common Stock by combining such shares into a
smaller number of shares, then, in such case, the Exercise Price per
share of the Warrant Shares purchasable pursuant to this Warrant in
effect at the time of such action shall be proportionately increased and
the number of Warrant Shares at that time purchasable pursuant to this
Warrant shall be proportionately decreased. Provided however, the maximum
Exercise Price shall not exceed $15.00 and the corresponding minimum
number of Warrant Shares issuable upon exercise hereof shall equal the
number determined by multiplying the initial number of Warrant Shares
which could be obtained upon exercise by $1.50 and dividing the product
so obtained by $15.00. Any dividend paid or distributed upon the Common
Stock in stock of any other class of securities convertible into shares
of Common Stock shall be treated as a dividend paid in Common Stock to
the extent that shares of Common Stock are issuable upon the conversion
thereof.
2. In case, prior to the expiration of this Warrant by exercise or by its
terms, the Company shall be recapitalized by reclassifying its
outstanding Common Stock, $.001 par value, into stock with a different
par value or by changing its outstanding Common Stock with par value to
stock without par, the Company or a successor corporation shall be
consolidated or merge with or convey all or substantially all of its or
of any successor corporation's property and assets to any other
corporation or corporations (any such corporation being included within
the meaning of the term successor corporation in the event of any
consolidation or merger of any such corporation with, or the sale of all
or substantially all of the property of any such corporation to, another
corporation or corporations), in exchange for stock or securities of a
successor corporation, the holder of this Warrant shall thereafter have
the right to purchase upon the terms and conditions and during the time
specified in this Warrant, in lieu of the Warrant Shares theretofore
purchasable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities receivable upon such
recapitalization or consolidation, merger or conveyance by a holder of
the number of shares of Common Stock which the holder of this Warrant
might have purchased immediately prior to such recapitalization or
consolidation, merger or conveyance.
3. Upon the occurrence of each event requiring an adjustment of the Exercise
Price and of the number of Warrant Shares purchasable at such adjusted
Exercise Price by reason of such event in accordance with the provisions
of this Section F, the
3
<PAGE> 4
Company shall compute the adjusted Exercise Price and the adjusted number
of Warrant Shares purchasable at such adjusted Exercise Price by reason
of such event in accordance with the provisions of this Section F and
shall prepare a certificate setting forth such adjusted Exercise Price
and the adjusted number of Warrant Shares and showing in detail the facts
upon which such conclusions are based. The Company shall mail forthwith
to each holder of this Warrant a copy of such certificate, and thereafter
said certificate shall be conclusive and shall be binding upon such
holder unless contested by such holder by written notice to the Company
within thirty (30) days after receipt of the certificate by such holder.
4. In case:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or any other
distribution in respect of the Common Stock (including cash),
pursuant to without limitation, any spin-off, split-off or
distribution of the Company's assets; or
(b) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
(c) of any classification, reclassification or other reorganization of
the capital stock of the Company, consolidation or merger of the
Company with or into another corporation, or conveyance of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
then, and in any such case, the Company shall mail to the Holder, at
least twenty (20) days prior thereto, a notice stating the date or
expected date on which a record is to be taken for the purpose of such
dividend or distribution of rights, or the date on which such
classification, reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation, or winding up is to take place, as
the case may be. Such notice shall also specify the date or expected
date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to participate in said dividend or distribution
of rights, or shall be entitled to exchange their shares of Common stock
for securities or other property deliverable upon such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation, or winding up, as the case may be. The failure
to give such notice shall not affect the validity of any such proceeding
or transaction and shall not affect the right of the holder of this
Warrant to participate in said dividend, distribution of rights, or any
such exchange and acquire the kind and amount of cash, securities or
other property as
4
<PAGE> 5
the Holder would have been entitled to acquire if it was the record
holder of the Warrant Shares which could be obtained upon the exercise of
the Warrants immediately before such proceeding or transaction; provided
that, the Holder exercises the Warrants within 30 days after discovery
that such action or proceeding has taken place.
5. In case the Company at any time while this Warrant shall remain unexpired
and unexercised, shall dissolve, liquidate, or wind up its affairs, the
holder of this Warrant may thereafter receive upon exercise hereof in
lieu of each share of Common Stock of the Company which it would have
been entitled to receive, the same kind and amount of any securities or
assets as may be issuable, distributable or payable upon any such
dissolution, liquidation or winding up with respect to each share of
Common Stock of the Company.
G. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary at its principal office and
with the Warrant Agent, if any, an officer's certificate showing the
adjusted Exercise Price determined as therein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a statement
of the number of additional shares of Common Stock, if any, the
consideration for such shares, determined as provided in such Section F, and
such other facts as shall be necessary to show the reason for and the manner
of computing such adjustment. Each such officer's certificate shall be made
available at all reasonable times for inspection by the holder and the
Company shall, forthwith after each such adjustment, mail a copy of such
certificate to the holder.
H. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. Neither this Warrant,
the Warrant Shares, nor any other security issued or issuable upon exercise
of this Warrant may be sold or otherwise disposed or except as follows:
1. to a person who, in the opinion of counsel reasonably satisfactory to the
Company, is a person to whom the Warrant or Warrant Shares may legally be
transferred without registration and without the delivery of a current
prospectus under the Securities Act of 1933, as amended (the "Act") with
respect thereto and then only against receipt of an agreement of such
person to comply with the provisions of this Section H with respect to
any resale or other disposition of such securities; or
2. to any person upon delivery of a prospectus then meeting the requirements
of the Act relating to such securities and the offering thereof for such
sale or disposition.
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the holder as follows:
5
<PAGE> 6
1. The Company is duly organized and, as of the date of the original
issuance hereof, validly existing and in good standing under the laws of
the State of Nevada.
2. The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuing
Warrant Shares upon the exercise of this Warrant, such shares as may be
issuable upon the exercise hereof.
3. Warrant Shares, when issued and paid for in accordance with the terms of
this Warrant, will be fully paid and not assessable.
4. This Warrant has been duly authorized and approved by all required
corporate action by the Company and does not violate the certificate of
incorporation or by-laws of the Company.
J. REGISTRATION RIGHTS: LIQUIDATED DAMAGES. The Holder will be entitled to
registration rights in respect of the shares of Common Stock issuable upon
conversion of the Debentures and exercise of the Warrants (the terms of
which are set forth below) as follows: (1) The Company shall prepare and
file, within 90 days of the initial Closing Date, Registration Statement on
Form S-3 or such other applicable Registration Statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
covering the resale of the shares of Common Stock issuable upon the exercise
of the Warrants. The Company shall use its best efforts to cause the
Registration Statement to be declared effective by the Commission no later
than 150 days following the initial Closing Date and shall promptly deliver
to Purchaser copies of all amendments to such Registration Statement and
correspondence with the Commission with respect thereto. The Company shall
maintain the effectiveness of the Registration Statement until all of the
Common Stock issuable or issued upon conversion or exercise of the Warrants
has been sold. The Company shall pay all expenses of registration (other
than underwriting fees and discounts in respect of shares of Common Stock
offered and sold under such Registration Statement by the Purchaser, if
any). (2) If the Registration Statement is not declared effect by the
Commission during the 150 day period mentioned above, the Company shall pay
promptly in cash or free trading common stock valued at the Conversion
Price, as hereinafter defined, to the Holder, as liquidated damages and not
as a penalty, an amount equal to one percent (1%) per month commencing 150
and ending 180 days after the initial Closing of the outstanding principal
amount of the Debentures, in the event that the Registration Statement is
not declared effective by the Commission by the 180th day, liquidated
damages shall be increased to two percent (2%) per month from 180 days after
the Closing date until the Registration Statement is declared effective.
[SIGNATURE PAGE FOLLOWS]
6
<PAGE> 7
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION
[CORPORATE SEAL]
By:
-----------------------------------
Barry L. Shevlin, CEO
Dated:
ATTEST:
______________________________
, Secretary
7
<PAGE> 8
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF WARRANTS
TO: Progressive Telecommunications Corporation
601 Cleveland Street, Suite 930
Clearwater, Florida 33755
The undersigned hereby exercises, according to the terms and
conditions thereof, the right to purchase _____________ Shares of Common Stock,
evidenced by the within Warrant Certificate, and herewith makes payment of the
purchase price in full.
Dated:_____________________________
Name:______________________________
Address:___________________________
Signature:_________________________
UPON EXERCISE OF THIS WARRANT PAYMENT SHOULD BE MADE TO THE ORDER OF
PROGRESSIVE TELECOMMUNICATIONS CORPORATION.
8
<PAGE> 1
Exhibit 4.3
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THE EXERCISE OF THIS WARRANT ARE TRANSFERABLE
ONLY IN ACCORDANCE WITH PARAGRAPH H HEREOF.
Void after 5:00 P.M., New York Time, on December 31, 2000
Warrant to Purchase
__________ Shares
of Common Stock
WARRANT TO PURCHASE COMMON STOCK
This is to Certify That, FOR VALUE RECEIVED, _________________________________,
a____________________________________________________________, having an office
at _________________________________________________________________________(the
"Holder") is entitled to purchase, subject to the provisions of this Warrant,
from Progressive Telecommunications Corporation, a company organized under the
laws of the State of Nevada, having an office at 601 Cleveland Street, Suite
930, Clearwater, Florida 33755 (the "Company"), the number of shares set forth
above (the "Warrant Shares") of the Company's Common Stock, $.001 par value
("Common Stock") at a price of $2.50 per share (or such other price computed by
applying all adjustments made on or before December 31, 2000, in accordance
with Section F hereof, to $2.50 as if it had been the initial Exercise Price
per share hereunder) at any time on or after October 15, 1999 until 5:00 P.M.
New York Time, on December 31, 2000. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for a share
of Common Stock may be adjusted from time to time as hereinafter set forth. The
shares of Common Stock deliverable upon such exercise, and as adjusted from
time to time, are hereinafter sometimes referred to as "Warrant Shares" and the
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price."
The Warrants represented by the Certificate are part of an authorized class of
2,000,000 Warrants.
A. EXERCISE OF WARRANT. Subject to the following conditions precedent and the
provisions of Section H hereof, this Warrant may be exercised in whole or in
part at any time or from time to time on or after October 15, 1999, and
before 5:00 P.M. New York Time on December 31, 2000, or, if either such day
is a day on which banking institutions are authorized by law to close, then
on the next succeeding day which shall not be such a day, by presentation
and surrender hereof to the Company at any office maintained by it in
Clearwater, Florida, or at the office of its Warrant Agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price
1
<PAGE> 2
for the number of shares specified in such form. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder hereof to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant at its office, or by the Warrant Agent
of the Company at its office, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificate representing such shares of Common
Stock shall not then be actually delivered to the Holder.
B. RESERVATION OF SHARES. The Company hereby agrees that at all times there
shall be reserved for issuance and/or delivery upon exercise of this Warrant
such number of shares of its Common Stock as shall be required for issuance
of delivery upon exercise of this Warrant.
C. FRACTIONAL SHARES. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon exercise hereof, the Company shall
issue to the Holder the next whole share.
D. EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of the Warrant Agent for
other Warrants of different denominations entitling the holder thereof to
purchase in aggregate the same number of shares of Common Stock purchasable
hereunder. The term Warrant as used herein includes any Warrants into which
this Warrant may be divided or exchanged. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date. Any such new warrant executed
and delivered shall constitute an additional contractual obligation on the
part of the Company, whether or not this Warrant so lost stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
E. RIGHTS OF THE HOLDER. The Holder shall not, by virtue here of, be entitled
to any rights of a shareholder in the Company, either at law or equity, and
the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth
herein.
F. STOCK DIVIDENDS, RECLASSIFICATION, REORGANIZATION, ANTI-DILUTION PROVISIONS,
ETC. This Warrant is subject to the following further provisions:
2
<PAGE> 3
1. In case, prior to the expiration of this Warrant by exercise or by its
terms, the Company shall issue any shares of its Common Stock as a stock
dividend or subdivide the number of outstanding shares of Common Stock
into a greater number of shares, then, in either of such cases, the
Exercise Price per share of the Warrant Shares purchasable pursuant to
this Warrant in effect at the time of such action shall be
proportionately reduced and the number of Warrant Shares at that time
purchasable pursuant to this Warrant shall be proportionately increased;
and conversely, in the event the Company shall contract the number of
outstanding shares of Common Stock by combining such shares into a
smaller number of shares, then, in such case, the Exercise Price per
share of the Warrant Shares purchasable pursuant to this Warrant in
effect at the time of such action shall be proportionately increased and
the number of Warrant Shares at that time purchasable pursuant to this
Warrant shall be proportionately decreased. Provided however, the maximum
Exercise Price shall not exceed $10.00 and the corresponding minimum
number of Warrant Shares issuable upon exercise hereof shall equal the
number determined by multiplying the initial number of Warrant Shares
which could be obtained upon exercise by $2.50 and dividing the product
so obtained by $10.00. Any dividend paid or distributed upon the Common
Stock in stock of any other class of securities convertible into shares
of Common Stock shall be treated as a dividend paid in Common Stock to
the extent that shares of Common Stock are issuable upon the conversion
thereof.
2. In case, prior to the expiration of this Warrant by exercise or by its
terms, the Company shall be recapitalized by reclassifying its
outstanding Common Stock, $.001 par value, into stock with a different
par value or by changing its outstanding Common Stock with par value to
stock without par, the Company or a successor corporation shall be
consolidated or merge with or convey all or substantially all of its or
of any successor corporation's property and assets to any other
corporation or corporations (any such corporation being included within
the meaning of the term successor corporation in the event of any
consolidation or merger of any such corporation with, or the sale of all
or substantially all of the property of any such corporation to, another
corporation or corporations), in exchange for stock or securities of a
successor corporation, the holder of this Warrant shall thereafter have
the right to purchase upon the terms and conditions and during the time
specified in this Warrant, in lieu of the Warrant Shares theretofore
purchasable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities receivable upon such
recapitalization or consolidation, merger or conveyance by a holder of
the number of shares of Common Stock which the holder of this Warrant
might have purchased immediately prior to such recapitalization or
consolidation, merger or conveyance.
3. Upon the occurrence of each event requiring an adjustment of the Exercise
Price and of the number of Warrant Shares purchasable at such adjusted
Exercise Price
3
<PAGE> 4
by reason of such event in accordance with the provisions of this Section
F, the Company shall compute the adjusted Exercise Price and the adjusted
number of Warrant Shares purchasable at such adjusted Exercise Price by
reason of such event in accordance with the provisions of this Section F
and shall prepare a certificate setting forth such adjusted Exercise
Price and the adjusted number of Warrant Shares and showing in detail the
facts upon which such conclusions are based. The Company shall mail
forthwith to each holder of this Warrant a copy of such certificate, and
thereafter said certificate shall be conclusive and shall be binding upon
such holder unless contested by such holder by written notice to the
Company within thirty (30) days after receipt of the certificate by such
holder.
4. In case:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or any other
distribution in respect of the Common Stock (including cash),
pursuant to without limitation, any spin-off, split-off or
distribution of the Company's assets; or
(b) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
(c) of any classification, reclassification or other reorganization of
the capital stock of the Company, consolidation or merger of the
Company with or into another corporation, or conveyance of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
then, and in any such case, the Company shall mail to the Holder, at
least twenty (20) days prior thereto, a notice stating the date or
expected date on which a record is to be taken for the purpose of such
dividend or distribution of rights, or the date on which such
classification, reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation, or winding up is to take place, as
the case may be. Such notice shall also specify the date or expected
date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to participate in said dividend or distribution
of rights, or shall be entitled to exchange their shares of Common stock
for securities or other property deliverable upon such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation, or winding up, as the case may be. The failure
to give such notice shall not affect the validity of any such proceeding
or transaction and shall not affect the right of the holder of this
4
<PAGE> 5
Warrant to participate in said dividend, distribution of rights, or any
such exchange and acquire the kind and amount of cash, securities or
other property as the Holder would have been entitled to acquire if it
was the record holder of the Warrant Shares which could be obtained upon
the exercise of the Warrants immediately before such proceeding or
transaction; provided that, the Holder exercises the Warrants within 30
days after discovery that such action or proceeding has taken place.
5. In case the Company at any time while this Warrant shall remain unexpired
and unexercised, shall dissolve, liquidate, or wind up its affairs, the
holder of this Warrant may thereafter receive upon exercise hereof in
lieu of each share of Common Stock of the Company which it would have
been entitled to receive, the same kind and amount of any securities or
assets as may be issuable, distributable or payable upon any such
dissolution, liquidation or winding up with respect to each share of
Common Stock of the Company.
G. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary at its principal office and
with the Warrant Agent, if any, an officer's certificate showing the
adjusted Exercise Price determined as therein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a statement
of the number of additional shares of Common Stock, if any, the
consideration for such shares, determined as provided in such Section F, and
such other facts as shall be necessary to show the reason for and the manner
of computing such adjustment. Each such officer's certificate shall be made
available at all reasonable times for inspection by the holder and the
Company shall, forthwith after each such adjustment, mail a copy of such
certificate to the holder.
H. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. Neither this Warrant,
the Warrant Shares, nor any other security issued or issuable upon exercise
of this Warrant may be sold or otherwise disposed or except as follows:
1. to a person who, in the opinion of counsel reasonably satisfactory to the
Company, is a person to whom the Warrant or Warrant Shares may legally be
transferred without registration and without the delivery of a current
prospectus under the Securities Act of 1933, as amended (the "Act") with
respect thereto and then only against receipt of an agreement of such
person to comply with the provisions of this Section H with respect to
any resale or other disposition of such securities; or
2. to any person upon delivery of a prospectus then meeting the requirements
of the Act relating to such securities and the offering thereof for such
sale or disposition.
5
<PAGE> 6
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the holder as follows:
1. The Company is duly organized and, as of the date of the original
issuance hereof, validly existing and in good standing under the laws of
the State of Nevada.
2. The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuing
Warrant Shares upon the exercise of this Warrant, such shares as may be
issuable upon the exercise hereof.
3. Warrant Shares, when issued and paid for in accordance with the terms of
this Warrant, will be fully paid and not assessable.
4. This Warrant has been duly authorized and approved by all required
corporate action by the Company and does not violate the certificate of
incorporation or by-laws of the Company.
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION
[CORPORATE SEAL]
By:
---------------------------------
Barry Shevlin, CEO
Dated:
ATTEST:
- ------------------------------
, Secretary
6
<PAGE> 7
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF WARRANTS
TO: Progressive Telecommunications Corporation
601 Cleveland Street, Suite 930
Clearwater, Florida 33755
The undersigned hereby exercises, according to the terms and
conditions thereof, the right to purchase _____________ Shares of Common Stock,
evidenced by the within Warrant Certificate, and herewith makes payment of the
purchase price in full.
Dated:_________________________________
Name:__________________________________
Address:_______________________________
Signature:_____________________________
UPON EXERCISE OF THIS WARRANT PAYMENT SHOULD BE MADE TO THE ORDER OF
PROGRESSIVE TELECOMMUNICATIONS CORPORATION.
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Exhibit 4.4
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made this ____ day of ________________, 1999 by and between
Progressive Telecommunications Corporation, a Nevada corporation, having an
address at 601 Cleveland Street, Suite 930, Clearwater, Florida 33755 (the
"Company"), and _______________ _________________having an address at
___________________________________________, (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company has issued to the Holder Units (the "Units")
consisting of shares of Common Stock (the "Common Stock") and Warrants to
purchase shares of the Company's Common Stock (the "Warrants").
NOW THEREFORE, in consideration of the agreements set forth herein the
parties agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in paragraph 4.
"Registrable Shares" means the Shares of Common Stock which are part
of the Units and which maybe issued to Holder upon the exercise of the
Warrants, and, any other shares of Common Stock of the Company issued in
respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events) or upon exercise of
such Warrant; provided, however, that shares of Common Stock which are
Registrable Shares shall
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<PAGE> 2
cease to be Registrable Shares upon any sale pursuant to a Registration
Statement, Section 4(1) of the Securities Act or Rule 144 under the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may from time to time, be in effect.
2. REGISTRATION.
(a) When the Company proposes to file a Registration Statement for a
public offering, it will, prior to such filing, give written notice to the
Holder of its intention to do so and, upon the written request of the Holder
given within twenty (20) days after the Company provides such notice (which
request shall state the intended method of disposition of such Registrable
Shares), the Company shall cause all Registrable Shares which the Company has
been requested by the Holder to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended method of distribution specified in the request of
such Holder; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this paragraph 2 without
obligation to the Holder. The foregoing rights shall expire and have no effect
on any Registration Statement filed after December 31, 2000.
(b) The Holder's rights under this paragraph shall be subject of the
limitation that, in the event that the Company files a Registration Statement
for an underwritten public offering or if another Holder initiates a
Registration, intending to distribute their Shares in an Underwritten Offering,
the inclusion of the Registrable Shares shall be upon the condition that: (i)
if requested by the managing underwriter as a condition of the offering, they
be sold through the underwriters on the same terms and conditions as are
applicable to the Company or all other selling stockholders of the Company; or
(ii) if such condition is imposed by the managing underwriter, and the Holder
does not wish to sell the Registrable Shares upon such terms and conditions,
the Holder will agree not to transfer or otherwise dispose of any Registrable
Shares for a period of time from the effective date of the Registration
Statement (not to exceed 120 days) specified by the managing underwriter.
(c) All registration rights under this paragraph 2, shall terminate on
December 31, 2000.
3. REGISTRATION PROCEDURES.
The Company is required by the provisions of this Agreement to use its
best efforts to effect the registration of any of the Registrable Shares under
the Securities Act, and the Company shall:
(a) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective;
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(b) as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective for a period of not less than nine months from
the effective date;
(c) as expeditiously as possible furnish to Holder such reasonable
numbers of copies of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as the selling Stockholder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the selling Stockholder and promptly notify the selling stockholder at any
time when a prospectus is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus would include an
untrue statement of material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing; and
(d) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the selling Stockholders shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the selling Stockholder; provided, however, that the Company shall not be
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Holder and, after having done so, the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
Holder and, if requested, the Holder shall immediately cease making offers of
Registrable Shares and return all prospectuses to the Company. The Company
shall promptly provide the Holder with revised prospectuses and, following
receipt of the revised prospectuses, the Holder shall be free to resume making
offers of the Registrable Shares.
4. ALLOCATION OF EXPENSES.
The Company will pay all Registration Expenses of all registrations
under this Agreement; provided, however, that if a registration is withdrawn at
the request of the Holder (other than as a result of information concerning the
business or financial condition of the Company which is made known to the
Holder after the date on which such registration was requested), the Holder
shall pay the portion of Registration Expenses in the proportion that the
market value of their Registrable Shares included in such registration bear to
all of securities included therein. For purposes of this Section, the term
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, fees and
disbursements of counsel for the Company state Blue Sky fees and expenses, and
the expense of
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any special audits incident to or required by any such registration, but
excluding underwriting discounts, selling commissions and the fees and expenses
of Holder's own counsel.
5. INDEMNIFICATION.
In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the seller of such Registrable Shares, and its directors and
officers, each underwriter of such Registrable Shares, and each other person,
if any, who controls such seller or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or controlling
person may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, in so far as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Shares were registered under the Securities Act, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, and any document incorporated
therein by reference or arise out of or are based upon the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and the Company will reimburse such
seller, underwriter and each such controlling person for any legal or any other
expenses reasonably incurred by such seller, underwriter or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors, and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriters or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such seller, specifically for
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<PAGE> 5
use in connection with the preparation of such Registration Statement,
prospectus, amendment or supplement; provided, however, that the obligations of
such Stockholders hereunder shall be limited to an amount equal to the proceeds
to each Stockholder of Registrable Shares sold as contemplated herein.
Each party entitled to Indemnification under this paragraph 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; providing, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement. The Indemnified
party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation
of such Indemnified party by the counsel retained by the Indemnifying Party
would be inappropriate due to actual or potential differing interests between
the Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
6. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING.
In the event that Registrable Shares are sold pursuant to a
Registration Statement in an underwritten offering pursuant to paragraph 2, the
Company agrees to enter into an underwriting agreement containing customary
representations and warranties with respect to the business and operations of
an issuer of the securities being registered and customary covenants and
agreements to be performed by such issuer, including without limitation
customary provisions with respect to indemnification by the Company of the
underwriters of such offering.
7. INFORMATION BY HOLDER.
The Holder shall furnish to the Company such information regarding
such holder and the distribution proposed by such holder as the Company may
request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
8. SELECTION OF UNDERWRITER.
In the case of any registration effected pursuant to this Agreement,
the Company shall have the right to designate the managing underwriter in any
underwritten offering.
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9. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon, and inure to
the benefit of, the respective successors, assigns, heirs, executors and
administrators of the parties hereto.
10. FURTHER ASSURANCES.
From and after the date hereof, all persons subject to or bound by
this Agreement shall from time to time, at the request of any such other person
and without further consideration, do, execute and deliver, or cause to be
done, executed and delivered, all such further acts, things and instruments as
may reasonably be requested or required more effectively to evidence and give
effect to the provisions, intent and purposes of this Agreement (including,
without limitation, certificates to the effect that this Agreement continues
operative and as to any defaults hereunder or modifications hereof).
11. NOTICE.
All notices, requests, demands, offerings, acceptances, consents and
other communications required or permitted under this Agreement shall, unless
otherwise provided, be in writing and shall be deemed to have been duly given
if personally delivered and actually received or if mailed by first class
registered or certified mail, return receipt requested, or by first class mail,
addressed to the parties hereto at their respective addresses set forth on the
first page of this Agreement or in each case to such other person or address as
may be designated by notice hereunder. Any such notice, etc. shall be deemed
given on the date of delivery, if delivered, or on the fifth day after the date
of mailing, if mailed.
12. GOVERNING LAW; INTERPRETATION.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida applicable to contracts made
and to be performed exclusively therein as to all matters, without reference to
the conflicts of law provision thereof.
(b) All pronouns and words shall be read in appropriate number and
gender, the masculine, feminine and neuter shall be interpreted interchangeably
and singular shall include the plural and vice versa, as the circumstances may
require.
13. SUBMISSION TO JURISDICTION.
Each of the parties hereto irrevocably submits to the non-exclusive
jurisdiction of the federal and state courts located in the State of Florida.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals to this instrument, as of the date first above written.
PROGRESSIVE TELECOMMMUNICATIONS
CORPORATION
By:
--------------------------------------
Barry L. Shevlin, CEO
HOLDER:
By:
---------------------------------------
Name:
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Exhibit 4.5
S U B O R D I N A T E D N O T E
Three (3) years after date, we promise, for value received, to pay at
our office in Cape Coral, Florida, to the order of ____________________________
The sum of ______________________________ with interest at Twelve Percent (12%)
per annum. Interest shall be payable during the term of this Note quarterly on
the 15th day of January, April, July and October of each year.
SERIES. This Note is one of a series of Subordinated Three-Year Notes
all of like tenor except as to the amount issued, and to be issued by us,
amounting in the aggregate to not more than the principal sum of Four Hundred
Thousand Dollars ($400,000.00).
SUBORDINATION. The Corporation and each holder of this Note, by his
acceptance hereof, agree that the payment of the principal of and interest on
this Note is hereby expressly subordinated to the prior payment of the
principal of interest on all existing or future obligations of the Company for
money borrowed from any bank, trust company, insurance company, Federal or
state agency and other public or municipal agency or entity, or other financial
institution engaged in the business of lending money, hereinafter called the
Senior Indebtedness. Upon any receivership, insolvency, assignment for the
benefit of creditors, bankruptcy, reorganization, or arrangement with creditors
(whether or not pursuant to bankruptcy or other insolvency laws), sale of all
or substantially all of the assets, dissolution, liquidation, or any other
marshaling of the assets and liabilities of the company, or in the event the
Notes shall be declared due and payable upon the occurrence of any event of
default, (1) no amount shall be paid by the Corporation in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
have been paid in full, and (2) no claim or proof of claim shall be filed with
the Corporation by or on behalf of the holder of this Note which shall assert
any right to receive any payments in respect of the principal of and interest
on this Note except subject to the payment in full of the principal of and
interest on all of the Senior Indebtedness then outstanding.
SECURITY INTEREST. The subordination provisions herein do not create a
security interest as against either the common debtor or subordinated creditor.
TERM. This subordination agreement shall remain in full force and
binding upon the parties to the Note until such time as the Senior Indebtedness
existing before the Note, or acquired after the issuance of the Note, shall
have been paid in full or the note matures.
DEFAULT. If default be made in the note payment or any of the interest
payments when due, the holder of this note may, at the option of said holder,
declare all unpaid indebtedness evidenced by this Note immediately due and
payable, and thereupon the undersigned agrees to pay all costs of collection,
including a reasonable attorney's fee.
<PAGE> 2
Failure at times to exercise such option shall not constitute a waiver of the
right to exercise it later.
WAIVERS. The undersigned waives presentment, demand for payment,
notice of dishonor, protest, and any and all other notices and demands in
connection with the delivery, acceptance, performance, default, or enforcement
of this note, and consents to any and all extensions of time, renewals,
releases of liens or security interests, waivers, or modifications that may be
made or granted by the Bank to any party hereto. No delay by the holder in
exercising any power or right shall operate as a waiver of any power or right;
nor shall any single or partial exercise of any power or right preclude other
or further exercise, or the exercise of any other power or right; and no waiver
whatever or modification of the terms of this Note shall be valid unless in
writing signed by the holder of this Note and then only to the extent therein
set forth.
Payable at Cape Coral, Florida
C.C.C. COMMUNICATIONS CORPORATION
By:
----------------------------------
Tom Chubokas, President
<PAGE> 1
Exhibit 4.6
WARRANTS OF C.C.C. COMMUNICATIONS CORPORATION
Right to purchase _____________ shares
of
C.C.C. Communications Corporation
Registered Owners:
For value received, C.C.C. Communications Corporation, an Nevada corporation,
(the "Corporation") grants the following rights to the registered owners of
this Warrant:
1. Issue. Upon tender to the Corporation (as defined in paragraph 4
hereof), the Corporation shall issue to the registered owners within fifteen
(15) days hereof the number of shares specified in paragraph 2 hereof of fully
paid and nonassessable shares of Common Stock of the Corporation that the
registered owners are otherwise entitled to purchase.
2. Number of shares. The number of shares of Common Stock of the
Corporation that the registered owners of this Warrant are entitled to receive
upon exercise of this Warrant is ________ shares. The Corporation shall at all
times reserve and hold available sufficient shares of Common Stock to satisfy
all conversion and purchase rights represented by outstanding convertible
securities, options and warrants, including this Warrant. The corporation
covenants and agrees that all shares of Common Stock that may be issued upon
the exercise of this Warrant shall, upon issuance, be duly and validly issued,
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the purchase and the issuance of the shares.
3. Exercise price and period. The exercise price of this Warrant, the
price at which the shares of stock purchasable upon exercise of this Warrant
may be purchased, is $0.67 per share for a term of eighteen (18) months, from
the date of Warrant, thereafter at a price of $1.00 per share for a period of
eighteen (18) months, total of thirty-six (36) months. If not exercised during
this period, this Warrant and all rights granted under this Warrant shall
expire and lapse.
4. Tender. The exercise of this Warrant must be accomplished by actual
delivery of the Exercise Price by certified check or official bank draft in
lawful money of the United States of America, and by actual delivery of a duly
executed exercise form, a copy of which is attached to this Warrant as Exhibit
"A", properly executed by the registered owners of this Warrant, and by
surrender of this Warrant. The payment and exercise form must be delivered,
personally or by mail, to the offices of the Corporation at 4417 SE 16th Place,
Suite #11, Cape Coral, Florida 33904. Documents sent by mail shall be deemed to
be delivered when they are received by the Corporation.
<PAGE> 2
5. Partial exercise of warrant. This Warrant may be exercised during
its exercise period by the registered owner or owners hereof, and at their
option, as to the whole at any time or in part from time to time. If this
Warrant is exercised at one time for less than the maximum number of shares of
Common Stock purchasable upon the exercise hereof, the Corporation shall issue
to the registered owner or owners of this Warrant a new warrant of like tenor
and date representing the number of shares of Common Stock equal to the
difference between the number of shares purchasable upon full exercise of this
Warrant and the number of shares that were purchased upon the exercise of this
Warrant.
6. Antidilution. In the event that the outstanding shares of Stock of
the Company hereafter are changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of merger, consolidation, other reorganization, recapitalization,
reclassification, combination of shares, stock split-up, stock dividend or
public offering:
(a) The aggregate number and kind of shares subject to the Warrant
granted hereunder shall be adjusted appropriately;
(b) Rights under outstanding Warrant granted hereunder, both as to
the number of subject shares and the Warrant price, shall be
adjusted appropriately;
(c) Where dissolution or liquidation of the Company or any merger
or combination in which the Company is not a surviving corporation
is involved, each outstanding Warrant granted hereunder shall
terminate, but the Holder shall have the right, immediately prior
to such dissolution, liquidation, merger, or combination, to
exercise this Warrant in whole or in part, to the extent that it
shall not have been exercised;
(d) If dividends are declared on the common shares of the Company
payable otherwise than in cash, such noncash dividends attributable
to each such common share shall be transferred by the Company to
the Holder upon the exercise of his option, without extra cost; and
(e) If the company files a registration statement for a public
offering, the shares issued hereunder shall be included at no cost
to Holder.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined solely by the Company, and any such
adjustment may provide for the elimination of factional share interests.
7. Other Provisions Relating to Rights of Bearers of Warrants.
(a) No rights as stockholder conferred by warrants. A Warrant does
not entitle its bearer to any of the rights of a stockholder of the
Company.
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(b) Lost, stolen, mutilated, or destroyed warrants. If any Warrant
is lost, stolen, mutilated, or destroyed, the Company and the
Warrant Agent may issue a new Warrant of like denomination, tenor
and date as the Warrant so lost, stolen, mutilated, or destroyed.
Any such issuance of a new Warrant shall be on whatever terms and
conditions with respect to indemnity or otherwise that the Company
and Warrant Agent may in their sole discretion impose (which shall,
in the case of a mutilated Warrant, include the surrender of the
Warrant). Any new Warrant shall constitute an original contractual
obligation of the Company, regardless of whether the allegedly
lost, stolen, mutilated, or destroyed Warrant is at any time
enforceable by anyone.
(c) No holder of any Warrant shall, upon the exercise thereof, be
entitled to any dividends that may have accrued with respect to
shares included in the Share Units, prior to the date of exercise.
8. Tag-Along Rights.
(a) In the event Company proposes to sell, repurchase or otherwise
acquire any of its stock,or in the event Thomas Chubokas and James
C. Watson (the "Controlling Shareholders"), owning as of the date
hereof not less than 50% of the total outstanding and issued
corporate stock of Company, desire to sell more than 50% of their
respective stockholdings, then and in such event, Company, or the
Controlling Shareholders, as the case may be, shall provide written
notice to Holder of the terms of such proposed sale, repurchase or
other acquisition which notice shall be given not earlier than
thirty (30) days preceding the effective date of any such proposed
sale, repurchase or other acquisition (recognizing that Holder
shall require thirty days to exercise his option rights). For a
period of fifteen (15) days after their receipt of such notice
Holder shall each have the right upon written notice to the Company
to require the Company or the Controlling Shareholders, as the case
may be, to include in the number of shares to be sold, repurchased
or otherwise acquired the pro-rata portion attributable to the
stock resulting by reason of the exercise by Holder of his
respective option rights. For purposes hereof, the pro-rata share
shall mean a fraction, the numerator of which is the number of
shares of such stock resulting by reason of the exercise of the
Warrant and the denominator being the total number of shares owned
by the Controlling Shareholders (or being sold by the company, as
the case may be) plus the number of shares of stock resulting by
reason of the exercise of the Warrant. The provisions of this
paragraph are waived if the Company makes a public offering.
(b) The controlling Shareholders have joined in the execution of
this Agreement in their individual capacities to evidence their
consent to the foregoing provision of tag-along rights and
agreement to comply with their notice obligations above set forth,
time being of the essence.
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9. Applicable law. The validity, interpretation and performance of
this Agreement and of the Warrants shall be governed by the laws of the State
of Florida.
IN WITNESS WHEREOF, the Corporation has signed this Warrant by its duly
authorized officers this ____ day of ____________, ________.
C.C.C. COMMUNICATIONS CORPORATION,
A Nevada corporation
Attest:
________________________ By:/s/ Tom Chubokas
-------------------------------
Tom Chubokas, President
(Corporate Seal) /s/ Tom Chubokas
-------------------------------
TOM CHUBOKAS
/s/ James C. Watson
-------------------------------
JAMES C. WATSON
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Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT executed as of the 15th day of May, 1999, by and PROGRESSIVE
TELECOMMUNICATIONS CORPORATION, a Florida corporation with executive offices at
601 Cleveland Street, Suite 930, Clearwater, Florida 33755 (the "Company"), and
TOM CHRIS CHUBOKOS, (hereafter referred to as the "Employee") located at 216 SE
19th Terrace. Cape Coral, Florida 33990.
W I T N E S S E T H
Whereas, the Employee is currently the CEO/President and a Chairman of
the Board of Directors of CCC Communications Corporation (which is merging with
the CCC Merger Corp. a wholly owned subsidiary of the Company) under an
Employment Agreement and has served in this executive capacity since its
foundation, and;
Whereas, the Company acknowledges and recognizes the value of the
Employee's services which are of special, unique and of extraordinary character
with expertise desired by the Company; and
Whereas, the Company desires to employ, retain and make secure for the
Company the abilities and expertise of the Employee for a minimum period of (3)
years from the effective date of this Agreement; and
Whereas, both the Company and the Employee desire to embody the terms
and conditions of employment of the Employee into a written agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the Company and the Employee do hereby agree as follows:
1. EMPLOYMENT.
The Company hereby employs the Employee as the President, Chief
Operations Officer, Member of the Board of Directors and the Employee hereby
accepts such employment upon the terms and conditions hereinafter set forth.
2. TERM.
Subject to the provisions of this Section, hereof the term of
Employment shall commence on May 15, 19998 and continue for an initial period
of three (3) years or until May 15, 2002. Following the completion of the
Initial Term, the Employee's term of employment shall be renewed, if not
renegotiated, for two years automatically, unless either party notifies the
other, in writing, of its intent not to renew at lease ninety (90) days prior
to this Agreement's expiration.
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3. COMPENSATION AND BENEFITS.
For services rendered by the Employee hereunder, the Company shall pay
to the Employee the following compensation:
3.1 Fixed Compensation.
Employee shall receive (from the Company) a signing bonus of
%50,000.00 and 50,000 shares of stock at a par value of .01 cent
per share. Employee shall receive a minimum of $140,000.00 in
annual salary paid in two-week installments of $5,384.62 or
weekly installments of $2,692.31 . This shall be considered the
minimum salary for the Employee. The Company's Board of Directors
may, at its discretion, increase the salary, but at no time or in
any event shall the above referenced salary be reduced.
3.2 Incentive Compensation.
Such incentive compensation ("Incentive Compensation") may be
paid to Employee in the form of a cash bonus, profit sharing or
otherwise as the Board of Directors of the Company or the Board's
Compensation Committee may grant to executive employees of the
Company from time to time. In addition, the Employee is a
permanent participant in the Company's executive bonus pool (the
"Bonus Pool"). Pursuant to the Bonus Pool, the Company's Board of
Directors, will distribute $100,000 and/or 100,000 shares of the
Company's Common Stock divided amongst the participants, at such
time the Company achieves each of the following milestones:
(a) One Million ($1,000,000) Dollars in sales in any given
calendar month;
(b) Two Million ($2,000,000) Dollars in sales in any given
calendar month;
(c) Three Million ($3,000,000) Dollars in sales in any given
calendar month;
(d) Four Million ($4,000,000) Dollars in sales in any given
calendar month; and
(e) Five Million ($5,000,000) Dollars in sales in any given
calendar month.
3.3 Other Benefits.
In addition to the Fixed and Incentive compensation which
Employee shall receive pursuant to subparagraphs 3.1 and 3.2 of
this paragraph 3, the Employee shall receive the following items
of reimbursement, compensation or benefits:
(a) Expenses. Employee is authorized hereunder to incur
reasonable expenses for promoting the business and affairs
of the Company, including, without limitation
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by specification, expenses for entertainment, travel and
similar items. The Company shall promptly reimburse Employee
for all such expenses upon presentation, as expenses are
incurred, by the Employee to the Company of an itemized
account of such expenditures.
(b) The Company shall maintain either a whole-life life
insurance policy or policies or a minimum deposit life
insurance policy or policies (or the equivalent thereof) on
the life of the Employee having an aggregate face value of
not less than $250,000 Dollars (collectively, the "Policy").
In the event that the Company purchases minimum deposit life
insurance and this Agreement is terminated without Cause as
defined herein prior to the time that the insurance policy
has been fully paid, the Company agrees to continue to make
the premium payments on the policy until it is fully paid.
The proceeds of the policy shall be payable to any
beneficiary or beneficiaries designated at any time and from
time to time by the Employee, provided however, that upon
the death of the employee, the aggregate amount of premiums
paid on the Policy shall be repaid to the Company by the
beneficiary or beneficiaries designated in the Policy.
Employee, if requested by the Company, shall take all
necessary steps, including if requested, the naming of the
Company as a Co-Beneficiary of the Policy to the extent of
the total amount of premiums paid thereon, in order to
insure Employee's compliance with this covenant. In no event
shall the premiums on any policy or policies aggregate more
than $10,000 per year. The Policy shall be in addition to
any key man policy or group term policy or policies insuring
the life of the Employee maintained by the Company.
(c) Automobile. The Company shall provide Employee with an
automobile compatible with his position and responsibility
hereunder or, in lieu thereof, at the option of the
Employee, a monthly stipend equal to the cost of leasing and
insuring such an automobile. The Company's monthly
obligation under this paragraph shall not exceed $600 per
month including gas and maintenance.
(d) Medical Benefits. The Company shall provide Employee with
such family health and medical benefits as the Company
normally accords its executive officers.
(e) Vacations. Employee shall be entitled during each calendar
year, during the period of employment, to six weeks vacation
beginning during the first year of employment and every year
thereafter. The vacation entitlement is cumulative or may be
compensated in a monetary manner. The Employee is entitled
to full compensation during such vacation periods.
(f) Sick Time. Employee is entitled , if needed, 20 fully
compensated sick days per calendar year. Calendar year is
defined as January to December.
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(g) Working Facilities. The Company shall furnish Employee with
a private office, secretarial help and such other
facilities, services and staff as are suitable to his
position to ensure adequate performance of the duties the
Employee holds within the Company.
(h) Company shall provide and supply Employee with Officers &
Directors Liability Insurance and Indemnify Employee from
shareholder lawsuits and Corporate/Company liabilities, such
as clause shall be added to the by-laws of the Company.
3.3 The Company agrees that nothing contained in this Agreement is
intended to or shall be deemed to be granted to the Employee in
lieu of, or as a limitation upon, any rights and privileges which
the Employee may otherwise be entitled to as an executive
employee of the Company under any retirement, pension, insurance,
hospitalization or other employee benefit plan of any type
(including, without limitation by specification, any incentive,
profit sharing, bonus or stock option plan), which may now be in
effect or which may hereafter be adopted by the Company, it being
understood that the Employee shall have the same rights and
privileges to participate in such Company benefit plans as any
other executive employee of the Company.
4. DUTIES; TIME AND EFFORT.
4.1 During the term of employment hereunder, Employee, subject to the
supervision and control of the Board of Directors of the Company,
shall supervise all aspects of the Company. Employee shall serve
as the Chief Operations Officer, President and Board Member of
Progressive Telecommunications Corporation. In addition, the
Employee shall serve as Chief Executive Officer, President and
Chairman of the Board for the subsidiaries CCC Communications and
Stormtel as is so requested by the Board of Directors. The
Company and Employee agree that Employee shall serve in these
capacities throughout the period of employment agreement as
outlined herein.
4.2 Employee agrees to devote his full-time and effort to the
business of the Company during the term of his employment
hereunder and to serve as a member of the Company's Board of
Directors. The Employee shall perform his duties faithfully,
diligently and to the best of his ability. Employee, at all
times, shall use his best efforts to preserve, protect, enhance
and maintain the trade, business and goodwill of the Company.
5. COVENANTS AND RESTRICTIONS.
Subject to the provisions of Paragraph 8.6 hereof, Employee covenants
that, except in carrying out his duties hereunder, during the term of his
employment and for a period of one (1) year following the date of termination
of employment hereunder:
5.1 Without the express written consent of the Board of Directors,
Employee shall not directly or indirectly, participate or engage
in, assist, render employment services to, become
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<PAGE> 5
associated with, work for, or otherwise become in any way or
manner connected with the ownership, management, operation, or
control of, any business, which is competing with Companies
primary services and products that would take from the assets or
products or confidential and proprietary information of the
Company. This clause in no way is to be construed as industry ban
but rather as ban from utilizing contacts, products developed,
and other proprietary information.
5.2 Employee shall not knowingly provide or solicit to provide to any
Person or individual (i) competitive primary goods or services
which are competitive with those provided by the Company or which
would be competitive with the goods or services that the Company
has planned to provide; or (ii) any goods or services to any
customer of the Company. The term "customer" shall mean any
person or individual to whom the Company has provided goods or
services within the twelve (12) month period prior to the
termination of Employee's employment hereunder. Notwithstanding
anything herein to the contrary, no limitation shall be imposed
on Employee hereunder with respect to any goods and services that
the Company has planned to provide and which are not actually
being provided at the time of the termination of Employee's
employment .
5.3 Employee agrees that he shall not divulge to others, nor shall he
use to the detriment of the Company or in any business or process
of manufacture competitive with or similar to any business or
process of manufacture engaged in by the Company or any of its
subsidiaries or affiliated companies, at any time during his
employment with the Company or thereafter, any confidential or
trade secret information obtained during the course of employment
with the Company relating to sales, salesmen, sales volume or
strategy, customers, formulas, processes, methods, machines,
manufactures, compositions, ideas, improvements or inventions
belonging to or relating to the business of the Company, or its
subsidiary or affiliated companies.
5.4 Employee shall neither solicit, seek to solicit any of the
Company's personnel in any capacity whatsoever nor shall Employee
induce or attempt to induce any of the Company's personnel to
leave the employ of the Company to work for Employee or
otherwise.
5.5 Employee acknowledges that his breach of any of the restrictive
covenants contained in this Paragraph 5 may cause irreparable
damage to the Company for which remedies at law would be
inadequate. Accordingly, if Employee breaches or threatens to
breach any of the provisions of this Paragraph 5, the Company
shall be entitled to appropriate injunctive relief, including,
without limitation, preliminary and permanent injunctions in any
court of competent jurisdiction, restraining Employee from taking
any action prohibited . If any portion of this Paragraph 5 is
adjudicated to be invalid or unenforceable, this Paragraph 5
shall be deemed amended to delete there from the portion so
adjudicated, such deletion to apply only with respect to the
operation of this Paragraph 5 in the jurisdiction in which such
adjudication is made.
5.6 Employee is granted one-hundred twenty from execution to divest
any other Company interests, assets which has been owned for many
years prior to this Agreement but
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<PAGE> 6
could be construed as competitive in the marketplace. This is a
goodwill gesture towards commitment on the part of the Employee.
6. PROPRIETARY PROPERTY.
Subject to the provisions of Paragraph 8.6 hereof:
6.1 The Employee agrees that any and all inventions or improvements
as will as any and all ideas, creations, know-how and methods of
applying and putting into practice any inventions or improvements
(all of the foregoing being hereinafter called "Proprietary
Property" and being more fully defined in subparagraph 6.2 below)
that are created, developed, conceived of or discovered either
(i) by the Employee (solely or jointly with others) either in the
course of his employment, on the Company's time, with the
Company's materials or facilities, or (ii) by and for the
Company; or (iii) by any independent individual of business
acquired by the Company. The Employee shall not, without
limitation as to time or place, use any proprietary Property
except on Company business, during or after his period of
employment (in accordance with Section 5), nor disclose the same
to any person or individual except for disclosure on Company
business or as may be required by law. It is agreed by the
parties, the Company will compensate the Employee for ideas,
creations and methods with royalties under agreement.
6.2 As used in this Agreement, "Proprietary Property" means
proprietary technical information not generally known by the
Employee prior to employment or information not generally known
in the Company's industry and which is disclosed to Employee or
known or developed by Employee as a consequence of or through
employment with the Company.
6.3 During or subsequent (in accordance with Section 5) to the
Employee's employment by Company, Employee shall not, directly or
indirectly, lecture upon, publish articles concerning, use,
disseminate, disclose, sell or offer for sale any Proprietary
Property without the Company's prior written consent.
7. DISABILITY.
7.1 Subject to the terms of this subparagraph 7.1, in the event
Employee becomes temporarily disabled during the term of this
Agreement, he shall continue to receive one hundred (100%)
percent of the Fixed Compensation to which Employee was entitled
at the time of disability for a maximum period of six (6) months.
Beginning on the seventh month of disability by Employee the
fixed compensation shall be reduced to fifty (50%) percent and be
available for six (6) more calendar months. The terms "disabled"
and "disability" shall mean disability which, in the opinion of a
doctor reasonably satisfactory to the Company, renders the
Employee unable to perform his duties hereunder. The date such
disability commences shall be the date Employee first absents
himself from work during a continuous period of disability as so
determined by the
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<PAGE> 7
doctor herein above set forth. The term "temporary disability"
shall mean a disability which is not a permanent disability as
such term is defined in subparagraph 7.2 below.
7.2 Notwithstanding anything to the contrary set forth in this
Agreement, the Company may terminate this Agreement upon no less
than ninety (90) days prior written notice to Employee after six
(6) full continuous calendar months following the "permanent
disability" (as defined below) of Employee and the payment to
Employee of all unpaid compensation which the Company owes to the
Employee for the period of employment prior to termination. In
such event, the Employee shall be entitled to receive from the
Company or from the Company's disability insurance carrier
disability compensation in an amount which shall, when added to
all social security benefits received or to be received by
Employee as a result of the permanent disability, equal One
Hundred Thousand ($100,000) Dollars per annum; provided, however,
in no event shall the premiums paid by the Company for
maintaining the disability policy (as such term is defined below)
exceed Fifteen Thousand ($15,000) Dollars per annum. The
Employee's entitlement to disability benefits shall be pursuant
to the terms of this Agreement and the disability insurance
policy (the "Disability Policy") to be obtained and maintained by
the Company, naming the Employee as the insured thereunder.
Notwithstanding the foregoing, in the event Employee's disability
is either not covered under the Disability Policy or Employee is
covered for less than One Hundred Thousand ($100,000) Dollars per
annum or if coverage under the Disability Policy terminates
during the Period of disability for any reason whatsoever, then
for the balance of Employee's then current term of employment the
Company will pay Employee One Hundred Thousand ($100,000) Dollars
per annum or, if Employee is receiving benefits under the
Disability Policy, the Company will supplement the insurance
payments which Employee is entitled to receive so that Employee
receives a total of One Hundred Thousand ($100,000) Dollars per
annum and, thereafter, the Company will pay to Employee, or
supplement the benefits Employee receives under said Disability
Policy, so that Employee receives the lesser of (i) One Hundred
Thousand ($100,000) Dollars per annum; or (ii) fifty (50%)
percent of Employee's Fixed Compensation until Employee attains
the age of sixty-five (65). Once Employee attains age sixty-five
(65), the Company shall have no further obligations to make
disability payments to Employee or to otherwise supplement the
amounts Employee receives under the Disability Policy except to
the extent that it is the Company's then current policy to
continue to cover or provide benefits to permanently disabled
executive officers beyond age sixty-five (65). Notwithstanding
anything to the contrary set forth in this Paragraph 7.2, in the
event the Employee reassumes the full Performance of his duties
hereunder prior to such termination notice, the Employee shall be
entitled to one hundred (100%) percent of his total compensation
from the date of his return. In no event shall Employee be
entitled to renew the term of his employment for the Extension
Term or any Annual Term if Employee becomes permanently disabled
during either the Initial Term or the Extension Term. Employee
shall be deemed "Permanently Disabled" for purposes hereof if
either: (i) Employee has been temporarily disabled for a period
in excess of 730 consecutive days; or (ii) the insurance company
issuing the Disability Policy determines that the Employee is
Permanently Disabled and will make payments pursuant to the
Disability Policy; or (iii) a physician, mutually acceptable to
both the Company and the Employee, determines on the basis of
medical evidence that Employee is totally disabled, mentally or
physically, so as to be, prevented from engaging in
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<PAGE> 8
further employment by the Company in the capacity in which
Employee was engaged prior to such disability and that such
disability will be permanent and continuous during the remainder
of the life of Employee. In the event a physician cannot be
selected who is acceptable to both the Company and the Employee,
each party shall select a physician who shall together select a
third physician whose decision shall be final. In the event of a
dispute or the inability of the physicians selected by the
Company and the Employee to select a third physician, a physician
shall be selected by the American Arbitration Association and the
decision of such physician shall be final.
7.3 Payments of disability compensation under subparagraphs 7.1 and
7.2 above shall be reduced by the amounts actually received by
the Employee under any policy or policies of disability, health,
accident, or wage continuation insurance paid for by the Company.
8. TERMINATION; SEVERANCE; DEATH.
8.1 The Employee's employment shall terminate upon his death, and may
be terminated, at the option of (i) the Employee, (A) upon the
conclusion of the Initial Term, or any Annual Term upon proper
written notice to the Company, or (B) for breach of this
Agreement, or (ii) the Company upon proper written notice to the
Employee, (A) at the conclusion of the Initial Term or any Annual
Term, (B) as a result of his permanent disability as defined in
Paragraph 7.2 hereof, or (C) for cause. Termination "for cause"
shall mean termination only in the event the Employee is guilty
of (i) intentional or reckless failure to perform his duties
hereunder, or (ii) any act of intentional dishonesty by the
Employee which adversely effects the Company's business.
8.2 If Employee's employment is terminated by the Company for
documented cause, as referenced in Section 8.1C.
8.3 If Employee's employment is terminated by Employee's decision to
act as a consultant to the Company or as a result of the
Employee's permanent disability, the Company shall remain
obligated to pay Employee the entitlements set forth in Paragraph
7 of this Agreement.
8.4 If Employee's employment is terminated by the Company's
determination not to renew the employment term at the conclusion
of either the Initial Term or any Annual Term, the company shall
be obligated to pay Employee, within sixty (60) days of such
termination, a lump sum severance payment in an amount equal to
the product derived by multiplying each year of the Employee's
employment with the Company (commencing with the calendar year
1999) times One Hundred Thousand ($100,000) Dollars.
8.5 If Employee's employment is terminated by the Company during the
Initial Term or any Annual Term, the Company shall be obligated
to pay Employee, within sixty (60) days of such termination, a
lump sum severance payment in an amount equal to the aggregate
amount of the Employee's Base Salary for the remainder of the
Initial Term or any Annual Term as the case
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<PAGE> 9
may be, plus the product derived by multiplying each year of the
Employee's employment with the Company (commencing with the
calendar year 1999) times Seventy Five Thousand ($75,000)
Dollars.
8.6 If Employee dies during the term of his employment hereunder, the
Company shall promptly pay to the Employee's estate or promptly
distribute to the beneficiary or beneficiaries named by Employee
all life insurance proceeds under the Policy referred to in
paragraph 3.3(b) hereof (if received by the Company for any
reason) as well as any term life insurance policy or policies
with the exception of any key-man policy which the Company
maintained on the life of and for the benefit of the Employee;
provided, however, all other Company fringe benefits shall cease
upon Employee's death.
8.7 Notwithstanding anything to the contrary set forth in this
Agreement, the Employee's covenants set forth in Paragraphs 5 and
6 hereof shall not apply with respect to and shall not be
enforceable against Employee, in the event the Employee's
employment is terminated by the Company for any reason other than
those reasons expressly set forth in Paragraph 8.1 hereof.
9. ARBITRATION.
Any dispute, controversy or claim arising out of or pursuant to this
Agreement or the breach hereof shall be settled by arbitration in the City of
Clearwater, County of Pinellas and State of . Such arbitration shall be
effected by arbitrators selected as hereinafter provided and shall be conducted
in accordance with the Rules, existing at the date thereof, of the American
Arbitration Association. The dispute, controversy or claim shall be submitted
to three arbitrators, one arbitrator to be selected by the Company, one
arbitrator to be selected by the Employee and the third arbitrator to be
selected by the two so selected by the Company and Employee, or if they cannot
agree on a third, by the American Arbitration Association. In the event that
either the Company or Employee within one (1) month after notification of any
demand for arbitration hereunder, shall not have selected its arbitrator and
given notice thereof to the other party, the arbitrator for such party shall be
selected by the American Arbitration Association. Meetings of the arbitrators
shall be held in Clearwater, Florida at such place or places as may be agreed
upon by the arbitrators. The results of final determination of any such
arbitration proceedings shall be binding on the parties hereto and a judgment
may be entered in any court having jurisdiction.
10. SEVERABILITY OF PROVISIONS.
In the event any court of competent jurisdiction determines that any
term or provision of this Agreement shall be unenforceable, the invalidity of
such term or provision shall not affect the validity of the remainder hereof.
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11. NOTICES.
Any notice required or permitted to be given pursuant to the
provisions hereof shall be deemed given when sent by registered or certified
mail, return receipt requested, to the Company or Employee at their respective
addresses set forth above or to such other address as may be given by similar
notice by the Company or Employee.
12. WAIVER OF BREACH.
The waiver by the Company or Employee of a breach of any provision
hereof by the other shall not operate or be construed to operate as a waiver by
such party of any subsequent breach by the other of the same or any other
provision hereof.
13. ENTIRE AGREEMENT, MODIFICATION AND CONSTRUCTION.
This Agreement contains the entire understanding between the Company
and Employee with respect to the subject matter hereof. The terms and
conditions hereof may be changed only by an agreement in writing signed by the
Company and Employee. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, applicable to contracts made
and to be performed therein, without giving effect to the principles thereof
relating to conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
and its seal affixed by a duly authorized officer and the Employee has signed
this Agreement as of the day and year first above written.
Progressive Telecommunications Corporation: Employee:
/s/ Barry L. Shevlin /s/ Tom Chubokas
- ---------------------------------- ------------------------------
Authorized Corporate Signature Employee Signature
Barry L. Shevlin Tom Chubokas
- ---------------------------------- ------------------------------
Print Name & Title Print Name
5/21/99 XXX-XX-XXXX 5/15/99
- ---------------------------------- ------------------------------
Date SS# Date
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<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
This Agreement executed as of the 15 of May 1999, by and between
Progressive Telecommunications Corporation (hereafter referred to as the
"Company"), a Florida Corporation with its offices located at 601 Cleveland
Street, Suite 930 Clearwater, Florida 33755 and James "Chris" Watson (hereafter
referred to as the "Employee") located at 4417 S.E. 16th Place, Suite 11, Cape
Coral, Florida 33904, the Corporate Employee Address.
WITNESSETH
Whereas, the Employee is currently the Executive Vice President, Chief
Technical Officer and a Member of the Board of Directors of CCC Communications
Corporation (which is merging with the Company) under an Employment Agreement
and has served in this executive capacity since its formation, and;
Whereas, the Company acknowledges and recognizes the value of the
Employee's services which are special, unique and of extraordinary character
with expertise desired by the Company; and
Whereas, the Company desires to employ, retain and make secure for the
Company the services, abilities and expertise of the Employee for a minimum
period of three years from the effective date of this Agreement; and
Whereas, both the Company and the Employee desire to embody the terms
and conditions of employment into a written agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the Company and the Employee do hereby agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Employee as Executive Vice
President Chief Technical Officer, Member the Board of Directors and the
Employee hereby accepts such Employment upon the terms and conditions
hereinafter set forth.
2. TERM
Subject to the provisions of this Section hereof the term of
employment shall commence on May 15, 1999 (Commence Date) and continue for an
initial period of three (3) years or until May 15, 2002. Following completion
of the Initial Term, the Employee's term of employment shall be renewed, if not
renegotiated, for two year terms automatically, unless either party notifies
the other, in writing, of its intent not to renew at least ninety (90) days
prior to this Agreement's expiration.
3. COMPENSATION AND BENEFITS
For the services rendered by the Employee hereunder, the Company shall
be obligated to the Employee under the following compensation schedule:
3.1 Fixed Compensation
Employee shall receive (from the Company) a signing bonus of
$50,000.00 and 50,000 shares of stock at a par value of .01 cent
per share. Employee shall receive a minimum of $120,000.00 in
annual salary paid in bi-weekly installments of $4561.53 or
weekly installments of $2,500.00. This shall be considered the
<PAGE> 2
minimum salary to the Employee. The Company's Board of Directors
may, at its discretion, increase the salary but at no time or in
any event shall the above referenced salary be reduced.
3.2 Incentive Compensation
Such incentive compensation ("Incentive Compensation") will be
paid to the Employee in the form of a cash bonus or otherwise as
the Board of Directors of the Company or the Board's Compensation
Committee may grant executive employees of the Company from time
to time. In addition, the Employee is permanent participant in
the Company's executive bonus pool (the "Bonus Pool").Pursuant to
the Bonus Pool, the Company's Board of Directors will distribute
$100,000.00 and 100,000 shares of the Company's Common Stock
divided amongst the executive participants, at such time the
Company achieves each of the following milestones:
(a) One-Million ($1,000,000.00) Dollars in gross revenues billed
in any given calendar month;
(b) Two-Million ($2,000,000.00) Dollars in gross revenues billed
in any given calendar month;
(c) Three-Million ($3,000,000.00) Dollars in gross revenues
billed in any given calendar month;
(d) Four-Million ($4,000,000.00) Dollars in gross revenues
billed in any given calendar month;
(e) Five-Million ($5,000,000.00) Dollars in gross revenues
billed in any given calendar month;
It is agreed by the parties, the Company will compensate the
Employee for interactive voice integrated with local dial tone
service methods with royalties. The Company such pay a royalty of
2% of net billing, exclusive to the integrated local voice
telephone system; such royalties will be perpetual even after
termination of this agreement for a period of seven years. Such
royalty's payment shall continue even if the system is sold or
sub-licensed to other companies.
3.3 Other Benefits
In addition to the above reference fixed and incentive
compensation which the Employee shall receive, pursuant to
subsections 3.1 and 3.2 of Section 3, the Employee shall receive
the reimbursements, compensation and benefits:
(a) Expenses. Employee is authorized hereunder to incur
reasonable expenses for promoting the business and affairs
of the Company, including, without limitation by
specification, expenses for travel, entertainment, lodging
and other similar items. The Company shall promptly
reimburse the Employee for all such expenses upon
presentation, as expenses are incurred, by the Employee to
the Company of an itemized account of such expenditures.
(b) The Company shall maintain either a whole-life life
insurance policy or policies or a minimum deposit life
insurance policy or policies (or the equivalent thereof) on
the life of Employee having an aggregate face value of not
less than $250,000.00 (collectively, the "Policy"). In the
event that the Company purchases minimum deposit life
insurance and this Agreement is terminated with or without
cause as defined herein prior to the time that the insurance
policy has been fully paid, the Company agrees to continue
to make the premium payments on the policy until it is fully
paid. The proceeds of the policy shall be fully payable to
any beneficiary or beneficiaries designated at any time and
from time to time by the Employee, provided however, that
upon death of the Employee, the aggregate amount of premiums
paid on the Policy by the Company is repaid to the Company
by the beneficiary(s) of the Employee designated in the
Policy. Employee, if requested by the Company, shall take
all necessary steps, including if requested, the naming of
the Company as a Co-Beneficiary of the Policy to the extent
of the total amount of the premiums paid thereon, in order
to insure Employee's compliance with this covenant. In no
event shall premiums on any policy or policies aggregate
more than $10,000.00 per year. The policy shall be in
addition to any key man policy or group term policy or
policies insuring the life of the Employee maintained by the
Company for the benefit of the Company.
<PAGE> 3
(c) Automobile. The Company shall provide Employee with an
automobile compatible with his position and responsibility
hereunder or, in lieu thereof, at the option of the
Employee, a monthly stipend equal to the cost of leasing and
insuring such an automobile. The Company's monthly
obligation under this paragraph shall not exceed $500.00 per
month excluding gas and maintenance.
(d) Medical Benefits. The Company shall provide and pay for in
its entirety the Employee with such family health and
medical benefits as the Company accords its Executive
officers.
(e) Vacations. Employee shall be entitled during each calendar
year, during the period of employment, to four weeks
vacation beginning during the first year of Employment and
every year thereafter. The vacation entitlement is
cumulative or may be compensated in a monetary manner. The
Employee is entitled to compensation during such vacation
periods.
(f) Sick Time. Employee is entitled, if needed, 20 fully
compensated sick per calendar year, defined as calendar year
January to December.
(g) Working Facilities. The Company shall furnish Employee with
a private office, secretarial help and other facilities,
services and staff as are suitable to his position to ensure
adequate performance of the duties of the position the
Employee holds in the Company.
3.3 The Company agrees that nothing contained in this Agreement is
intended to or shall be deemed to be granted to the Employee in
lieu of, or as a limitation upon, any rights and privileges which
the Employee may otherwise be entitled to as an executive
employee of the Company under any retirement, pension, insurance,
hospitalization or other employee benefit plan of any type
(including, without limitation by specification, any incentive,
profit sharing, bonus or stock option plan), which may now be in
effect or which may hereafter be adopted by the Company, it being
understood that the Employee shall have the same rights and
privileges to participate in such Company benefit plans as any
other executive employee of the Company.
4. Duties, Time And Effort.
4.1 During the term of Employment hereunder, Employee, subject to the
supervision and control of the Board of Directors of the Company
shall supervise all aspects of the Company. Employee shall serve
the Company as the Chief Technical Officer, Executive Vice
President and Board Member of Progressive Telecommunications
Corporation. In addition, the Employee shall serve as Chief
Technical Officer, Executive Vice President and Member of the
Board for the subsidiaries CCC Communications and StormTel as is
so requested by the Board of Directors. The Company and Employee
agree that Employee shall serve in these capacities throughout
the period of employment agreement as outlined herein.
4.2 Employee agrees to devote full-time attention and effort to the
business of the Company during the term of employment hereunder
and to serve as a member of the Company's Board of Directors. The
Employee shall perform his duties faithfully, diligently and to
the best of his ability. Employee, at all times, shall use his
best efforts to preserve, protect, enhance and maintain the
trade, business and goodwill of the Company.
5. Covenants and Restrictions.
Subject to the provisions 8.6 hereof, Employee covenants that, except
in carrying out his duties hereunder, during the term of employment and for a
period of one (1) year following the date of termination of employment
hereunder:
<PAGE> 4
5.1 Without express written consent of the Board of Directors,
Employee shall not directly or indirectly, participate or engage
in, assist render employment services to, become associated with,
work for, or otherwise become in any way or manner connected with
the ownership, management, operation, or control of, any
business, which is competing with Companies primary services and
products that would take from the assets or products or
confidential and proprietary information of the Company. This
clause in no way is to be construed as industry ban but rather as
a ban from utilizing contacts, products developed, procedures and
other proprietary information.
5.2 Employee shall not knowingly provide or solicit to provide to any
person or individual (I) any goods or services which are
competitive with those provided by the Company or which would be
competitive with the goods and services that the Company has
planned to provide; or (ii) any goods or services to any customer
of the Company. The term "Customer" shall mean any person or
company to whom the Company has provided goods or services to
within the previous twelve (12) month period prior to termination
of Employee's employment hereunder. Notwithstanding anything
herein to the contrary, no limitation shall be imposed on
Employee hereunder with respect to any goods or services that the
Company has planned to provide and which are not actually being
provided at the time of the termination of Employee's employment.
5.3 Employee agrees that he shall not divulge to others, nor shall he
use to the detriment of the Company or in any business or process
of manufacture competitive with or similar to any business or
process of manufacture engaged in by the Company or any of its
subsidiaries or affiliated companies, at any time during
employment with the Company or thereafter, any confidential or
trade secret information obtained during the course of employment
with the Company relating to sales, salesman, sales volume or
strategy, customers, formulas, processes, methods, machines,
manufactures, compositions, ideas, improvements or inventions
belonging to or relating to the business of the Company, or its
subsidiary or affiliated companies if accepted by the Company for
use.
5.4 Employee shall neither solicit, seek to solicit any of the
Company's personnel in any capacity whatsoever nor shall Employee
induce or attempt to induce any of the Company's personnel to the
employ of the Company to work for Employee or otherwise.
5.5 Employee acknowledges that a breach of any of the restrictive
covenants contained in Section 5 may cause irreparable damage to
the Company for which remedies at law would be inadequate.
Accordingly, if Employee breaches or threatens to breach any of
the provisions of this Section 5, the Company shall be entitled
to appropriate injunctive relief, including without limitation,
preliminary and permanent injunctions in any court of competent
jurisdiction, restraining Employee from taking any action
prohibited hereby. This remedy shall be in addition to all other
remedies available to the Company at law or equity. If any
portion of this Section 5 is adjudicated to be invalid or
unenforceable, this Section 5 shall be deemed amended to delete
there from the portion so adjudicated, such deletion to apply
only with respect to the operation of this Section 5 in the
jurisdiction in which such adjudication is made.
6. Proprietary Property.
Subject to the provisions of Section 8.6 hereof:
6.1 The Employee agrees that any and all inventions or improvements
as well as any and all ideas, creations, know-how and methods of
applying and putting into practice any inventions or improvements
(all of the foregoing being hereinafter called "Proprietary
Property" and being more fully defined in subsection 6.2 below)
that are created, developed, conceived of or
<PAGE> 5
discovered either (I) by the Employee (solely or jointly with
others) in the course of employment, on Company time, with
Company materials or facilities; or (ii) by and for the Company;
or (iii) by any independent individual of business acquired by
the Company. The Employee shall not, without limitation as to
time or place, use any Proprietary Property except on Company
business, during or after his period of employment (in accordance
with Section 5), nor disclose the same to any other person or
individual except for disclosure on Company business or as may be
required by law. It is agreed by the parties, the Company will
compensate the Employee for ideas, creations and methods with
royalties under this agreement.
6.2 As used in this Agreement "Proprietary Property" means
proprietary technical information not known by the Employee prior
to employment or information not generally known in the Company's
industry and which is disclosed to Employee or known or developed
by Employee as a consequence of or through employment with the
Company.
6.3 During or subsequent (in accordance with Section 5) to the
Employee's employment by the Company, Employee shall not,
directly or indirectly, lecture upon, publish articles
concerning, use, disseminate, disclose, sell or offer for sale
any Proprietary Property without the Company's prior written
consent.
7. Disability.
7.1 Subject to the terms of Section 7.1, in the event Employee
becomes temporarily disabled during the term of this Agreement,
Employee shall continue to receive one-hundred percent (100%) of
the fixed compensation to which Employee was entitled at the time
of disability for a maximum period of six (6) months. Beginning
on the seventh month of disability by Employee the fixed
compensation shall be reduced to fifty percent (50%) and be
available for six (6) more calendar months. The terms "disabled"
and "disability" shall mean disability which, in the opinion of a
doctor reasonably satisfactory to the Company, renders the
Employee unable to perform his duties hereunder. The date such
disability commences shall be the date Employee first absents
from work during a continuous period of disability as so
determined by the doctor herein above set forth. The term
"temporary disability" shall mean a disability which is not a
permanent disability as defined in Section 7.2 below.
7.2 Notwithstanding anything to the contrary set forth in this
Agreement, the Company may terminate this Agreement upon no less
than ninety (90) days prior written notice to Employee after six
(6) full continuous calendar months following "permanent
disability" (as defined below) of Employee and the payment to
Employee of all unpaid accrued compensation which the Company
owes to the Employee for the period of employment prior to
termination. In such event, the Employee shall be entitled to
receive from the Company or from the Company's disability
insurance carrier disability compensation in an amount which,
when added to all social security benefits received or to be
received by Employee as a result of the permanent disability,
equal to One-Hundred Thousand ($100,000.00) per annum; provided,
however, in no event shall the premiums paid by the Company for
maintaining the disability policy (as such term is defined below)
exceed fifteen thousand ($15,000.00) dollars per annum. The
Employee's entitlement to disability benefits shall be pursuant
to the terms of this Agreement and the disability insurance
policy (the "Disability Policy") to be obtained and maintained by
the Company, naming the Employee as the insured thereunder.
Notwithstanding the foregoing, in the event Employee's disability
is either not covered under the Disability Policy or Employee is
covered for less than One-Hundred ($100,000.00) Thousand dollars
per annum or if coverage under the Disability Policy terminates
during the Period of disability for any reason whatsoever, then
for the balance of Employee's then current term of employment the
Company will pay Employee One-Hundred ($100,000.00) Thousand
dollars per annum or, if Employee is receiving benefits under the
Disability Policy,
<PAGE> 6
the Company will supplement the insurance payments which Employee
is entitled to receive so that Employee receives a total of
One-Hundred Thousand ($100,000.00) dollars per annum and,
thereafter, the Company will pay to Employee, or supplement the
benefits Employee receives under said Disability Policy, so that
Employee receives the lesser of (I) One-Hundred Thousand
($100,000.00) dollars per annum; or (ii) fifty (50%) percent of
Employee's Fixed Compensation until Employee attains the age of
sixty-five (65). Once the Employee attains the age of sixty-five
(65), the Company shall have no further obligations to make
disability payments to Employee or to otherwise supplement the
amounts Employee receives under the Disability Policy except to
the extent that it is the Company's then current policy to
continue to cover or provide benefits to permanently disabled
executive officers beyond the age sixty-five (65).
Notwithstanding anything to the contrary set forth in this
Section 7.2, in the event the Employee reassumes the full
Performance of his duties hereunder prior to such termination
notice, the Employee shall be entitled to one-hundred (100%)
percent of the total compensation from the date of the Employee's
return. In no event shall Employee be entitled to renew the term
of the Employment for the Extension Terms or any Annual Term if
the Employee becomes permanently disabled during either the
Initial Term or Extension Term. Employee shall be deemed
"Permanently Disabled" for purposes hereof if either: (I)
Employee has been temporarily disabled for a period in excess of
730 consecutive days; or (ii) the insurance company issuing the
Disability Policy determines that the Employee is permanently
Disabled and will make payments pursuant to the Disability
Policy; or (iii) a physician, mutually acceptable to both the
Company and the Employee, determines on the basis of medical
evidence that the Employee is totally disabled, mentally or
physically, so as to be , prevented from engaging in further
employment by the Company in the capacity in which Employee was
engaged prior to such disability and that such disability will be
permanent and continuous during the remainder of the life of
Employee. In the event a physician cannot be selected who is
acceptable to both the Company and the Employee, each party shall
select a physician who shall select a third physician whose
decision shall be final. In the event of a dispute or the
inability of the physicians selected by the Company and the
Employee to select a third physician, a physician shall be
selected by the American Arbitration Association and the decision
of such physician shall be final.
7.3 Payments of disability compensation under Sub-Sections 7.1 and
7.2 above shall be reduced by the amounts actually received by
the Employee under any policy or policies of disability, health,
accident or wage continuation insurance paid for by the Company.
8. Termination; Severance; Death.
8.1 The Employee's employment shall terminate upon death, and may be
terminated, at the option of (I) the Employee, (a) upon the
conclusion of the Initial Term, or any Annual Term upon proper
notice to the Company, or (b) for documented breach of this
Agreement, or (ii) the Company upon proper written notice to the
Employee, (a) at the conclusion of the Initial Term or any Annual
Term, (b) as a result of permanent disability as defined in
Section 7.2 hereof, or (C) for cause. Termination "for cause"
shall mean termination only in the event the Employee is guilty
in a court of competent jurisdiction with respect to Section 5,
(I) intentional failure to perform duties hereunder, (ii) any act
of intentional dishonesty which has material adverse effect to
the Company's business.
8.2 If Employee's employment is terminated by the Company for
documented cause, as referenced in Section 8.1C.
8.3 If Employee's employment is terminated by the Employment decision
to act as a consultant to the Company or as a result of the
Employee's permanent disability, the Company shall remain
obligated to pay Employee the entitlements set forth in Section 7
of this Agreement.
<PAGE> 7
8.4 If Employee's employment is terminated by the Company's
determination not to renew the employment term at the conclusion
of either the Initial Term or any Annual Term, THE Company shall
be obligated to pay Employee, within sixty (60) days of such
termination, a lump sum severance payment in an amount equal to
the product derived by multiplying each year of the Employee's
employment with the Company (commencing with calendar year 1999)
times One-Hundred Thousand ($100,000.00) Dollars.
8.5 If Employee's employment is terminated by the Company during the
Initial Term or any Annual Term, the Company shall be obligated
to pay Employee, within sixty (60) days of such termination, a
lump sum severance payment in an amount equal to the aggregate
amount of the Employee's Base Salary for the remainder of the
Initial Term or any Annual Term as the case may be, plus the
product derived by multiplying each year of the Employee's with
the Company (commencing with the calendar year 1999) times
Seventy Five Thousand ($75,000.00) Dollars.
8.6 If the Employee dies during the term of the employment hereunder,
the Company shall promptly pay to the Employee's estate or
promptly distribute to the beneficiary or beneficiaries named by
the Employee all life insurance proceeds under the Policy
referred to in Section 3.3(b) hereof (if received by the Company
for any reason) as well as any term life insurance policy or
policies with the exception of any key-man policy which the
Company maintained on the life of and for the benefit of the
Employee; provided, however, all other Company fringe benefits
shall cease upon Employee's death.
8.7 Notwithstanding anything to the contrary set forth in this
Agreement, the Employee's covenants set forth in Sections 5 and 6
hereof shall not apply with respect to and shall not be
enforceable against the Employee, in the event the Employee's
employment is terminated by the Company for any reason other than
those reasons expressly set forth in Section 8.1 hereof.
9. Arbitration
Any dispute, controversy or claim arising out of or pursuant to this
Agreement or the breach hereof shall be settled by arbitration in the City of
Clearwater, County of Pinellas and State of Florida. Such arbitration shall be
effected by arbitrators selected as hereinafter provided and shall be conducted
in accordance with the Rules, existing at the date thereof, of the American
Arbitration Association. The dispute, controversy or claim shall be submitted
to three arbitrators, one arbitrator to be selected by the Company, one
arbitrator to be selected by the Employee and the third arbitrator to be
selected by the two so selected by the Company and Employee, or if they cannot
agree on a third, by the American Arbitration Association. In the event that
either the Company or Employee within one (1) month after notification of any
demand for arbitration hereunder, shall not have selected its arbitrator and
given notice thereof to the other party, the arbitrator for such party shall be
selected by the American Arbitration Association. Meetings of the arbitrators
shall be held in Clearwater, Florida at such place or places as may be agreed
upon by the arbitrators. The results of final determination of any such
arbitration proceedings shall be binding on the parties hereto and a judgment
may be entered in any court having jurisdiction.
10. Severability Of Provisions
In the event any court of competent jurisdiction determines that any
term or provision of this Agreement shall be unenforceable, the invalidity of
such term or provision shall not affect the validity of the remainder hereof.
11. Notices
Any notice required or permitted to be given pursuant to the
provisions hereof shall be deemed given when sent by registered or certified
mail, return receipt requested, to the Company or Employee at
<PAGE> 8
their respective addresses set forth above or to such other address as may be
given by similar notice by the Company or Employee.
12. Waiver Of Breach
The waiver by the Company or Employee of a breach of any provision
hereof by the other shall not operate or be construed to operate as a waiver by
such party of any subsequent breach by the other of the same or any other
provision hereof.
13. Entire Agreement, Modification and Construction.
This Agreement contains the entire understanding between the Company
and Employee with respect to the subject matter hereof. The terms and
conditions hereof may be changed only by agreement in writing signed by the
Company and the Employee. This Agreement shall be governed by and construed
with the laws of the State of Florida, applicable to contracts made and to be
performed therein, without giving effect to the principles thereof relating to
conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed and its
seal affixed by a duly authorized officer and the Employee has signed this
Agreement as the day and year first written above.
Progressive Telecommunications Corporation: Employee:
/s/ Barry L. Shevlin /s/ James C. Watson
- --------------------------------- -------------------------------
Authorized Corporate Signature Employee Signature
Barry L. Shevlin James C. Watson
- --------------------------------- -------------------------------
Print Name & Title Print Name
5/21/99 XXX-XX-XXXX 5/15/99
- --------------------------------- -------------------------------
Date SS # Date
<PAGE> 1
Exhibit 10.5
EMPLOYMENT AGREEMENT
AGREEMENT executed as of the 2nd day of February, 1998, by and BETWEEN
PROGRESSIVE TELECOMMUNICATIONS CORPORATION, a Florida corporation with
executive offices at 601 Cleveland Street, Suite 930, Clearwater, Florida 33755
(the "Company"), and BARRY SHEVLIN, residing at 1050 Starkey Rd., #106, Largo,
FL 33771 (the "Employee").
W I T N E S S E T H
WHEREAS, the Employee is currently employed by the Company under an
oral agreement and has served the Company in various executive capacities; and
WHEREAS, the Company acknowledges and recognizes the value of the
Employee's services, which services are of special, unique and extraordinary
character; and
WHEREAS, the Company desires to employ, retain and make secure for
itself the experience, abilities and services of the Employee for a period of
not less than five (5) years from the effective date of this Agreement; and
WHEREAS, both the Company and the Employee desire to embody the terms
and conditions of employment of the Employee into a written agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the Company and the Employee do hereby agree as follows:
1. EMPLOYMENT.
The Company hereby employs the Employee and the Employee hereby
accepts such employment upon the terms and conditions hereinafter set forth.
2. TERM.
Subject to the provisions of this Paragraph and Paragraphs 8 and 9
hereof the term of Employee's employment shall commence as of January 1, 1998
("Commencement Date") and continue for an initial period of five (5) years from
the Commencement Date (the "Initial Term"). Following the completion of the
Initial Term, the Employee's term of employment shall be renewed automatically
for additional one year terms ("Annual Terms") in the absence of written notice
of termination given by either party at least one hundred eighty (180) days
prior to the date of any such renewal.
1
<PAGE> 2
3. COMPENSATION AND CERTAIN OTHER BENEFITS.
For services rendered by the Employee hereunder, the Company shall pay
to the Employee the following compensation:
3.1 Fixed Compensation.
(a) Fixed compensation, payable in weekly installments during
the first year of this Agreement shall be broken down as
follows:
i. Initial 17 weeks of the first year fixed compensation
shall be based on an Eighty Thousand ($80,000) Dollar
base salary or $1,538.46 per week;
ii. The second 18 weeks of the first year fixed
compensation shall be based on a One Hundred Ten
Thousand ($110,000) Dollar annual base salary or
$2,115.38 per week; and
iii. The last 17 weeks of the first year fixed compensation
shall be based on a One Hundred Forty Thousand
($140,000) Dollar annual salary or $2,692.31 per week.
(b) Fixed compensation, payable in weekly installments during
the second year of this Agreement shall be at a rate equal
to or greater than One Hundred Forty Thousand ($140,000)
Dollars per annum. Any increase above One Hundred Forty
Thousand ($140,000) Dollars shall be determined by the
Company's Board of Directors in its sole discretion.
(c) Fixed compensation for the remainder of the Term of this
Agreement and all increases of fixed compensation shall be
determined by the Company's Board of Directors. However, in
no event shall fixed compensation be less than the previous
year.
3.2 Incentive Compensation.
Such incentive compensation ("Incentive Compensation") may be
paid to Employee in the form of a cash bonus, profit sharing or
otherwise as the Board of Directors of the Company or the Board's
Compensation Committee may grant to executive employees of the
Company from time to time. Additionally, the Employee shall be a
participant in the Company's executive bonus pool (the "Bonus
Pool"). Pursuant to the Bonus Pool, the Company's Board of
Directors, at its sole discretion, is authorized to distribute up
to an aggregate of $100,000 and 100,000 shares of the Company's
Common Stock divided amongst the participants, at such time the
Company achieves each of the following milestones:
2
<PAGE> 3
(a) One Million ($1,000,000) Dollars in sales in any given
calendar month;
(b) Two Million ($2,000,000) Dollars in sales in any given
calendar month;
(c) Three Million ($3,000,000) Dollars in sales in any given
calendar month;
(d) Four Million ($4,000,000) Dollars in sales in any given
calendar month; and
(e) Five Million ($5,000,000) Dollars in sales in any given
calendar month.
3.3 Other.
In addition to the Fixed Compensation and Incentive Compensation
which Employee shall receive pursuant to subparagraphs 3.1 and
3.2 of this paragraph 3, the Employee shall receive the following
items of reimbursement, compensation or benefits:
(a) Expenses. Employee is authorized hereunder to incur
reasonable expenses for promoting the business and affairs
of the Company, including, without limitation by
specification, expenses for entertainment, travel and
similar items. The Company shall promptly reimburse Employee
for all such expenses upon presentation from time to time by
Employee to the Company of an itemized account of such
expenditures.
(b) Life Insurance. The Company shall maintain either a
whole-life life insurance policy or policies or a minimum
deposit life insurance policy or policies (or the equivalent
thereof) on the life of the Employee having an aggregate
face value of not less than $250,000 Dollars (collectively,
the "Policy"). In the event that the Company purchases
minimum deposit life insurance and this Agreement is
terminated without Cause as defined herein prior to the time
that the insurance policy has been fully paid, the Company
agrees to continue to make the premium payments on the
policy until it is fully paid. The proceeds of the policy
shall be payable to any beneficiary or beneficiaries
designated at any time and from time to time by the
Employee, provided however, that upon the death of the
employee, the aggregate amount of premiums paid on the
Policy shall be repaid to the Company by the beneficiary or
beneficiaries designated in the Policy. Employee, if
requested by the Company, shall take all necessary steps,
including if requested, the naming of the Company as a
Co-Beneficiary of the Policy to the extent of the total
amount of premiums paid thereon, in order to insure
Employee's compliance with this covenant. In no event shall
the premiums on any policy or policies aggregate more than
$10,000 per year. The Policy shall be in addition to any key
man policy or group term policy or policies insuring the
life of the Employee maintained by the Company.
3
<PAGE> 4
(c) Automobile. The Company shall provide Employee with an
automobile compatible with his position and responsibility
hereunder or, in lieu thereof, at the option of the
Employee, a monthly stipend equal to the cost of leasing and
insuring such an automobile. The Company's monthly
obligation under this paragraph shall not exceed $600.
(d) Medical Benefits. The Company shall provide Employee with
such family health and medical benefits as the Company
normally accords its executive officers.
(e) Vacations. Employee shall be entitled during each fiscal
year during the period of his employment hereunder to such
vacation time as the Company normally accords its executive
officers who have been employed by it for a length of time
similar to the length of Employee's employment, but not less
than two weeks per year. Employee may take such vacation
over such period or periods of time as Employee in his
discretion shall select. Vacation time shall not accrue from
year to year. While on vacation, the compensation to which
Employee is entitled shall be paid in full.
(f) Working Facilities. The Company shall furnish Employee with
a private office, secretarial help and such other
facilities, services and staff as are suitable to his
position and adequate for the performance of his duties
hereunder.
3.3 The Company agrees that nothing contained in this Agreement is
intended to or shall be deemed to be granted to the Employee in
lieu of, or as a limitation upon, any rights and privileges which
the Employee may otherwise be entitled to as an executive
employee of the Company under any retirement, pension, insurance,
hospitalization or other employee benefit plan of any type
(including, without limitation by specification, any incentive,
profit sharing, bonus or stock option plan), which may now be in
effect or which may hereafter be adopted by the Company, it being
understood that the Employee shall have the same rights and
privileges to participate in such Company benefit plans as any
other executive employee of the Company.
4. DUTIES; TIME AND EFFORT.
4.1 During the term of his employment hereunder, Employee, subject to
the supervision and control of the Board of Directors of the
Company, shall supervise the operations of the Company. Employee
shall serve as Chief Executive Officer of the Company and the
Company and Employee contemplate that Employee shall continue to
serve in such capacity throughout the period of his employment
hereunder.
4.2 Employee agrees to devote his full-time and effort to the
business of the Company during the term of his employment
hereunder and to serve as a member of the Company's Board of
Directors. The Employee shall perform his duties faithfully,
diligently and to the best of his ability. Employee, at all
times, shall use his best efforts to preserve, protect, enhance
and maintain the trade, business and goodwill of the Company.
4
<PAGE> 5
5. COVENANTS AND RESTRICTIONS.
Subject to the provisions of Paragraph 8.6 hereof, Employee covenants
that, except in carrying out his duties hereunder, during the term of his
employment and for a period of one (1) year following the date of termination
of employment hereunder (unless such longer period of time is specifically set
forth herein):
5.1 Without the express written consent of the Board of Directors,
Employee shall not directly or indirectly, own any interest in,
participate or engage in, assist, render any services (including
advisory services) to, become associated with, work for, serve
(in any capacity whatsoever, including, without limitation, as an
employee, consultant, advisor, agent, independent contractor,
officer or director) or otherwise become in any way or manner
connected with the ownership, management, operation, or control
of, any business, firm, corporation, partnership or other entity
(collectively referred to herein as a "Person") that engages in,
or assists others in engaging in or conducting any business,
which deals, directly or indirectly, in products or services
similar to or competitive with the Company's product line or
services in the United States; provided, however, the above shall
not be deemed to exclude Employee from acting as director of
another corporation with the consent of the Company's Board of
Directors; provided further, however, that the above shall not be
deemed to prohibit Employee from owning or acquiring securities
issued by any corporation whose securities are listed with a
national securities exchange or are traded in the
over-the-counter market, provided that Employee at no time owns,
directly or indirectly, beneficially or otherwise, five (5%)
percent or more of any class of any such corporation's
outstanding capital stock.
5.2 Employee shall not knowingly provide or solicit to provide to any
Person or individual (i) any goods or services which are
competitive with those provided by the Company or which would be
competitive with the goods or services that the Company has
planned to provide; or (ii) any goods or services to any customer
of the Company. The term "customer" shall mean any person or
individual to whom the Company has provided goods or services
within the twenty-four (24) month period prior to the termination
of Employee's employment hereunder. Notwithstanding anything
herein to the contrary, no limitation shall be imposed on
Employee hereunder with respect to any goods and services that
the Company has planned to provide and which are not actually
being provided at the time of the termination of Employee's
employment hereunder .
5.3 Employee agrees that he shall not divulge to others, nor shall he
use to the detriment of the Company or in any business or process
of manufacture competitive with or similar to any business or
process of manufacture engaged in by the Company or any of its
subsidiary or affiliated companies, at any time during his
employment with the Company or thereafter, any confidential or
trade secret information obtained by him during the course of his
employment with the Company relating to sales, salesmen, sales
volume or strategy, customers, formulas, processes, methods,
machines, manufactures, compositions, ideas, improvements or
inventions belonging to or relating to the business of the
Company, or its subsidiary or affiliated companies.
5
<PAGE> 6
5.4 Employee shall neither solicit, seek to solicit any of the
Company's personnel in any capacity whatsoever nor shall Employee
induce or attempt to induce any of the Company's personnel to
leave the employ of the Company to work for Employee or
otherwise.
5.5 Employee acknowledges that his breach of any of the restrictive
covenants contained in this Paragraph 5 may cause irreparable
damage to the Company for which remedies at law would be
inadequate. Accordingly, if Employee breaches or threatens to
breach any of the provisions of this Paragraph 5, the Company
shall be entitled to appropriate injunctive relief, including,
without limitation, preliminary and permanent injunctions in any
court of competent jurisdiction, restraining Employee from taking
any action prohibited hereby. This remedy shall be in addition to
all other remedies available to the Company at law or equity. If
any portion of this Paragraph 5 is adjudicated to be invalid or
unenforceable, this Paragraph 5 shall be deemed amended to delete
there from the portion so adjudicated, such deletion to apply
only with respect to the operation of this Paragraph 5 in the
jurisdiction in which such adjudication is made.
6. PROPRIETARY PROPERTY.
Subject to the provisions of Paragraph 8.6 hereof:
6.1 The Employee agrees that any and all inventions or improvements
as will as any and all ideas, creations, know-how and methods of
applying and putting into practice any inventions or improvements
(all of the foregoing being hereinafter called "Proprietary
Property" and being more fully defined in subparagraph 6.2 below)
that are created, developed, conceived of or discovered either
(i) by the Employee (solely or jointly with others) either in the
course of his employment, on the Company's time, with the
Company's materials or facilities, relating to any subject matter
with which his work for the Company is or may be concerned, or
relating to any business in which the Company or any of its
subsidiaries or affiliated companies is involved; or (ii) by or
for the Company; or (iii) by any independent individual or person
and thereafter acquired by the Company, and which are within the
Employee's knowledge or possession in the case of (i) above or
that come into the Employee's knowledge or possession during and
in the course of the Employee's employment hereunder in the case
of (ii) or (iii) above, shall be, if created, developed,
conceived of or discovered by the Employee, promptly disclosed to
the Company, or shall be, if otherwise developed or acquired by
the Company, received by the Employee as an employee of the
Company and not in any way for his own benefit. Employee shall
neither have nor obtain any right, title or interest in or to
such Proprietary Property unless and until the Company shall
expressly and in writing waive, the rights that it has therein
and thereto with respect to any and all Proprietary Property that
is invented, created, written, developed, furnished or Produced
by the Employee, or suggested by the Employee to the Company,
during the term of the Employee's employment under this
Agreement, Employee does hereby agree that all such Proprietary
Property shall be the exclusive property of the Company, and that
the Employee shall neither have nor retain any right, title or
interest, of any kind therein and thereto or in and to any of the
benefits or proceeds therefrom. At any time, whether during or
after the term of this Agreement, the Employee shall, upon the
request and at the expense of
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the Company, (A) obtain patents or copyrights on, or (B) permit
the Company to patent or Copyright, any such Proprietary
Property, whichever (A) or (B) is appropriate, and/or (C)
execute, acknowledge and deliver any and all assignments,
instruments of transfer, or other documents, that the Company
deems necessary or appropriate to transfer to and in the Company
all right, title and interest in and to such Proprietary Property
and to evidence the Company's ownership of such Proprietary
Property, including, without limitation, taking all steps
necessary to enable the Company to publish or protect said
Proprietary Property by patents or otherwise in any and all
countries and to render all such assistance as the Company may
require in any patent office proceeding or litigation involving
said Proprietary Property. The Employee shall not, without
limitation as to time or place, use any Proprietary Property
except on Company business, during or after his period of
employment, nor disclose the same to any other Person or
individual except for disclosure on Company business or as may be
required by law.
6.2 As used in this Agreement, "Proprietary Property" means
proprietary technical information not generally known in the
Company's industry and which is disclosed to Employee or known or
developed by Employee as a consequence of or through his
employment with the Company.
6.3 During or subsequent to the Employee's employment by Company,
Employee shall not, directly or indirectly, lecture upon, publish
articles concerning, use, disseminate, disclose, sell or offer
for sale any Proprietary Property without the Company's prior
written permission.
7. DISABILITY.
7.1 Subject to the terms of this subparagraph 7.1, in the event
Employee becomes temporarily disabled during the term of this
Agreement, he shall continue to receive one hundred (100%)
percent of the Fixed Compensation to which he was entitled at the
time he became disabled for any period of disability not in
excess of three (3) consecutive calendar months. Following the
third consecutive calendar month of temporary disability, the
compensation to be received by Employee shall be reduced to fifty
(50%) percent of the amount he received during the first three
(3) months of such disability after the third consecutive month
and for a period of five years thereafter. For the purpose of
this subparagraph 7.1, the terms "disabled" and "disability"
shall mean disability which, in the opinion of a doctor
reasonably satisfactory to the Company, renders the Employee
unable to perform his duties hereunder. The date such disability
commences shall be the date Employee first absents himself from
work during a continuous period of disability as so determined by
the doctor hereinabove set forth. The term "temporary disability"
shall mean a disability which is not a permanent disability (as
such term is defined in subparagraph 7.2 below).
7.2 Notwithstanding anything to the contrary set forth in this
Agreement, the Company may terminate this Agreement upon no less
than ninety (90) days prior written notice to Employee after six
(6) full continuous calendar months following the "permanent
disability" (as defined below) of Employee and the payment to
Employee of all unpaid compensation which
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<PAGE> 8
the Company owes to the Employee for the period of employment
prior to termination. In such event, the Employee shall be
entitled to receive from the Company or from the Company's
disability insurance carrier disability compensation in an amount
which shall, when added to all social security benefits received
or to be received by Employee as a result of the permanent
disability, equal One Hundred Thousand ($100,000) Dollars per
annum; provided, however, in no event shall the premiums paid by
the Company for maintaining the disability policy (as such term
is defined below) exceed Ten Thousand ($10,000) Dollars per
annum. The Employee's entitlement to disability benefits shall be
pursuant to the terms of this Agreement and the disability
insurance policy (the "Disability Policy") to be obtained and
maintained by the Company, naming the Employee as the insured
thereunder. Notwithstanding the foregoing, in the event
Employee's disability is either not covered under the Disability
Policy or Employee is covered for less than One Hundred Thousand
($100,000) Dollars per annum or if coverage under the Disability
Policy terminates during the Period of disability for any reason
whatsoever, then for the balance of Employee's then current term
of employment the Company will pay Employee One Hundred Thousand
($100,000) Dollars per annum or, if Employee is receiving
benefits under the Disability Policy, the Company will supplement
the insurance payments which Employee is entitled to receive so
that Employee receives a total of One Hundred Thousand ($100,000)
Dollars per annum and, thereafter, the Company will pay to
Employee, or supplement the benefits Employee receives under said
Disability Policy, so that Employee receives the lesser of (i)
One Hundred Thousand ($100,000) Dollars per annum; or (ii) fifty
(50%) percent of Employee's Fixed Compensation until Employee
attains the age of sixty-five (65). Once Employee attains age
sixty-five (65), the Company shall have no further obligations to
make disability payments to Employee or to otherwise supplement
the amounts Employee receives under the Disability Policy except
to the extent that it is the Company's then current policy to
continue to cover or provide benefits to permanently disabled
executive officers beyond age sixty-five (65). Notwithstanding
anything to the contrary set forth in this Paragraph 7.2, in the
event the Employee reassumes the full Performance of his duties
hereunder prior to such termination notice, the Employee shall be
entitled to one hundred (100%) percent of his total compensation
from the date of his return. In no event shall Employee be
entitled to renew the term of his employment for the Extension
Term or any Annual Term if Employee becomes permanently disabled
during either the Initial Term or the Extension Term. Employee
shall be deemed "Permanently Disabled" for purposes hereof if
either: (i) Employee has been temporarily disabled for a period
in excess of 730 consecutive days; or (ii) the insurance company
issuing the Disability Policy determines that the Employee is
Permanently Disabled and will make payments pursuant to the
Disability Policy; or (iii) a physician, mutually acceptable to
both the Company and the Employee, determines on the basis of
medical evidence that Employee is totally disabled, mentally or
physically, so as to be, prevented from engaging in further
employment by the Company in the capacity in which Employee was
engaged prior to such disability and that such disability will be
permanent and continuous during the remainder of the life of
Employee. In the event a physician cannot be selected who is
acceptable to both the Company and the Employee, each party shall
select a physician who shall together select a third physician
whose decision shall be final. In the event of a dispute or the
inability of the physicians selected by the Company and the
Employee to select a third physician, a physician
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shall be selected by the American Arbitration Association and the
decision of such physician shall be final.
7.3 Payments of disability compensation under subparagraphs 7.1 and
7.2 above shall be reduced by the amounts actually received by
the Employee under any policy or policies of disability, health,
accident, or wage continuation insurance paid for by the Company.
8. TERMINATION; SEVERANCE; DEATH.
8.1 The Employee's employment shall terminate upon his death, and may
be terminated, at the option of (i) the Employee, (A) upon the
conclusion of the Initial Term, or any Annual Term upon proper
written notice to the Company, or (B) for breach of this
Agreement, or (ii) the Company upon proper written notice to the
Employee, (A) at the conclusion of the Initial Term or any Annual
Term, (B) as a result of his permanent disability as defined in
Paragraph 7.2 hereof, or (C) for cause. Termination "for cause"
shall mean termination only in the event the Employee is guilty
of (i) intentional or reckless failure to perform his duties
hereunder, or (ii) any act of intentional dishonesty by the
Employee which adversely effects the Company's business or its
reputation.
8.2 If Employee's employment is terminated by the Company for cause,
the Company shall have no further obligation to pay compensation
or benefits to Employee, other than those accrued through the
date of such termination.
8.3 If Employee's employment is terminated by Employee's decision to
act as a consultant to the Company or as a result of the
Employee's permanent disability, the Company shall remain
obligated to pay Employee the entitlements set forth in Paragraph
7 of this Agreement.
8.4 If Employee's employment is terminated by the Company's
determination not to renew the employment term at the conclusion
of either the Initial Term or any Annual Term, the company shall
be obligated to pay Employee, within sixty (60) days of such
termination, a lump sum severance payment in an amount equal to
the product derived by multiplying each year of the Employee's
employment with the Company (commencing with the calendar year
1998) times Seventy Five Thousand ($75,000) Dollars.
8.5 If Employee's employment is terminated by the Company during the
Initial Term or any Annual Term, the Company shall be obligated
to pay Employee, within sixty (60) days of such termination, a
lump sum severance payment in an amount equal to the aggregate
amount of the Employee's Base Salary for the remainder of the
Initial Term or any Annual Term as the case may be, plus the
product derived by multiplying each year of the Employee's
employment with the Company (commencing with the calendar year
1998) times Seventy Five Thousand ($75,000) Dollars.
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<PAGE> 10
8.6 If Employee dies during the term of his employment hereunder, the
Company shall promptly pay to the Employee's estate or promptly
distribute to the beneficiary or beneficiaries named by Employee
all life insurance proceeds under the Policy referred to in
paragraph 3.3(b) hereof (if received by the Company for any
reason) as well as any term life insurance policy or policies
with the exception of any key-man policy which the Company
maintained on the life of and for the benefit of the Employee;
provided, however, all other Company fringe benefits shall cease
upon Employee's death.
8.7 Notwithstanding anything to the contrary set forth in this
Agreement, the Employee's covenants set forth in Paragraphs 5 and
6 hereof shall not apply with respect to and shall not be
enforceable against Employee, in the event the Employee's
employment is terminated by the Company for any reason other than
those reasons expressly set forth in Paragraph 8.1 hereof.
9. CHANGE IN CONTROL.
If, as both a director and a stockholder of the Company, Employee
opposes a "Change in Control" (as such term is defined below) of the Company
and such Change in Control shall occur at any time during Employee's employment
hereunder in spite of Employee's objection, Employee may, by written notice to
the Company at any time within six (6) months after such Change in Control,
elect to terminate his employment with the Company at the end of such six (6)
month period. In the event Employee opposes a Change in Control, as both a
stockholder and a director, and such Change in Control nevertheless takes
place, then, if Employee elects to terminate his employment pursuant to this
Paragraph 9, the Company shall pay him either (a) two and nine-tenths (2.9)
times his then current Fixed Compensation within sixty (60) days of receipt of
Employee's notice, if a majority of the Company's Board of Directors opposed
the Change in Control; or (b) two and one-half (2.5) times his then current
Fixed Compensation within sixty (60) days of receipt of Employee's notice, if a
majority of the Company's Board of Directors voted in favor of the Change in
Control; provided, however, in no event shall the amount payable to Employee
pursuant to this Paragraph 9 exceed the maximum payment permitted by Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") or then
applicable law, and to the extent any "excess parachute payment" (as such term
is defined in Code Section 280G(b)) would result from the application of the
formulas set forth in (a) or (b) above, then the amount Employee would
otherwise receive shall be reduced so that no "excess parachute payment" is
made by the Company or received by Employee; provided further, however, that
the provisions of this Paragraph 9 shall not apply to any Change in Control of
the Company which is supported by the Employee either as an officer, director
or as a stockholder of the Company. The Employee shall not be required to
mitigate the amount of any payment provided for herein by seeking other
employment or otherwise, nor shall the amount of such payment provided for in
this Paragraph 9 be reduced by any compensation subsequently earned by the
Employee as the result of his employment with another employer. For purposes of
this Agreement, a "Change in Control" shall be deemed to have occurred if (a)
any "person" or group of "persons" (as the terms "person" or "group" are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 and the
rules thereunder) which does not include the Employee
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is or becomes the beneficial owner, directly or indirectly, of securities of
the Company representing fifty (50%) percent or more of the combined voting
power of the then outstanding securities of the Company (whether by purchase or
acquisition of securities by any person or by the Company or by agreement to
act in concert with respect to the voting of such securities or otherwise); or
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company cease
for any reason to constitute at least a majority thereof unless the election of
each director who was not a director at the beginning of the period, was
approved by a vote of at least two-thirds at the beginning of such period; or
(c) any other event shall have occurred which constitutes a change in ownership
or effective control of the Company or in the ownership of its assets, or which
would be deemed to be such a change under Code Section 280G or the regulations
or other legal authority developed thereunder.
10. ARBITRATION.
Any dispute, controversy or claim arising out of or pursuant to this
Agreement or the breach hereof shall be settled by arbitration in the City of
Clearwater, County of Pinellas and State of . Such arbitration shall be
effected by arbitrators selected as hereinafter provided and shall be conducted
in accordance with the Rules, existing at the date thereof, of the American
Arbitration Association. The dispute, controversy or claim shall be submitted
to three arbitrators, one arbitrator to be selected by the Company, one
arbitrator to be selected by the Employee and the third arbitrator to be
selected by the two so selected by the Company and Employee, or if they cannot
agree on a third, by the American Arbitration Association. In the event that
either the Company or Employee within one (1) month after notification of any
demand for arbitration hereunder, shall not have selected its arbitrator and
given notice thereof to the other party, the arbitrator for such party shall be
selected by the American Arbitration Association. Meetings of the arbitrators
shall be held in Clearwater, Florida at such place or places as may be agreed
upon by the arbitrators. The results of final determination of any such
arbitration proceedings shall be binding on the parties hereto and a judgment
may be entered in any court having jurisdiction.
11. SEVERABILITY OF PROVISIONS.
In the event any court of competent jurisdiction determines that any
term or provision of this Agreement shall be unenforceable, the invalidity of
such term or provision shall not affect the validity of the remainder hereof.
12. NOTICES.
Any notice required or permitted to be given pursuant to the
provisions hereof shall be deemed given when sent by registered or certified
mail, return receipt requested, to the Company or Employee at their respective
addresses set forth above or to such other address as may be given by similar
notice by the Company or Employee.
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13. WAIVER OF BREACH.
The waiver by the Company or Employee of a breach of any provision
hereof by the other shall not operate or be construed to operate as a waiver by
such party of any subsequent breach by the other of the same or any other
provision hereof.
14. ENTIRE AGREEMENT, MODIFICATION AND CONSTRUCTION.
This Agreement contains the entire understanding between the Company
and Employee with respect to the subject matter hereof. The terms and
conditions hereof may be changed only by an agreement in writing signed by the
Company and Employee. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, applicable to contracts made
and to be performed therein, without giving effect to the principles thereof
relating to conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
and its seal affixed by a duly authorized officer and the Employee has signed
this Agreement as of the day and year first above written.
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION
[Corporate Seal]
By: /s/ Barry Greenwood
----------------------------------
Barry Greenwood, President
EMPLOYEE
/s/ Barry Shevlin
-------------------------------------
Barry Shevlin
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<PAGE> 1
Exhibit 10.6
EMPLOYMENT AGREEMENT
AGREEMENT executed as of the 2nd day of February, 1998, by and between
PROGRESSIVE TELECOMMUNICATIONS CORPORATION, a Florida corporation with
executive offices at 601 Cleveland Street, Suite 930, Clearwater, Florida 33755
(the "Company"), and DR. HOWARD TACKETT, residing at 1591 Gulf Blvd.,
Clearwater, FL 34630 (the "Employee").
W I T N E S S E T H
WHEREAS, the Employee is currently employed by the Company under an
oral agreement and has served the Company in various executive capacities; and
WHEREAS, the Company acknowledges and recognizes the value of the
Employee's services, which services are of special, unique and extraordinary
character; and
WHEREAS, the Company desires to employ, retain and make secure for
itself the experience, abilities and services of the Employee for a period of
not less than five (5) years from the effective date of this Agreement; and
WHEREAS, both the Company and the Employee desire to embody the terms
and conditions of employment of the Employee into a written agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the Company and the Employee do hereby agree as follows:
1. EMPLOYMENT.
The Company hereby employs the Employee and the Employee hereby
accepts such employment upon the terms and conditions hereinafter set forth.
2. TERM.
Subject to the provisions of this Paragraph and Paragraphs 8 and 9
hereof the term of Employee's employment shall commence on February 2, 1998
("Commencement Date") and continue for an initial period of five (5) years from
the Commencement Date (the "Initial Term"). During the 45 days commencing on
the Commencement Date ("Trial Period"), the Company projects that certain
financial events will occur which are critical to the success of the Company.
Accordingly, during the Trial Period either party may terminate this Agreement
on three (3) days written notice. Following the completion of the Initial
Term, the Employee's term of employment shall be renewed automatically for
additional one year terms ("Annual Terms") in
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the absence of written notice of termination given by either party at least one
hundred eighty (180) days prior to the date of any such renewal.
3. COMPENSATION AND CERTAIN OTHER BENEFITS.
For services rendered by the Employee hereunder, the Company shall pay
to the Employee the following compensation:
3.1 Fixed Compensation.
(a) Fixed compensation, payable in weekly installments during
the first year of this Agreement shall be broken down as
follows:
i. Initial 17 weeks of the first year fixed compensation
shall be based on an Forty Thousand ($40,000) Dollar
base salary or $769.23 per week;
ii. The second 18 weeks of the first year fixed
compensation shall be based on a Fifty Five Thousand
($55,000) Dollar annual base salary or $1,057.69 per
week; and
iii. The last 17 weeks of the first year fixed compensation
shall be based on a Seventy Thousand ($70,000) Dollar
annual salary or $1,346.15 per week.
(b) Fixed compensation, payable in weekly installments during
the second year of this Agreement shall be at a rate equal
to or greater than Eighty Five Thousand ($85,000) Dollars
per annum. Any increase above Eighty Five Thousand ($85,000)
Dollars shall be determined by the Company's Board of
Directors in its sole discretion.
(c) Fixed compensation for the remainder of the Term of this
Agreement and all increases of fixed compensation shall be
determined by the Company's Board of Directors. However, in
no event shall fixed compensation be less than the previous
year.
3.2 Incentive Compensation.
Such incentive compensation ("Incentive Compensation") may be
paid to Employee in the form of a cash bonus, profit sharing or
otherwise as the Board of Directors of the Company or the Board's
Compensation Committee may grant to executive employees of the
Company from time to time. Additionally, the Employee shall be a
participant in the Company's executive bonus pool (the "Bonus
Pool"). Pursuant to the Bonus Pool, the Company's Board of
Directors, at its sole discretion, is authorized to distribute up
to an aggregate of $100,000 and 100,000 shares of the Company's
Common Stock divided amongst the participants, at such time the
Company achieves each of the following milestones:
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(a) One Million ($1,000,000) Dollars in sales in any given
calendar month;
(b) Two Million ($2,000,000) Dollars in sales in any given
calendar month;
(c) Three Million ($3,000,000) Dollars in sales in any given
calendar month;
(d) Four Million ($4,000,000) Dollars in sales in any given
calendar month; and
(e) Five Million ($5,000,000) Dollars in sales in any given
calendar month.
3.3 Other.
In addition to the Fixed Compensation and Incentive Compensation
which Employee shall receive pursuant to subparagraphs 3.1 and
3.2 of this paragraph 3, the Employee shall receive the following
items of reimbursement, compensation or benefits:
(a) Expenses. Employee is authorized hereunder to incur
reasonable expenses for promoting the business and affairs
of the Company, including, without limitation by
specification, expenses for entertainment, travel and
similar items. The Company shall promptly reimburse Employee
for all such expenses upon presentation from time to time by
Employee to the Company of an itemized account of such
expenditures.
(b) Life Insurance. The Company shall maintain either a
whole-life life insurance policy or policies or a minimum
deposit life insurance policy or policies (or the equivalent
thereof) on the life of the Employee having an aggregate
face value of not less than $250,000 Dollars (collectively,
the "Policy"). In the event that the Company purchases
minimum deposit life insurance and this Agreement is
terminated without Cause as defined herein prior to the time
that the insurance policy has been fully paid, the Company
agrees to continue to make the premium payments on the
policy until it is fully paid. The proceeds of the policy
shall be payable to any beneficiary or beneficiaries
designated at any time and from time to time by the
Employee, provided however, that upon the death of the
employee, the aggregate amount of premiums paid on the
Policy shall be repaid to the Company by the beneficiary or
beneficiaries designated in the Policy. Employee, if
requested by the Company, shall take all necessary steps,
including if requested, the naming of the Company as a
Co-Beneficiary of the Policy to the extent of the total
amount of premiums paid thereon, in order to insure
Employee's compliance with this covenant. In no event shall
the premiums on any policy or policies aggregate more than
$10,000 per year. The Policy shall be in addition to any key
man policy or group term policy or policies insuring the
life of the Employee maintained by the Company.
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(c) Medical Benefits. The Company shall provide Employee with
such family health and medical benefits as the Company
normally accords its executive officers.
(d) Vacations. Employee shall be entitled during each fiscal
year during the period of his employment hereunder to such
vacation time as the Company normally accords its executive
officers who have been employed by it for a length of time
similar to the length of Employee's employment, but not less
than two weeks per year. Employee may take such vacation
over such period or periods of time as Employee in his
discretion shall select. Vacation time shall not accrue from
year to year. While on vacation, the compensation to which
Employee is entitled shall be paid in full.
(e) Working Facilities. The Company shall furnish Employee with
a private office, secretarial help and such other
facilities, services and staff as are suitable to his
position and adequate for the performance of his duties
hereunder.
3.3 The Company agrees that nothing contained in this Agreement is
intended to or shall be deemed to be granted to the Employee in
lieu of, or as a limitation upon, any rights and privileges which
the Employee may otherwise be entitled to as an executive
employee of the Company under any retirement, pension, insurance,
hospitalization or other employee benefit plan of any type
(including, without limitation by specification, any incentive,
profit sharing, bonus or stock option plan), which may now be in
effect or which may hereafter be adopted by the Company, it being
understood that the Employee shall have the same rights and
privileges to participate in such Company benefit plans as any
other executive employee of the Company.
4. DUTIES; TIME AND EFFORT.
4.1 During the term of his employment hereunder, Employee, subject to
the supervision and control of the Board of Directors of the
Company, shall supervise the operations of the Company. Employee
shall serve as Vice President of the Company and the Company and
Employee contemplate that Employee shall continue to serve in
such capacity throughout the period of his employment hereunder.
4.2 Employee agrees to devote his full-time and effort to the
business of the Company during the term of his employment
hereunder and to serve as a member of the Company's Board of
Directors. The Employee shall perform his duties faithfully,
diligently and to the best of his ability. Employee, at all
times, shall use his best efforts to preserve, protect, enhance
and maintain the trade, business and goodwill of the Company.
5. COVENANTS AND RESTRICTIONS.
Subject to the provisions of Paragraph 8.6 hereof, Employee covenants
that, except in carrying out his duties hereunder, during the term of
his employment and for a period of one (1)
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<PAGE> 5
year following the date of termination of employment hereunder (unless
such longer period of time is specifically set forth herein):
5.1 Without the express written consent of the Board of Directors,
Employee shall not directly or indirectly, own any interest in,
participate or engage in, assist, render any services (including
advisory services) to, become associated with, work for, serve
(in any capacity whatsoever, including, without limitation, as an
employee, consultant, advisor, agent, independent contractor,
officer or director) or otherwise become in any way or manner
connected with the ownership, management, operation, or control
of, any business, firm, corporation, partnership or other entity
(collectively referred to herein as a "Person") that engages in,
or assists others in engaging in or conducting any business,
which deals, directly or indirectly, in products or services
similar to or competitive with the Company's product line or
services in the United States; provided, however, the above shall
not be deemed to exclude Employee from acting as director of
another corporation with the consent of the Company's Board of
Directors; provided further, however, that the above shall not be
deemed to prohibit Employee from owning or acquiring securities
issued by any corporation whose securities are listed with a
national securities exchange or are traded in the
over-the-counter market, provided that Employee at no time owns,
directly or indirectly, beneficially or otherwise, five (5%)
percent or more of any class of any such corporation's
outstanding capital stock.
5.2 Employee shall not knowingly provide or solicit to provide to any
Person or individual (i) any goods or services which are
competitive with those provided by the Company or which would be
competitive with the goods or services that the Company has
planned to provide; or (ii) any goods or services to any customer
of the Company. The term "customer" shall mean any person or
individual to whom the Company has provided goods or services
within the twenty-four (24) month period prior to the termination
of Employee's employment hereunder. Notwithstanding anything
herein to the contrary, no limitation shall be imposed on
Employee hereunder with respect to any goods and services that
the Company has planned to provide and which are not actually
being provided at the time of the termination of Employee's
employment hereunder.
5.3 Employee agrees that he shall not divulge to others, nor shall he
use to the detriment of the Company or in any business or process
of manufacture competitive with or similar to any business or
process of manufacture engaged in by the Company or any of its
subsidiary or affiliated companies, at any time during his
employment with the Company or thereafter, any confidential or
trade secret information obtained by him during the course of his
employment with the Company relating to sales, salesmen, sales
volume or strategy, customers, formulas, processes, methods,
machines, manufactures, compositions, ideas, improvements or
inventions belonging to or relating to the business of the
Company, or its subsidiary or affiliated companies.
5.4 Employee shall neither solicit, seek to solicit any of the
Company's personnel in any capacity whatsoever nor shall Employee
induce or attempt to induce any of the Company's personnel to
leave the employ of the Company to work for Employee or
otherwise.
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5.5 Employee acknowledges that his breach of any of the restrictive
covenants contained in this Paragraph 5 may cause irreparable
damage to the Company for which remedies at law would be
inadequate. Accordingly, if Employee breaches or threatens to
breach any of the provisions of this Paragraph 5, the Company
shall be entitled to appropriate injunctive relief, including,
without limitation, preliminary and permanent injunctions in any
court of competent jurisdiction, restraining Employee from taking
any action prohibited hereby. This remedy shall be in addition to
all other remedies available to the Company at law or equity. If
any portion of this Paragraph 5 is adjudicated to be invalid or
unenforceable, this Paragraph 5 shall be deemed amended to delete
there from the portion so adjudicated, such deletion to apply
only with respect to the operation of this Paragraph 5 in the
jurisdiction in which such adjudication is made.
6. PROPRIETARY PROPERTY.
Subject to the provisions of Paragraph 8.6 hereof:
6.1 The Employee agrees that any and all inventions or improvements
as will as any and all ideas, creations, know-how and methods of
applying and putting into practice any inventions or improvements
(all of the foregoing being hereinafter called "Proprietary
Property" and being more fully defined in subparagraph 6.2 below)
that are created, developed, conceived of or discovered either
(i) by the Employee (solely or jointly with others) either in the
course of his employment, on the Company's time, with the
Company's materials or facilities, relating to any subject matter
with which his work for the Company is or may be concerned, or
relating to any business in which the Company or any of its
subsidiaries or affiliated companies is involved; or (ii) by or
for the Company; or (iii) by any independent individual or person
and thereafter acquired by the Company, and which are within the
Employee's knowledge or possession in the case of (i) above or
that come into the Employee's knowledge or possession during and
in the course of the Employee's employment hereunder in the case
of (ii) or (iii) above, shall be, if created, developed,
conceived of or discovered by the Employee, promptly disclosed to
the Company, or shall be, if otherwise developed or acquired by
the Company, received by the Employee as an employee of the
Company and not in any way for his own benefit. Employee shall
neither have nor obtain any right, title or interest in or to
such Proprietary Property unless and until the Company shall
expressly and in writing waive, the rights that it has therein
and thereto with respect to any and all Proprietary Property that
is invented, created, written, developed, furnished or Produced
by the Employee, or suggested by the Employee to the Company,
during the term of the Employee's employment under this
Agreement, Employee does hereby agree that all such Proprietary
Property shall be the exclusive property of the Company, and that
the Employee shall neither have nor retain any right, title or
interest, of any kind therein and thereto or in and to any of the
benefits or proceeds therefrom. At any time, whether during or
after the term of this Agreement, the Employee shall, upon the
request and at the expense of the Company, (A) obtain patents or
copyrights on, or (B) permit the Company to patent or Copyright,
any such Proprietary Property, whichever (A) or (B) is
appropriate, and/or (C) execute, acknowledge and deliver any and
all assignments, instruments of transfer, or other documents,
that the Company deems necessary or appropriate to transfer to
and in the Company all right, title and interest in and to such
Proprietary Property and to evidence the Company's
6
<PAGE> 7
ownership of such Proprietary Property, including, without
limitation, taking all steps necessary to enable the Company to
publish or protect said Proprietary Property by patents or
otherwise in any and all countries and to render all such
assistance as the Company may require in any patent office
proceeding or litigation involving said Proprietary Property. The
Employee shall not, without limitation as to time or place, use
any Proprietary Property except on Company business, during or
after his period of employment, nor disclose the same to any
other Person or individual except for disclosure on Company
business or as may be required by law.
6.2 As used in this Agreement, "Proprietary Property" means
proprietary technical information not generally known in the
Company's industry and which is disclosed to Employee or known or
developed by Employee as a consequence of or through his
employment with the Company.
6.3 During or subsequent to the Employee's employment by Company,
Employee shall not, directly or indirectly, lecture upon, publish
articles concerning, use, disseminate, disclose, sell or offer
for sale any Proprietary Property without the Company's prior
written permission.
7. DISABILITY.
7.1 Subject to the terms of this subparagraph 7.1, in the event
Employee becomes temporarily disabled during the term of this
Agreement, he shall continue to receive sixty (60%) percent of
the Fixed Compensation to which he was entitled at the time he
became disabled for any period of disability not in excess of
three (3) consecutive calendar months. Following the third
consecutive calendar month of temporary disability, the
compensation to be received by Employee shall be reduced to fifty
(50%) percent of the amount he received during the first three
(3) months of such disability after the third consecutive
month and for a period of five years thereafter. For the purpose
of this subparagraph 7.1, the terms "disabled" and "disability"
shall mean disability which, in the opinion of a doctor
reasonably satisfactory to the Company, renders the Employee
unable to perform his duties hereunder. The date such disability
commences shall be the date Employee first absents himself from
work during a continuous period of disability as so determined by
the doctor hereinabove set forth. The term "temporary disability"
shall mean a disability which is not a permanent disability (as
such term is defined in subparagraph 7.2 below).
7.2 Notwithstanding anything to the contrary set forth in this
Agreement, the Company may terminate this Agreement upon no less
than ninety (90) days prior written notice to Employee after six
(6) full continuous calendar months following the "permanent
disability" (as defined below) of Employee and the payment to
Employee of all unpaid compensation which the Company owes to the
Employee for the period of employment prior to termination. In
such event, the Employee shall be entitled to receive from the
Company or from the Company's disability insurance carrier
disability compensation in an amount which shall, when added to
all social security benefits received or to be received by
Employee as a result of the permanent disability, equal Fifty
Thousand ($50,000) Dollars per annum; provided, however, in no
event
7
<PAGE> 8
shall the premiums paid by the Company for maintaining the
disability policy (as such term is defined below) exceed Five
Thousand ($155,000) Dollars per annum. The Employee's entitlement
to disability benefits shall be pursuant to the terms of this
Agreement and the disability insurance policy (the "Disability
Policy") to be obtained and maintained by the Company, naming the
Employee as the insured thereunder. Notwithstanding the
foregoing, in the event Employee's disability is either not
covered under the Disability Policy or Employee is covered for
less than Fifty Thousand ($50,000) Dollars per annum or if
coverage under the Disability Policy terminates during the Period
of disability for any reason whatsoever, then for the balance of
Employee's then current term of employment the Company will pay
Employee Fifty Thousand ($50,000) Dollars per annum or, if
Employee is receiving benefits under the Disability Policy, the
Company will supplement the insurance payments which Employee is
entitled to receive so that Employee receives a total of Fifty
Thousand ($15500,000) Dollars per annum and, thereafter, the
Company will pay to Employee, or supplement the benefits Employee
receives under said Disability Policy, so that Employee receives
the lesser of (i) Fifty Thousand ($50,000) Dollars per annum; or
(ii) fifty (50%) percent of Employee's Fixed Compensation until
Employee attains the age of sixty-five (65). Once Employee
attains age sixty-five (65), the Company shall have no further
obligations to make disability payments to Employee or to
otherwise supplement the amounts Employee receives under the
Disability Policy except to the extent that it is the Company's
then current policy to continue to cover or provide benefits to
permanently disabled executive officers beyond age sixty-five
(65). Notwithstanding anything to the contrary set forth in this
Paragraph 7.2, in the event the Employee reassumes the full
Performance of his duties hereunder prior to such termination
notice, the Employee shall be entitled to one hundred (100%)
percent of his total compensation from the date of his return. In
no event shall Employee be entitled to renew the term of his
employment for the Extension Term or any Annual Term if Employee
becomes permanently disabled during either the Initial Term or
the Extension Term. Employee shall be deemed "Permanently
Disabled" for purposes hereof if either: (i) Employee has been
temporarily disabled for a period in excess of 730 consecutive
days; or (ii) the insurance company issuing the Disability Policy
determines that the Employee is Permanently Disabled and will
make payments pursuant to the Disability Policy; or (iii) a
physician, mutually acceptable to both the Company and the
Employee, determines on the basis of medical evidence that
Employee is totally disabled, mentally or physically, so as to
be, prevented from engaging in further employment by the Company
in the capacity in which Employee was engaged prior to such
disability and that such disability will be permanent and
continuous during the remainder of the life of Employee. In the
event a physician cannot be selected who is acceptable to both
the Company and the Employee, each party shall select a physician
who shall together select a third physician whose decision shall
be final. In the event of a dispute or the inability of the
physicians selected by the Company and the Employee to select a
third physician, a physician shall be selected by the American
Arbitration Association and the decision of such physician shall
be final.
7.3 Payments of disability compensation under subparagraphs 7.1 and
7.2 above shall be reduced by the amounts actually received by
the Employee under any policy or policies of disability, health,
accident, or wage continuation insurance paid for by the Company.
8
<PAGE> 9
8. TERMINATION; SEVERANCE; DEATH.
8.1 The Employee's employment shall terminate upon his death, and may
be terminated, at the option of (i) the Employee, (A) upon the
conclusion of the Initial Term, or any Annual Term upon proper
written notice to the Company, or (B) for breach of this
Agreement, or (ii) the Company upon proper written notice to the
Employee, (A) at the conclusion of the Initial Term or any Annual
Term, (B) as a result of his permanent disability as defined in
Paragraph 7.2 hereof, or (C) for cause. Termination "for cause"
shall mean termination only in the event the Employee is guilty
of (i) intentional or reckless failure to perform his duties
hereunder, or (ii) any act of intentional dishonesty by the
Employee which adversely effects the Company's business or its
reputation.
8.2 If Employee's employment is terminated by the Company for cause,
the Company shall have no further obligation to pay compensation
or benefits to Employee, other than those accrued through the
date of such termination.
8.3 If Employee's employment is terminated by Employee's decision to
act as a consultant to the Company or as a result of the
Employee's permanent disability, the Company shall remain
obligated to pay Employee the entitlements set forth in Paragraph
7 of this Agreement.
8.4 If Employee's employment is terminated by the Company's
determination not to renew the employment term at the conclusion
of either the Initial Term or any Annual Term, the company shall
be obligated to pay Employee, within sixty (60) days of such
termination, a lump sum severance payment in an amount equal to
the product derived by multiplying each year of the Employee's
employment with the Company (commencing with the calendar year
1998) times Ten Thousand ($10,000) Dollars.
8.5 If Employee's employment is terminated by the Company during the
Initial Term or any Annual Term, the Company shall be obligated
to pay Employee, within sixty (60) days of such termination, a
lump sum severance payment in an amount equal to the aggregate
amount of the Employee's Base Salary for the remainder of the
Initial Term or any Annual Term as the case may be, plus the
product derived by multiplying each year of the Employee's
employment with the Company (commencing with the calendar year
1998) times Ten Thousand ($10,000) Dollars.
8.6 If Employee dies during the term of his employment hereunder, the
Company shall promptly pay to the Employee's estate or promptly
distribute to the beneficiary or beneficiaries named by Employee
all life insurance proceeds under the Policy referred to in
paragraph 3.3(b) hereof (if received by the Company for any
reason) as well as any term life insurance policy or policies
with the exception of any key-man policy which the Company
maintained on the life of and for the benefit of the Employee;
provided, however, all other Company fringe benefits shall cease
upon Employee's death.
9
<PAGE> 10
8.7 Notwithstanding anything to the contrary set forth in this
Agreement, the Employee's covenants set forth in Paragraphs 5 and
6 hereof shall not apply with respect to and shall not be
enforceable against Employee, in the event the Employee's
employment is terminated by the Company for any reason other than
those reasons expressly set forth in Paragraph 8.1 hereof.
9. ARBITRATION.
Any dispute, controversy or claim arising out of or pursuant to this
Agreement or the breach hereof shall be settled by arbitration in the City of
Clearwater, County of Pinellas and State of . Such arbitration shall be
effected by arbitrators selected as hereinafter provided and shall be conducted
in accordance with the Rules, existing at the date thereof, of the American
Arbitration Association. The dispute, controversy or claim shall be submitted
to three arbitrators, one arbitrator to be selected by the Company, one
arbitrator to be selected by the Employee and the third arbitrator to be
selected by the two so selected by the Company and Employee, or if they cannot
agree on a third, by the American Arbitration Association. In the event that
either the Company or Employee within one (1) month after notification of any
demand for arbitration hereunder, shall not have selected its arbitrator and
given notice thereof to the other party, the arbitrator for such party shall be
selected by the American Arbitration Association. Meetings of the arbitrators
shall be held in Clearwater, Florida at such place or places as may be agreed
upon by the arbitrators. The results of final determination of any such
arbitration proceedings shall be binding on the parties hereto and a judgment
may be entered in any court having jurisdiction.
10. SEVERABILITY OF PROVISIONS.
In the event any court of competent jurisdiction determines that any
term or provision of this Agreement shall be unenforceable, the invalidity of
such term or provision shall not affect the validity of the remainder hereof.
11. NOTICES.
Any notice required or permitted to be given pursuant to the
provisions hereof shall be deemed given when sent by registered or certified
mail, return receipt requested, to the Company or Employee at their respective
addresses set forth above or to such other address as may be given by similar
notice by the Company or Employee.
12. WAIVER OF BREACH.
The waiver by the Company or Employee of a breach of any provision
hereof by the other shall not operate or be construed to operate as a waiver by
such party of any subsequent breach by the other of the same or any other
provision hereof.
10
<PAGE> 11
13. ENTIRE AGREEMENT, MODIFICATION AND CONSTRUCTION.
This Agreement contains the entire understanding between the Company
and Employee with respect to the subject matter hereof. The terms and
conditions hereof may be changed only by an agreement in writing signed by the
Company and Employee. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, applicable to contracts made
and to be performed therein, without giving effect to the principles thereof
relating to conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
and its seal affixed by a duly authorized officer and the Employee has signed
this Agreement as of the day and year first above written.
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION
[Corporate Seal]
By: /s/ Barry L. Shevlin
----------------------------------
Barry L. Shevlin, CEO
EMPLOYEE
/s/ Dr. Howard Tackett
----------------------------------
Dr. Howard Tackett
11
<PAGE> 1
Exhibit 10.7
ATRIUM AT CLEARWATER, LIMITED
OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (this "Lease") is made and entered into on
the 27 day of DECEMBER, 1997 (the "Effective Date"), by and between ATRIUM AT
CLEARWATER, LIMITED, a Florida Limited Partnership ("Landlord") and PROGRESSIVE
TELECOMMUNICATIONS, as ("Tenant").
W I T N E S S E T H:
1. DEFINITIONS. Landlord and Tenant hereby agree that the words and
phrases herein shall have the following meanings:
a) "Base Rental" shall mean the sum of $78,832.00 per annum payable
$6,569.33 monthly and as adjusted pursuant to Paragraph 5 hereof together with
applicable Florida sales tax.
b) "Building Standard" shall mean the type of materials Landlord
designates from time to time to be the minimum quality to be used as the
Leasehold Improvements as defined herein.
c) "Building" or "Buildings" shall mean all office buildings now or
hereafter located upon the real property described in Exhibit "A" attached
hereto and made a part hereof (the "Property"). Reference to the "Property" in
this Lease shall be deemed to include the Building and Landlord's interest in
the Parking Garage unless expressly provided otherwise. The Building presently
consists of one, nine-story structure containing 133,007 rentable square feet.
The Landlord's interest in the Parking Garage presently represents an exclusive
right to the third and fourth floors of the four (4) story Parking Garage
located on the parcel identified in Exhibit "A-1". Landlord's interest in the
Parking Garage may increase to all four levels of the Parking Garage and
several adjacent uncovered parking spaces if Landlord exercises its option to
acquire the remaining fifty percent (50%) interest in the Parking Garage from
The City of Clearwater. The Building has an address of 601 Cleveland Street,
Clearwater, FL 33755, and is located at the Southeast corner of Cleveland
Street and Park Street. The Building is known as the "Atrium at Clearwater"
and/or the "Sun Trust Building". The Parking Garage has an address of 613 PARK
STREET, CLEARWATER, FL 33755 and is located across the street, to the south of
THE BUILDING. The Parking Garage is sometimes referred to as the "Park Street
Garage".
d) "Commencement Date" shall mean JANUARY 1, 1998, subject to
adjustment as provided in Paragraphs 3(b) and 3(c) hereof.
e) "Common Areas" shall mean those areas of the Building devoted to
corridors, atrium(s), walkways, overhead-covered walkway to the Parking Garage,
elevator foyers and elevator cabs, restrooms, mechanical rooms, janitorial
closets, electrical and telephone closets, vending areas and other similar
facilities to be utilized for the common use or benefit of tenants generally
and/or the public, provided Landlord shall have the right, at any time, to
change the size and location of the Common Areas.
f) "Existing Improvements" means the improvements in the Premises on
the Effective Date.
g) "Exterior Common Areas" shall mean the portions of the Property not
located within the Building and which are provided and maintained for the
common use and benefit of Landlord and tenants of the Building and their
respective employees, invitees and licensees,
Atrium at Clearwater/Progressive.Lease.December 5, 1997 BS WM
----- --------
Tenant Landlord
PAGE 1
<PAGE> 2
including, without limitation, all unassigned parking areas, and all streets,
sidewalks and landscaped areas.
h) "Florida Sales Tax" or "Sales Tax" shall mean the amount that
Landlord is required to pay to the Department of Revenue for the State of
Florida, based on Landlord's collection of Base Rent, Operating Expense
Reimbursement and any other collections by Landlord from Tenant (referred to
collectively herein as Rent) which amount of Sales Tax shall be reimbursed to
Landlord by Tenant and shall be part of Tenant's Rent obligations herein. The
current rate of such sales tax (in the city of Clearwater, Pinellas County) is
seven percent (7%). This rate may change from time to time as determined by the
state of Florida and local government bodies.
i) "Hazardous Materials" shall mean any substance defined in the
definitions of "hazardous substances", "hazardous wastes", "hazardous
materials", "toxic substances", "contaminants", or "pollutants" under
applicable federal, state, or local laws, ordinances, codes, or regulations now
or hereafter in effect.
j) "Leasehold Improvements" shall mean those improvements as defined
and set forth in Paragraph 53 below.
k) "Lease Term" shall mean a term commencing on the Commencement Date
(JANUARY 1, 1998) and continuing until DECEMBER 31, 2002 (the "Termination
Date").
l) "Lease Year" shall mean the 12 month period starting on the first
day of the first full month following the Commencement Date and thereafter,
each successive 12 month period.
m) "Normal Business Hours" shall mean 8:00 A.M. - 6:00 P.M., Monday
through Friday, excluding legal holidays and from 9:00 a.m. to 1:00 p.m. on
Saturdays.
n) "Premises" shall mean Suite 930 of the Building as outlined on the
floor plan attached to this Lease as Exhibit "B" and made a part hereof.
o) "Rent" shall include Base Rental (pursuant to Paragraph 5),
Operating Expense Reimbursements (pursuant to Paragraph 7) and all other sums
of money or amounts as shall become due and payable by Tenant to Landlord as
provided in this Lease, plus all Florida Sales Tax which shall be due and
payable to Landlord by Tenant as applied to all of the foregoing payments due
hereunder.
p) "Rentable Floor Area of the Premises" shall mean 4,927 square feet
of floor area which includes the interior useable area of the Premises, as
herein defined, and a prorata portion of the Common Areas. The ratio of the
total Common Areas relative to the Rentable Floor Area shall not vary after the
effective date if Landlord changes the size of the Common Areas.
q) "Security Deposit" shall mean the sum of $0.00 which has been paid
to Landlord by Tenant concurrent with the execution of this Lease by Tenant
(see Paragraph 38 below) and which Security Deposit amount shall be in addition
to and independent of the Rent Deposit as referenced in Subparagraph 5(d)
below.
r) "Service Areas" shall mean those areas within the exterior walls of
the Building used for elevator mechanical rooms, building stairs, fire towers,
elevator shafts, flues, vents, stacks, pipe shafts and vertical ducts (but
shall not include any such areas designated for the exclusive use or benefit of
any Tenant). Landlord shall have the right, at any time and from time to time,
to change the size or location of the Service Areas.
Atrium at Clearwater/Progressive.Lease.December 5, 1997 BS WM
----- --------
Tenant Landlord
PAGE 2
<PAGE> 3
s) "Total Rentable Area" shall mean 133,007 square feet which includes
the total floor area within the exterior walls of the Building less the Service
Areas.
t) "Substantial Completion" or "Substantially Complete(d)" shall be
defined as set forth in Paragraph 53 below.
2. LEASE GRANT. Subject to and upon the terms, provisions and conditions
herein set forth, and each in consideration of the covenants of the other
hereunder, Landlord leases to Tenant and Tenant leases from Landlord the
Premises.
3. LEASE TERM.
a) This Lease shall continue in force during the Lease Term until
terminated or extended as provided herein.
b) If by the Commencement Date, the Leasehold Improvements have not
been substantially completed as required herein (see Paragraph 53 below), due
to any act, omission, delay or default by Tenant or anyone acting under or for
Tenant, the Landlord shall have no liability for such failure to complete, and
Tenant's obligations under this Lease (including its obligations to pay Rent)
shall nonetheless commence as of the Commencement Date. Furthermore, if
Tenant has not obtained all of the local governmental use or occupancy
approvals in order to open for business after the Premises have been
Substantially Completed (per Paragraph 53 below), the Commencement Date shall
not be delayed until Tenant obtains such approvals.
c) If, however, by the Commencement Date, the Leasehold Improvements
are not substantially completed due to causes other than acts, omissions,
delays or defaults by Tenant or anyone acting under or for Tenant, then as
Tenant's sole and exclusive remedy for the delay in Tenant's occupancy of the
Premises, the Commencement Date shall be postponed and the Rent payments
deferred until the earlier of:
(i) The date of actual occupancy of the Premises by Tenant; or
(ii) Three days after the date the Improvements are
substantially completed and notice thereof is given to
Tenant.
4. USE.
a) The Premises shall be used and occupied by Tenant solely for
general business office use including, but not limited to, Tenant's business as
a LONG DISTANCE PROVIDER and all lawful matters thereto. Tenant agrees not to
use or permit the use of the Premises for any purpose which is illegal, or
which, in Landlord's reasonable opinion, creates a nuisance or which would
increase the cost of insurance coverage with respect to the Property.
b) Tenant represents and warrants that Tenant will keep the Premises
free from contamination by Hazardous Materials and that the Premises and the
activities to be conducted thereon will not pose any hazard to human health or
violate any applicable current federal, state, or local laws, ordinances,
rules, codes, or regulations pertaining to Hazardous Materials or industrial
hygiene or environmental conditions (collectively referred to herein as
"Environmental Laws"). Tenant at its sole cost and expense shall conform to all
existing and any future changes in the Environmental Laws, whether foreseen or
unforeseen, and will take all direct and indirect actions required in order to
keep its Premises or any activities conducted on the Premises free from any
violation of any current or future applicable Environmental Laws. Tenant agrees
to indemnify, defend and hold Landlord (and Landlord's partners, affiliates,
directors, officers, shareholders, employees, mortgagees, heirs successors and
assigns, as applicable) harmless from and against any and all claims, losses,
damages (including, without limitation, unforeseeable consequential and
incidental damages), fines or penalties resulting from the violation of any
BS WM
-------- --------
Atrium at Clearwater/Progressive.Lease. December 5, 1997 Tenant Landlord
PAGE 3
<PAGE> 4
Environmental Laws applicable to the Building and/or the Premises which have
been caused by or necessitated by the acts of Tenant and/or its agents. All
sums paid and costs incurred by Landlord with respect to the foregoing matters
shall be payable by Tenant to Landlord as additional rent due on demand.
c) Landlord hereby represents and warrants to Tenant that to the best
of Landlord's knowledge as of the date of this Lease, no hazardous material has
been leaked, spilled, discharged or incorporated into the Premises or the
Building. Landlord shall notify Tenant immediately if Landlord should discover
any hazardous materials or violations of any laws or regulations regarding
hazardous materials. Landlord will, at Landlord's sole expense, take all action
necessary to remove or abate any hazardous materials should they be found on or
in the Premises.
5. RENTAL.
a) Tenant covenants and agrees to pay during the Lease Term, to
Landlord, without any counterclaim, set off or deduction whatsoever, the Base
Rental as set forth in Section l(a) of the Lease and this Section 5 of the
Lease and all such other sums of money as shall become due hereunder (all of
which are sometimes herein collectively called "Rent"). The Base Rental payable
during each calendar year or portion thereof during the Lease Term, shall be
due and payable in 12 equal installments on the first day of each calendar
month during the Lease Term and any extensions or renewals thereof, and Tenant
hereby agrees to pay such Base Rental and any adjustments thereto to Landlord
at Landlord's address provided herein (or such other address as may be
designated by Landlord in writing from time to time). The Tenant hereby waives
any and all right to offset or charge any amount owed to Tenant by Landlord
against the Rent, Operating Expenses, Operating Expense reimbursements, or any
other monies that may be due the Landlord by Tenant under this Lease.
b) It is also further agreed that the Landlord may collect a "Late
Charge" equal to five percent (5%) of any monthly payment which is not paid
within five (5) days of the due date thereof, to cover the extra expense
involved in handling delinquent payments, provided that collection of said Late
Charge(s) shall not be deemed a waiver by the Landlord of any of its other
rights under this Lease. All installments of Rent not paid when due and
payable, notwithstanding any grace period provided pursuant to Paragraph 28(a)
hereof, shall bear interest from the date due and payable until paid at
eighteen percent (18%) per annum but no more than the maximum rate allowed
under the laws of the State of Florida. Such interest and late charges shall
constitute Additional Rent under this Lease and shall be due and payable on
demand, but no later than the next due date for any Rent due hereunder.
c) Tenant shall pay all sales and use taxes levied or assessed against
all payments of Rent due under this Lease simultaneously with each payment
required hereunder on the date required hereunder without further notice,
provided, however, that Landlord will provide Tenant with prior notice of any
change in the sales and use taxes that are so assessed. Until such further
notice, the Florida State sales tax applicable to all payments of Rent due
hereunder shall be deemed to be seven percent (7%).
d) Upon COMMENCEMENT of this Lease, Tenant shall deposit with Landlord
the amount of $14,058.37 which shall be applied to the base rental
($13,138.66), and sales tax ($919.71) due for the first AND SECOND MONTHS of
the Lease Term to the extent available ("Rent Deposit"), which Rent Deposit
amount shall be in addition to and independent of the Security Deposit as
referenced in Paragraph 1(q) above.
e) Tenant shall pay the monthly installments of the Base Rental
through the end of the first Lease Year as set forth in Paragraph l(a) above
(initially $6,569.33 per month plus
Atrium at Clearwater/Progressive.Lease. December 5, 1997 BS WM
------ --------
Tenant Landlord
PAGE 4
<PAGE> 5
sales tax), and thereafter the Base Rental shall be increased annually at the
commencement of each succeeding Lease Year, including all extensions and
renewals of this Lease ("Succeeding Lease Year") according to the following
schedule:
<TABLE>
<CAPTION>
Base Rental Calculations
-------------------------------------------------------------------------------------------------------------------
Lease Tenant's Rate Base Rental Base Rental
Year Dates SIF PSF Annually Monthly
---- ----- -------- ----- ----------- -----------
<S> <C> <C> <C> <C> <C>
1 01/01/1998 - 12/31/1998 4,927 16.00 78,832.00 6,569.33
2 01/01/1999 - 12/31/1999 4,927 16.64 81,985.28 6,832.11
3 01/01/2000 - 12/31/2000 4,927 17.31 85,286.37 7,107.20
4 01/01/2001 - 12/31/2001 4,927 18.00 88,686.00 7,390.50
5 01/01/2002 - 12/31/2002 4,927 18.72 92,233.44 7,686.12
</TABLE>
6. OFFSET: The Tenant hereby waives any and all right to offset or charge
any amount owed to Tenant by Landlord against the Base Rent or Tenant's Prorata
Share of Operating Expenses, or any other monies due the Landlord by Tenant
under this Lease. Tenant shall nevertheless be able to pursue its own separate
cause of action for any alleged breach pursuant to this Lease by Landlord.
7. PAYMENT OF OPERATING EXPENSES. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, TENANT SHALL NOT BE OBLIGATED TO REIMBURSE LANDLORD
FOR TENANT'S PRORATA SHARE OF OPERATING EXPENSES DURING THE INITIAL LEASE TERM,
EXPIRING DECEMBER 31, 2002 EXCEPT AS PROVIDED IN PARAGRAPH 7 (C), (F) AND (G)
BELOW (A LIMITED EXPENSE REIMBURSEMENT).
BS WM
-------- --------
Atrium at Clearwater/Progressive.Lease. December 5, 1997 Tenant Landlord
PAGE 5
<PAGE> 6
c) "Tenant's Prorata Share" of the Operating Expenses shall be equal to
a fraction the numerator of which is the Rentable Floor Area and the
denominator of which is the Total Rentable Area (133,007 square feet).
Accordingly, Tenant's Prorata Share of the Operating Expenses is deemed to be
4%.
f) Tenant's obligation to pay its Prorata Share of the Operating
Expenses, plus Florida Sales Tax thereon, shall survive the termination of this
Lease. Similarly, Landlord's obligation to refund any overpayment of Tenant's
Prorata Share of Expenses shall survive termination of this Lease.
g) LIMITED EXPENSE REIMBURSEMENT DURING INITIAL LEASE TERM ONLY. TO
THE EXTENT THAT REAL ESTATE TAXES AND INSURANCE COSTS DURING THE INITIAL LEASE
TERM INCREASE OVER THE AMOUNT FOR SUCH ITEMS FOR THE CALENDAR YEAR 1997, TENANT
SHALL PAY ITS PRORATA SHARE OF ANY SUCH INCREASE AS OF JANUARY 1 OF EACH YEAR,
PRORATED IF NECESSARY OR SUCH LATER DATE AS LANDLORD MAY ELECT TO MAKE SUCH
BILLING, BUT NO LATER THAN SEPTEMBER 1st OF THE FOLLOWING YEAR.
8. SERVICES TO BE FURNISHED BY LANDLORD. Subject to Paragraph 7 of this
Lease, Landlord agrees to use commercially reasonable efforts to furnish
Tenant the following services:
a) Water at those existing points of supply provided for the general or
common use of Tenant and other tenants in the Building.
b) Central heat and air conditioning to the Building, Service Areas,
Common Areas, and the Premises during Normal Business Hours provided Tenant
shall bear the entire additional cost of any "Overtime Use" of the air
conditioning systems within Tenant's Premises as provided in Paragraph 14
below, provided further that such services may be interrupted or moderated
(with shorter service hours or different temperature settings) by any policies
or regulations of any utility or governmental agency.
c) Routine maintenance and electric lighting service for all Common
Areas and Service Areas of the Building in the manner and to the extent deemed
by Landlord to be standard and/or reasonable.
d) Janitorial service to the Premises and all Common Areas, Mondays
through Fridays, exclusive of normal business holidays.
e) Facilities to provide all electrical current as Landlord, in its
sole discretion, determines is necessary for normal office use within the
Premises and for use and operation of the Common Areas (interior and exterior).
f) All florescent bulb replacement in the Premises and florescent and
incandescent bulb replacement in the Common Areas and Service Areas; however,
Tenant shall pay for the replacement of any "high hat" lights or any other
special or customized lighting.
g) Control of access to the Building during other than Normal Business
Hours shall be provided in such form as Landlord deems appropriate. Landlord,
however, shall have no liability to Tenant, its employees, agents, invitees or
licensees for bodily injury, death, or for damages to or loss of property
suffered or incurred by any party whomsoever, caused by or arising from theft
or burglary or entry of unauthorized persons onto the Property and neither
shall Landlord be required to insure against any such losses except if caused
by the Landlord's gross negligence or gross negligence of the Landlord's
employees. Tenant shall cooperate fully to maintain security in the Building
and on the Property and shall follow all regulations promulgated by Landlord.
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h) Elevator service to each floor of the Premises, provided that Tenant
shall not use the three (3) regular passenger elevators under any
circumstances for the purpose of moving its property in and out of the
Building and Tenant shall only use the one (1) freight elevator for purposes
of moving its property in and out of the Building, which freight elevator
moving activities shall be done:
(i) Only during other than Normal Business Hours or such other
hours as Landlord may approve in writing;
(ii) Only after first obtaining Landlord's consent to such use,
which request shall be submitted in writing to Landlord no
less than five (5) days in advance of each desired move
(which consent shall not be unreasonably withheld);
(iii) Only after arranging with Landlord to obtain security
and/or other supervisory staff of Landlord to be present
during such move;
(iv) Only after Landlord advises Tenant in writing of what
physical protections Landlord might require Tenant to
provide or install in order to protect the Building or its
components as a condition precedent to such move and which
hallways and which exterior doorways shall be used for such
purposes. Tenant shall pay Landlord promptly for all costs
associated with Tenant's moving including the operation of
the elevator (for moving purposes), the cost of any
operator, supervisory or security personnel and all other
costs required herein. Tenant shall also promptly reimburse
Landlord's cost to repair any damage to the elevator or the
elevator cab(s), the Common Areas, floors, walls, or other
components of the Building resulting from Tenant's moving
activities.
The failure by Landlord to any extent to furnish the defined services
noted above, in whole or in part, or the interruption or termination of any
such services, or the failure of any equipment or machinery used in the
provision of such services to cease to function properly shall not render
Landlord liable in any respect nor be construed as an eviction (constructive or
otherwise) of Tenant, nor cause an eviction of Tenant, nor cause an offset or
abatement of Rent, nor relieve Tenant from the obligation to fulfill any
covenant or agreement hereof. Notwithstanding the foregoing, if any of the
foregoing defined services to be provided by Landlord is interrupted or
terminated for more than seven (7) consecutive business days, Tenant shall have
the right to terminate this Lease upon giving prior written notice to Landlord
provided such services have not been reinstated in the meantime.
9. IMPROVEMENTS TO THE PREMISES.
a) Landlord's obligations to construct or install and to pay the cost
of any improvements to the Premises are limited to those specifically set forth
in Paragraph 53 below and/or as may be indicated on the floor plan attached
hereto as Exhibit "B". Except for those portions of the existing Premises which
Landlord is obligated to construct, remodel or change as specifically set forth
in paragraph 53 below, Tenant shall be deemed to have accepted the unchanged
balance of the Premises, Building and Property in their "as is" condition as of
the date this Lease is executed by Tenant.
b) Tenant shall not make any installation(s) or improvement(s) to the
Premises except at Tenant's sole cost and expense and only after having
obtained Landlord's prior written approval and by meeting all conditions as
outlined in Paragraph 12(c) below. By taking possession of the Premises, Tenant
acknowledges that Landlord has performed Landlord's obligations to construct,
remodel or change the Premises as required hereunder and Tenant shall
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be deemed to have accepted the Premises, in the "as is" condition as of the
date Tenant takes such possession.
10. MAINTENANCE AND REPAIR OF BUILDING BY LANDLORD. Except for those
specific responsibilities of Tenant as provided herein, Landlord shall repair
and maintain in good repair and serviceable condition the roof, foundations,
exterior walls and windows of the Building, Landlord's portion of the Parking
Garage, underground utility and sewer pipes outside the exterior walls of the
Building (unless covered or made inaccessible by Tenant's use of the Premises),
the Exterior Common Areas (including the first floor atrium and covered walkway
to the Parking Garage), the Common Areas (including the first floor atrium
area), and the heating, air conditioning, lighting, electrical, ventilation,
plumbing, and storm drainage equipment servicing the Building whether located
inside or outside the exterior walls of the Building (except for routine
maintenance of such heating, air conditioning and electric services within the
Premises for which Tenant is specifically responsible). Except as otherwise
expressly provided herein, Landlord shall not be required to make any repairs to
the Premises.
11. CARE OF THE PREMISES BY TENANT. Tenant shall, at its sole expense, keep
the Premises in good repair during the Lease Term, including without
limitation, the doors (both sides and door locks and hardware), interior
Building windows and interior walls within the Premises. Tenant shall not
commit or allow any waste to be committed on any portion of the Premises or
the Property, and at the termination of this Lease, Tenant shall deliver up the
Premises to Landlord broom clean and in the same good condition as exists at
the Commencement Date, ordinary wear and tear and damage by fire and other
casualty excepted, lacking which, Landlord may, at its option, restore the
Premises to such required condition and assess Tenant the cost of such which
assessment shall constitute Additional Rent under this Lease.
12. REPAIRS AND ALTERATIONS BY TENANT.
a) Tenant covenants and agrees with Landlord, at Tenant's sole expense,
to repair any damage done to the Premises or any part thereof, including
necessary replacement, where such damage is caused by Tenant or Tenant's
agents, employees, invitees, visitors, licensees or permitted assigns. All
such work or repairs by Tenant shall be in compliance with all applicable laws;
provided, however, if Tenant fails to make such repairs or replacements
promptly, Landlord may, at its option, make such repairs or replacements, and
Tenant shall pay the cost thereof to the Landlord within fifteen (15) days
after Landlord's demand therefore, as additional rent. In such event, Tenant
hereby grants Landlord reasonable access to Tenant's Premises for the foregoing
purposes. Tenant agrees with Landlord not to make or allow to be made any
improvements or alterations to the Premises, install any vending machines on
the Premises, or place signs on the Premises which are visible from outside the
Premises or in the corridors, without first obtaining the prior written consent
of Landlord which consent shall not be unreasonably withheld. Any and all
permanent alterations or additions to the Premises made by Tenant shall become
the property of Landlord upon installation by Tenant. Upon termination,
Landlord may, nonetheless, require Tenant to remove any and all fixtures,
equipment and other improvements so installed on the Premises. In the event
that Landlord so elects, and Tenant fails to remove such improvements, Landlord
may remove such improvements at Tenant's sole expense, and Tenant shall
promptly pay Landlord the cost of restoring the Premises to the same condition
they were in prior to the installation thereof ordinary wear and tear excepted.
b) In the event any damage to the Building or the Property is due in
whole or in part to the action or inaction of Tenant, or Tenant's agents,
employees, invitees, visitors, licensees, or permitted sublessees or assigns,
the necessary repair, including replacement, may be made by Landlord, at
Tenant's sole cost and expense which shall be due to Landlord as Additional
Rent payable within fifteen (15) days after Landlord's demand.
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c) Notwithstanding anything to the contrary in the original Lease or
any amendment or modification thereto, Tenant agrees that it will not remodel,
alter, change, remove, destroy or make any additions to any of the improvements
to the premises without first obtaining the written consent and authorization
from Landlord which may be withheld in Landlord's sole discretion. However,
Landlord's consent shall not be unreasonably withheld if:
(i) Tenant has such work performed by contractors approved by
Landlord or Landlord itself;
(ii) Tenant pays Landlord for 100% of the cost of such work
before any work is commenced (Landlord will be in control
of accepting the work as well as Tenant to verify code and
life safety compliances and quality of workmanship as well
as compatibility with other operating systems of the
Building);
(iii) Tenant shall deposit with Landlord an amount equal to
Landlord's estimate to replace, reinstall, repair or return
the premises to their current condition at the termination
of Tenant's Lease;
(iv) Landlord shall not be obligated to pay costs of such
improvements even if work is approved as required herein
unless Landlord receives lien releases for such payments.
13. GRAPHICS. Landlord shall provide and install, at Landlord's sole
expense, all letters or numerals on doors entering the Premises or on a wall
near Tenant's main entry door. All such letters and numerals shall be in the
standard graphics as approved by Landlord for the Building, and no other sign,
graphics or other displays which are visible outside the Premises shall be
permitted without Landlord's prior written consent which consent shall not be
unreasonably withheld. A directory in the lobby designed and maintained by the
Landlord shall contain the name of all tenants within the Building.
14. USE OF ELECTRICAL SERVICES BY TENANT.
a) Tenant's use of electrical services furnished by Landlord shall not
exceed, either in voltage, rated capacity, or overall load that which Landlord
in its reasonable discretion determines, from time to time, is necessary for
normal office use including normal desk-top office equipment and normal copying
equipment. In the event Tenant consumes electrical services in excess of that
so determined by Landlord to be reasonable, Landlord may refuse to consent to
or continue such usage or may consent of such usage upon such conditions as
Landlord elects including the requirement that upgraded supply facilities
and/or sub-meters be installed at Tenant's expense. In such event, Tenant shall
be obligated to pay for such electric consumption at the same rates as are
charged to Landlord by such utility company providing such service and Tenant
shall pay such amounts to Landlord or pay such amounts directly to the utility,
as Landlord may so elect. LANDLORD ACKNOWLEDGES THAT TENANT WILL HAVE MULTIPLE
SHIFTS WORKING WITHIN THEIR PREMISES. THE FACT THAT THE TENANT'S UTILIZATION OF
MULTIPLE SHIFTS SHALL NOT JUSTIFY METERING AS MENTIONED ABOVE.
b) If Tenant desires HVAC at any time other than during Normal Business
Hours, Landlord shall use reasonable efforts to furnish such service upon
reasonable notice from Tenant and Tenant shall pay Landlord's charges therefor
on demand. Normal Business Hours for the Building are as follows: 8:00 a.m. to
6 p.m., Monday through Friday, and 9:00 a.m. to 1:00 p.m. on Saturday. Any
tenant desiring additional hours of operation during the Monday to Saturday
schedule must contact the Landlord or its agent at Landlord's office
twenty-four (24) hours in advance of the time when Tenant desires additional
usage, provided
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Tenant Landlord
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the hourly charge for additional hours of operation shall be as follows:
i) $25.00 minimum charge for the first one (1) additional hour
plus $25.00 per hour for each hour thereafter.
ii) There shall be no offset or reduction of the minimum charge
for requests of less than one additional hour.
NOTWITHSTANDING ANYTHING TO THE CONTRARY AS CONTAINED HEREIN, TENANT SHALL
RECEIVE UP TO FOUR HUNDRED (400) HOURS OF OVERTIME HVAC PER YEAR AT NO COST.
15. PARKING. Tenant shall have no rights to use any portion of the Parking
Garage unless set forth herein. The following provisions shall be applied and
enforced on a non-discriminatory basis among all tenants.
a) Neither Tenant nor any of its invitees shall have any right to
access the Parking Garage except as specifically provided for herein.
b) During the Lease Term, Tenant shall have the right to use 15
parking spaces which shall be designated as "covered garage" and 5 parking
spaces which shall be designated to as "uncovered garage" parking spaces
("Rooftop"), all of which shall be located in Landlord's sole portion of the
Parking Garage at a cost of $0 per month for THE FIRST 10 "COVERED GARAGE"
PARKING SPACE AND AT A COST OF $35.00 PER MONTH FOR THE REMAINING 5 "COVERED
GARAGE" PARKING SPACE and $35.00 per month for each "uncovered garage"
(rooftop) parking space all of which costs SHALL INCREASE BY FIVE PERCENT (5%)
IN EACH LEASE YEAR. The parking charges for "covered" and "uncovered" parking
spaces as provided above shall be due each month as stated herein with Tenant's
monthly installments of Base Rent and shall be subject to all terms,
provisions, conditions and covenants of this Lease pertaining to defaults in
the payments of Rent.
c) In addition to the fixed parking spaces allotted to Tenant as
provided in subparagraph (b) above, which Tenant may allocate among its
employees, Landlord may provide additional "Temporary Parking" spaces to Tenant
or directly to employees of Tenant provided that Landlord reserves the right to
terminate any of these "Temporary Parking" spaces upon thirty (30) days prior
notice to the respective party.
Landlord shall provide various employees of Tenant with additional "Temporary
Parking" spaces all of which shall constitute uncovered rooftop parking spaces
at a cost of $35.00 per space, per month plus sales tax, all of which shall be
located at Landlord's sole discretion and all of which shall be subject to the
unilateral cancellation rights of Landlord with the above noted thirty (30)
days prior notice. The spaces referred to in this subparagraph (c) "Temporary
Parking" shall also be subject to the other restrictions and conditions as set
forth in this Paragraph 15, including but not limited to the conditions
precedent set forth in subparagraph (f) below.
d) Access to such parking spaces shall be through the driveways and
walkways located in the Parking Garage and/or on the Property which shall be
used by Tenant on a non-exclusive basis with Landlord and other tenants of the
Building or other authorized users of the Parking Garage. Landlord shall have
the right, in Landlord's sole and reasonable discretion, to establish rules and
regulations for use of the driveways, elevators, skybridge, walkways, parking
spaces and areas and to designate the right for the exclusive use of particular
parking spaces to other tenants in the Building. Landlord reserves the right
to, at any time, reassign, change or relocate any designated parking spaces
within the Property or the Parking Garage. Landlord shall also have the right
to establish or modify the methods used to control traffic and parking on the
Property and the Parking Garage, including, without limitation, the
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installation of traffic control devices, Parking Garage gate entrance controls,
or the hiring of parking attendants. LANDLORD RESERVES THE RIGHT TO ENFORCE THE
RESTRICTIONS OR DESIGNATIONS SET FORTH HEREIN BY TOWING VIOLATORS OR OTHER
ENFORCEMENT ACTIONS AS LANDLORD DEEMS NECESSARY.
e) No commercial or recreational vehicles shall be parked in any
parking areas on the Property except those vehicles parked on a temporary basis
while delivering, repairing or servicing the Building and/or its tenants.
f) In order to allow Landlord to enforce the provisions of this
Paragraph and this Lease including, but not limited to, provisions relating to
designated parking spaces, each employee of Tenant who expects to park in the
garage in an assigned parking space shall first provide Landlord with the name
of each such employee and the vehicle make and license number of such person.
Only those persons so pre-registered with Landlord shall be permitted to park
in the parking spaces specifically designated and assigned to Tenant as
provided herein. Landlord may designate the specific names of Tenant's
employees or users of any "covered" and/or "uncovered" parking spaces
("Rooftop") or number for such parking spaces and if any such employee or
designee does not park in such space and parks somewhere else in the Parking
Garage or elsewhere on the property of Landlord, Landlord may tow such
automobile of any employee or party violating these restriction whether or not
the Tenant is financially complying with its parking charge payments to
Landlord.
g) No permanent or part time employee, invitee, agent, or
subcontractor of Tenant shall be permitted to park in any parking space
designated as "Visitor" or in any space designated (by letter identification
on such parking space) for use by another tenant ("Other Tenant") as such Other
Tenant spaces may be designated from time to time by Landlord in Landlord's
sole discretion. The Visitor Parking Spaces or other tenant spaces as
designated from time to time by Landlord shall not be occupied by any person
who conducts part-time or full-time work on or about Tenant's Premises.
Landlord may designate various parking spaces on the North side of Park Street
(to the East of the Building) as Visitor Parking none of which shall be
utilized by any employees of Tenant and Landlord shall prescribe whatever
controls, charges and supervision of such Visitor Parking areas as Landlord may
establish in Landlord's sole discretion. Landlord reserves the right to
enforce the restrictions or designations set forth herein by towing violators
or other enforcement actions as Landlord deems necessary.
h) Landlord shall have the right, after reasonable notice to Tenant
and in Landlord's sole and reasonable discretion, to change the location of any
designated or undesignated parking spaces whether for visitors, other tenants,
handicapped or otherwise.
i) Tenant agrees that it will collect the parking charges from its
employees and remit the monthly collections to Landlord in one single payment
with a notice in writing of any nonpaying employee which notice may be relied
upon by Landlord in enforcing the parking provisions herein. Tenant may
alternatively accept payments from employees directly for parking charges as
required herein if requested by Tenant or any of its employees provided such
parking privileges may be revoked automatically and immediately if payment is
not made and Tenant hereby consents to such termination and agrees that such
termination of a direct employee parking arrangement shall not affect the
status of Landlord or Tenant and provided further that any parking agreement
negotiated directly between Landlord and an employee of Tenant may include
monthly rental rates as determined by Landlord from time to time in Landlord's
sole discretion with such parking rights in all respects being subject to
cancellation by Landlord upon 30 days prior notice to such employee of Tenant.
j) Notwithstanding anything to the contrary set forth elsewhere in
this Lease, any default in the payment of monthly parking charges as set forth
herein shall constitute a monetary default under this Lease provided Landlord
shall also have the right to unilaterally discontinue
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Tenant Landlord
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parking privileges for any space for which parking charges are not paid current
within sixty (60) days. If parking rights are so discontinued by Landlord for
such non-payment, Landlord may enforce such discontinuance by towing, tagging,
or any other measures necessary to remove such non-paying employee from the
Property or the Parking Garage. Any such non-paying employee also shall be
prohibited from parking on any ground level parking area and be restricted to
the uncovered portions of the garage parking areas as may be designated from
time to time by Landlord with Landlord similarly having towing rights for any
violation hereof.
LANDLORD SHALL NOT BE LIABLE FOR ANY DAMAGE TO OR ANY THEFT OF ANY VEHICLE, OR
ANY CONTENTS THEREFROM, WHILE IN OR ABOUT THE PARKING AREAS LOCATED ON OR ABOUT
THE PROPERTY OR THE PARKING GARAGE AREA.
k) MAXIMUM NUMBER OF EMPLOYEES. Omitted.
l) NO MEETINGS OR TRAINING SESSIONS. Omitted.
16. LAWS AND REGULATIONS. Tenant agrees to comply with all applicable
laws, ordinances, rules and regulations of any governmental entity, agency or
authority having jurisdiction of the Premises or Tenant's use thereof.
17. BUILDING RULES AND REGULATIONS. Tenant will comply with the rules and
regulations of the Building adopted and modified by Landlord from time to time
and will cause all of its agents, employees, invitees and visitors to do so.
Landlord shall provide Tenant with notice of all such rules and regulations and
any modifications thereto. The Rules and Regulations currently in effect are
attached hereto as Exhibit "D".
a) In addition to the Rules and Regulations attached as Exhibit "D",
Tenant shall comply with the following:
(i) Landlord has designated the Building and all areas within the
Building to be non-smoking areas and neither Tenant, nor its
invitees, customers or employees shall be permitted to smoke
within the Building or the Premises.
(ii) No birds, dogs, cats or other animals of any kind shall be
brought into or kept about the Building or the Premises, with
the exception of animals trained to assist handicapped
persons.
b) These rules shall be enforced on a non-discriminatory basis among
all tenants.
18. ENTRY BY LANDLORD. Tenant agrees to permit Landlord or its agents or
representatives to enter into and upon any part of the Premises at all
reasonable hours and with advance notice (and in emergencies at all times) to
inspect the condition, occupancy or use thereof, to show the Premises to
prospective purchasers, mortgagees, tenants or insurers, and to clean or make
repairs, alterations or additions thereto, and Tenant shall not be entitled to
any abatement or reduction of Rent by reason thereof; provided, however, that
Tenant's business is not unreasonably interrupted by any of the foregoing
activities.
19. ASSIGNMENT AND SUBLETTING.
a) Tenant shall not assign, sublease, transfer, pledge, encumber or
otherwise convey this Lease, the Premises or any portion thereof or interest
therein (a "Transfer"), as the case may be, either voluntarily or by operation
of law, without Landlord's prior written consent. If Tenant is either a
corporation or a partnership, any sale, transfer, pledge, encumbrance or other
conveyance of any stock or partnership interests therein shall comprise a
Transfer. A partial assignment of Tenant's leasehold interest shall comprise a
Transfer. Any attempted assignment or Transfer by Tenant in violation of the
terms and covenants of this paragraph shall be void.
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b) In the event Landlord consents to any assignment of this Lease or
any sublease of all or any part of the Premises, Tenant shall pay to Landlord,
on a monthly basis, an amount equal to all rent and other consideration paid
under said assignment or sublease during each month in excess of the Base
Rental for said month and Tenant shall remain liable for the full and faithful
performance of all the covenants and conditions of this Lease.
20. MECHANIC'S LIENS. Tenant will not permit any mechanic's lien or liens
to be placed upon the Premises or any portion of the Property, and nothing in
this Lease shall be deemed or construed in any way as constituting the consent
or request of Landlord, express or implied, by inference or otherwise, to any
person for the performance of any labor or the furnishing of any materials to
the Premises or any part of the Property, or as giving Tenant any right, power
or authority to contract for or permit the rendering of any services or the
furnishing of any materials that would or might give rise to any mechanic's or
other liens against the Premises or any part of the Property. This provision
shall comprise notice to all parties that Landlord's interest in the Property,
including the Premises, are and shall not be subject to liens or liability to
secure or satisfy claims of any party contracting or otherwise dealing with
Tenant or Tenant's agents or contractors. In the event any such lien is claimed
against the Premises or any part of the Property, then Tenant shall discharge
same or transfer such lien to security other than the Premises and the
Property, as soon as possible, but no later than ten (10) days after notice
thereof. In the event that Tenant fails to discharge or otherwise remove any
such liens, then, in addition to any other right or remedy of Landlord,
Landlord may, but shall not be obligated to, discharge the same. Any amount
paid by Landlord pursuant to this Paragraph shall be reimbursed by Tenant to
Landlord promptly after Landlord's demand therefore as additional rent, but no
later than thirty (30) days thereafter.
21. PROPERTY INSURANCE.
a) Subject to Paragraph 7 of this Lease, Landlord shall maintain fire
and extended coverage insurance on the Building in an amount as Landlord shall
deem appropriate and payments for losses thereunder shall be made solely to
Landlord or Landlord's mortgagee(s), as their interests shall appear.
b) Tenant shall maintain, at its sole expense, in an amount equal to
full replacement cost, fire and extended coverage insurance on all of its
improvements and personal property, including removable trade fixtures, located
at the Premises and such additional amounts as are required to meet Tenant's
obligations pursuant to Paragraph 25 hereof. Upon the execution of this Lease,
upon policy renewals and upon Landlord's request from time to time, Tenant
shall provide Landlord with current certificates of insurance evidencing
Tenant's compliance with the terms of this Paragraph 21 and Paragraph 22
hereof. Tenant shall, simultaneously with the execution of this Lease, obtain
and deliver to Landlord the written agreement or endorsement of Tenant's
insurers to notify Landlord by certified mail, return receipt requested, at
least 30 days prior to the cancellation, expiration or modification of any
insurance coverage required of Tenant herein.
22. LIABILITY INSURANCE. Tenant, at its sole expense, shall maintain a
policy or policies of comprehensive general liability insurance with respect to
its activities in the Building and on the Property, with the premiums thereon
fully paid on or before the due date therefore, issued by and binding upon an
insurance company approved by Landlord. Such insurance shall afford minimum
protection of not less than $1,000,000.00 combined single limit for bodily
injury and property damage, and Landlord shall be named as an insured thereon.
23. ASSUMPTION OF RISKS. Landlord shall not be liable to Tenant or
Tenant's customers, licensees, invitees, agents, guests or employees for any
loss of life, injury, loss or damages to its, his or their persons or property
created by any cause whatsoever, including, but not limited to:
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a) Acts or omissions of Landlord, its employees, agents or independent
contractors unless such acts or omissions are grossly negligent or willful;
b) The acts or omission of any other tenant in the Building;
c) Construction defects, water, rain, sleet, fire, storms, negligence
and accidents, breakage, stoppage or leaks of gas, water heating or sewer
pipes, boilers, wiring or plumbing; or
d) Any other defects (latent or patent) in or about the Premises.
Tenant expressly assumes all liability for or on account of any such loss of
life, injury, loss or damage, and shall at all times, indemnify, defend and
save Landlord harmless from and against all claims, causes of action,
liability, damage or expense, including, without limitation, attorneys' fees
and costs suffered or incurred by Landlord by reason of any loss of life,
injury, loss or damage to persons or property arising out of, related to or
connected with the occupancy, use, repair or maintenance of the Premises or any
other portion thereof by Tenant, its employees, agents, customers, invitees,
licensees, or contractors or due in whole or in part to the acts or omissions
of Tenant, its employees, agents, customers, invitees, licensees, or
contractors.
24. WAIVER OF SUBROGATION RIGHTS. Anything in this Lease to the contrary
notwithstanding, Tenant hereby waives any and all rights of recovery, claim,
action, or cause of action, against Landlord, its agents, officers or
employees, for any loss or damage that may occur to the Premises, the Building
or the Property, or any improvements thereto, or any personal property of
Tenant therein, by reason of fire, the elements or any other causes which are
insured against under the terms of the fire and extended coverage insurance
policies which Tenant is required to carry as required herein, regardless of
cause or origin, including the negligence of Landlord, its agents, officers or
employees; provided that such waiver by Tenant does not limit in any way
Tenant's right to recovery under such insurance policies. Tenant shall obtain
an endorsement to all of its insurance policies which provides for such waivers
as required herein shall not limit Tenant's right to recover under such
policies, and upon the execution hereof Tenant shall deliver a copy of such
endorsement to Landlord.
25. CASUALTY DAMAGE.
a) If the Premises or any part thereof shall be damaged by fire or
other casualty and all or any portion of the Building shall be so damaged that
substantial reconstruction of the Building, shall in Landlord's sole opinion,
be required (whether or not the Premises shall have been damaged by such
casualty), or if the Premises shall by reason of such occurrence be rendered
substantially untenantable, or if the holder of any mortgage on the Property
should require that the insurance proceeds payable as a result of a casualty be
applied to the payment of the mortgage debt, or if a casualty should occur
during the last two (2) years of the Lease Term or during any renewal period,
or if insurance proceeds actually received or expected to be received by either
the Landlord or Tenant (excluding amounts paid to the holders of mortgages upon
the Property) are insufficient for full repair of the casualty, or if the
casualty is not covered by Landlord's insurance, Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such termination within
ninety (90) days after the date of such damage.
b) If any of the events set forth in subparagraph (a) above take place
or occur and if Landlord does not elect to terminate this Lease, Landlord's
obligation to restore shall be limited to the restoration of the Leasehold
Improvements provided, however, that in no event shall Landlord be required to
spend an amount in excess of the insurance proceeds actually received by
Landlord as a result of the casualty and allocable to the damage to the
Premises after deduction of Landlord's reasonable expenses in obtaining such
proceeds and any amounts
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required to be paid to the mortgages of the Property. Tenant, at Tenant's
expense, shall promptly perform all other repairs to restore the Premises to
the same good condition as existed immediately prior to the casualty, using
Building Standard or better materials (the "Tenant Restoration Work"). Any
additional costs which are required to place the Premises in compliance with
then applicable governmental laws, codes, rules and regulations shall be
Tenant's obligation. The proceeds of Tenant's insurance policies or other funds
required for this purpose shall be held in trust for the purpose of performing
the Tenant Restoration Work.
c) Landlord shall not be liable for any inconvenience or annoyance to
Tenant or injury to the business of Tenant resulting in any way from such
damage or the repair thereof. If the Premises or any other portion of the
Building shall be damaged by fire or other casualty resulting from the fault or
negligence of Tenant or any of Tenant's agents, employees, or invitees, the
Rent hereunder shall not be diminished during the repair of such damage, and
Tenant shall be liable to Landlord for the entire cost of the repair and
restoration of the Building caused thereby; otherwise, Landlord shall allow
Tenant a prorata abatement of Rent during the time and to the extent the
Premises are unfit for occupancy as a result thereof.
26. CONDEMNATION. If more than twenty percent (20%) of the Property shall
be taken for any public or quasi-public use, by right of eminent domain or
otherwise, or if more than twenty percent (20%) shall be sold in lieu of
condemnation, then this Lease shall, at the option of Landlord, terminate as of
the date when physical possession of the Property is taken. If less than twenty
percent (20%) of the whole of the Property is thus taken or sold (whether or
not the Premises are affected thereby) and such taking shall render the
Property uninsurable in Landlord's reasonable discretion, then Landlord may, at
its option, terminate this Lease by giving written notice thereof to Tenant, in
which event this Lease shall terminate as of the date when physical possession
of such portion of the Property is taken. If this Lease is not terminated after
any such taking or sale of the Property and the Premises are directly affected
by such taking, the Base Rental payable hereunder shall be reduced in the same
proportion that the Floor Area of the Premises so taken or conveyed bears to
such Floor Area immediately prior to such taking or conveyance, and Landlord
shall restore the Building and the remaining Premises to substantially their
former condition. All amounts awarded upon a taking of any part or all of the
Property shall belong to Landlord, and Tenant shall not be entitled to and
expressly waives all claims to any such compensation.
27. DAMAGES FROM CERTAIN CAUSES. Landlord shall not be liable to Tenant
for any delays in performance of Landlord's duties hereunder or for any loss or
damage to any property or person occasioned by theft, fire, act of God, public
enemy, injunction, riot, strike, insurrection, war, court order, requisition,
order of governmental body or authority or any other cause beyond the control
of Landlord. Landlord shall not be liable to the Tenant for any damage or delay
or inconvenience which may arise in connection with the repair or alteration of
any part of the Property resulting from the foregoing or other causes.
28. EVENTS OF DEFAULT/REMEDIES.
a) The following events shall be deemed to be events of default by
Tenant under this Lease:
(i) Tenant shall fail to pay any Rent or any other sums of money
due hereunder and such failure shall continue for a period of
five (5) days after the date such Rent or other sums is due
(with no notice being required of Landlord);
(ii) Tenant shall fail to comply with any other provision of this
Lease or any other agreement between Landlord and Tenant,
including the Work Letter, if applicable; and Tenant's
failure to provide gross sales information as required in
order to calculate Percentage Rent;
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(iii) The leasehold hereunder demised shall be taken on execution
or other process of law in any action against Tenant;
(iv) Tenant shall fail to promptly move into, take possession of
and operate its business on the Premises when the Premises
are ready for occupancy or shall cease to do business in or
vacate or abandon any substantial portion of the Premises
for more than ten (10) consecutive days;
(v) Tenant shall become insolvent or unable to pay its debts as
they become due, Tenant files a petition in bankruptcy or
for reorganization under the bankruptcy laws or an
admission, answer or other responsive pleading to, or
requesting the relief afforded by the bankruptcy laws;
(vi) Tenant makes an assignment for the benefit of creditors,
within the meaning of the bankruptcy laws or Tenant consents
to the appointment of a receiver or custodian for all or a
substantial part of its property; or
(vii) The filing against Tenant of a petition in bankruptcy or for
reorganization under the bankruptcy laws, the adjudication
of Tenant as a bankrupt, the entry of a court order
appointing a receiver, custodian or trustee for all or a
substantial part of its property without its consent or the
assuming of custody or sequestration by a court of competent
jurisdiction of all or substantially all of Tenant's
property, and within thirty (30) days thereafter such filing
is not dismissed, or such court order is not vacated or such
assumption or sequestration is not released; or
(viii) The adjudication of Tenant as a bankruptor; OR
(ix) Tenant shall attempt to assign, transfer, sublet all or any
part of its interests in the Premises or in this Lease
without Landlord's prior written consent subject to the
provisions of Section 19 above.
b) Upon the occurrence of any event or events of default or other
breach of this Lease by Tenant, whether enumerated in this Paragraph or not,
Landlord shall have the option to pursue any one or more of the following
remedies:
(i) Landlord shall have the right, at its election, to cancel
and terminate this Lease and dispossess Tenant by summary
proceedings or other lawful means;
(ii) Landlord shall have the right to declare all amounts and
rents due under this Lease for the remainder of the existing
term (and any applicable extension or renewal thereof) to be
immediately due and payable, and thereupon all rents and
other charges due hereunder to the end of the initial term
and any renewal term, if applicable, shall be accelerated;
(iii) Landlord may elect to enter and repossess the premises and
relet the premises for tenant's account, holding Tenant
liable in damages for all expenses incurred in any such
reletting and for any difference between the amount of rent
received from such reletting and the rent due and payable
under the term of this Lease; and
(iv) Landlord may enter upon the Premises and do whatever Tenant
is obligated to do under this Lease (and Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord
may incur in effecting
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Tenant Landlord
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compliance with Tenant's obligations under this Lease and
Tenant further agrees that Landlord shall not be liable for
any damages resulting to the Tenant from such action). All
such remedies of Landlord shall be cumulative and not
exclusive, and in addition, Landlord may pursue any other
remedies that may be permitted by law or in equity.
Forbearance by Landlord to enforce one or more of the
remedies herein provided upon an event of default shall not
be deemed or construed to constitute a waiver of such
default or remedy.
c) This Paragraph 28 shall be enforceable to the maximum extent
permissible by applicable law, and the unenforceability of any portion hereof
shall not thereby render unenforceable any other portion.
d) Landlord shall not be in default hereunder unless Landlord has not
begun to cure any failure of its obligations hereunder within thirty (30) days
after the receipt by Landlord of written notice from Tenant of the alleged
failure to perform and does not continue to pursue the cure thereof. Except as
otherwise specifically provided in this Lease, in no event shall Tenant have
the right to terminate or rescind this Lease or to offset the Rent amount due
Landlord as a result of Landlord's default as to any covenant or agreement
contained in this Lease or as a result of the breach of any promise or
inducement hereof, whether in this Lease or elsewhere. Tenant hereby waives
such remedies of termination and rescission and hereby agrees that Tenant's
remedies for default hereunder and for breach of any promise or inducement by
Landlord shall be limited to a suit for damages and/or injunction. Tenant
hereby covenants that, prior to the exercise of any such remedies, it will give
the mortgagees on the Property written notice and a reasonable period of time
in which to cure any alleged default.
e) TENANT HEREBY WAIVES ANY RIGHT IT OR ITS SUCCESSORS OR ASSIGNS MAY
HAVE TO A JURY TRIAL IN ANY LITIGATION BETWEEN LANDLORD AND TENANT ARISING OUT
OF OR RELATING TO THIS LEASE. TENANT ACKNOWLEDGES THAT THIS PROVISION WAS A
MATERIAL INDUCEMENT TO LANDLORD ENTERING INTO THIS LEASE.
29. TENANT'S PROPERTY TAXES AND ASSESSMENTS. Tenant shall be liable for
all taxes levied or assessed against the personal property, furniture fixtures
and equipment placed by or used by Tenant in the Premises or as presently
exists within the Premises. If any such taxes for which Tenant is liable are
levied or assessed against Landlord or the Property or if the assessed value of
the Property is increased by inclusion of the personal property, furniture,
fixtures and equipment now located within the Premises or to be placed by
Tenant in the Premises or used within the Premises by Tenant, Tenant shall
promptly pay to Landlord upon demand that part of such taxes for which Tenant
is liable hereunder.
30. PEACEFUL ENJOYMENT. Tenant shall, and may peacefully have, hold and
enjoy the Premises against all persons claiming by, through or under Landlord,
subject to the other terms hereof, provided that Tenant pays the Rent and other
sums to be paid by Tenant hereunder and performs all of Tenant's covenants and
agreements herein contained.
31. RELOCATION. OMITTED.
32. HOLDING OVER. In the event Tenant continues to occupy the Premises
after the termination of this Lease (as it may be extended by written agreement
of the Landlord and Tenant), Tenant covenants and agrees, throughout the entire
holdover period, to pay monthly rent equal to two hundred percent (200%) of the
Base Rental for the last full month immediately preceding the termination of
this Lease. Tenant shall be responsible for any damages incurred by Landlord as
a result of any new lease having been executed by Landlord with a third party
for a period commencing after the Termination Date. No possession by Tenant
after the
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expiration of the terms of this Lease shall be construed to extend the term of
this Lease. Throughout any holdover period Tenant shall by deemed a
tenant-at-sufferance.
33. SUBORDINATION TO MORTGAGE.
a) This Lease is and shall be subject and subordinate to any ground
lease, mortgage, deed of trust or other lien created by Landlord, whether
presently existing or hereafter arising upon all or any portion of the Property
and to any renewals, refinancing and extensions thereof. Landlord is hereby
irrevocably vested with full power and authority to subordinate this Lease to
any ground lease, mortgage, deed of trust or other lien now existing or
hereafter placed upon all or any portion of the Property, and Tenant agrees
upon demand to execute such further instruments subordinating this Lease or
attorning to the holder of such ground lease, mortgage, deed of trust or other
lien as Landlord may request. Tenant hereby irrevocably constitutes Landlord as
its attorney-in-fact to execute such instruments in Tenant's name, place and
stead, it being agreed that such power is once coupled with an interest.
b) Tenant agrees that it shall from time to time within fifteen (15)
days after request by Landlord execute and deliver to such persons as Landlord
shall request a statement in recordable form certifying that:
(i) This Lease is unmodified and in full force and effect or
stating any modifications thereto;
(ii) Stating the dates of which rent and other charges payable
under this Lease have been paid;
(iii) Stating that Landlord is not in default hereunder (or if
Tenant alleges a default stating the nature of such alleged
default); and
(iv) Further stating such other matters as Landlord or its
mortgagee(s) shall reasonably require. Tenant shall, in the
event of the sale or assignment of Landlord's interest in
all or any portion of the Property or in the event of any
proceedings brought for the foreclosure of, or in the event
of the exercise of the power of sale under, or transfer in
lieu of foreclosure of any mortgage, or other lien made by
Landlord covering the Premises, attorn to the purchaser and
recognize such purchaser as Landlord under this Lease and
Tenant agrees that such purchaser shall not be liable for
any prior act, omission or default by Landlord or subject to
any offset or defenses Tenant may have against Landlord.
34. LANDLORD'S LIEN.
a) Tenant hereby grants to Landlord a lien and security interest on
all property of Tenant now or hereafter placed in or upon the Premises, and
such property shall be and remain subject to such lien and security interest of
Landlord for payment of all rent and other sums to be paid by Tenant herein and
for the performance by Tenant of all of Tenant's obligations hereunder.
b) The provisions of this paragraph relating to such lien and security
interest shall constitute a security agreement under the Uniform Commercial
Code of the State of Florida so that Landlord shall have and may enforce a
security interest on all property of Tenant now or hereafter placed in or on
the Premises, in addition to and cumulative with Landlord's liens and rights
provided by law or by the other terms and provisions of this Lease.
c) Tenant agrees to execute as debtor such financing statement or
statements and such other documents as Landlord may now or hereafter request in
order to perfect, continue or further protect Landlord's security interest.
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Tenant Landlord
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d) In the event Landlord retakes possession of the Premises in
exercise of Landlord's rights hereunder, Landlord may remove any personal
property located on the Premises and place same in storage without notice or
liability to Tenant for such removal. Such property may be placed in a
commercial storage facility in the name of Tenant and Tenant shall be liable
for the cost of such removal and storage as additional rent hereunder. In the
event Tenant does not pay the storage costs, the property stored may be
abandoned by Landlord which shall have no obligation and no liability for
declining to pay such costs or to protect such property. The foregoing rights
shall be in addition to Landlord's claim for Landlord's lien and Landlord's
rights under Chapter 715 Florida Statutes.
e) NOTWITHSTANDING THE FOREGOING, LANDLORD HEREBY WAIVES ITS LIEN
RIGHT ON ANY PERSONAL PROPERTY OR EQUIPMENT WHICH IS OWNED OR PURCHASED BY
TENANT AND WHICH IS NOT ATTACHED TO THE PREMISES, PROVIDED TENANT AND ITS
SECURED PARTY SHALL BE LIABLE FOR ANY DAMAGE TO THE PREMISES CAUSED BY THE
REMOVAL OF SUCH PERSONAL PROPERTY.
35. ATTORNEY'S FEES. The parties hereto agree that the prevailing party
shall be entitled to recover from the non-prevailing party all reasonable
attorneys' fees and costs incurred in litigation between the parties hereto
arising out of or related to this Lease. The term attorneys' fees and costs as
used in this Lease shall mean such costs at all levels from pretrial through
final appeal.
36. NO IMPLIED WAIVE. The failure of Landlord to insist at any time upon
the strict performance of any covenant or to exercise any right or remedy in
this Lease shall not be construed as a waiver thereof for the future. No
payment by Tenant or receipt by Landlord of a lesser amount than the monthly
installment of rent due under this Lease shall be deemed to be other than on
account of the earliest rent due hereunder, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided in this Lease or at law or equity.
37. LIMITATION OF LIABILITY. The liability of Landlord for any default by
Landlord under this Lease shall be limited to the interest of Landlord in the
Property. Tenant agrees to look solely to such interest for the satisfaction
thereof and neither Landlord nor any of its partners shall be personally liable
for any obligations hereunder.
38. SECURITY DEPOSIT. The Security Deposit shall be held by Landlord
without liability for interest and as security for the performance by Tenant of
Tenant's covenants and obligations under this Lease, it being expressly
understood that the Security Deposit shall not be considered an advance payment
of rental, nor a "Rent Deposit" as defined in Subparagraph 5(d), nor should the
Security Deposit be considered a measure of Landlord's damages in case of
default by Tenant. Landlord may, from time to time, without prejudice to any
other remedy, apply the Security Deposit to arrearage of rent or to the cost of
performing any other covenant or obligation of Tenant hereunder. Following any
such application of the Security Deposit, Tenant shall pay to Landlord on
demand the amount so applied in order to restore the Security Deposit to its
original amount. If Tenant is not in default at the termination of this Lease,
the balance of the Security Deposit remaining after any such application(s)
shall be returned by Landlord to Tenant. If Landlord transfers its interest in
the Premises during the term of this Lease, Landlord may assign the Security
Deposit to the transferee and thereafter Landlord shall have no further
liability for the return of such Security Deposit.
39. NOTICE. Any notice or demand given pursuant to this Lease must be in
writing and be given or be served by depositing the same in the United States
mail, postpaid and certified and addressed to the party to be notified, with
return receipt requested, or by delivering the same in person or by commercial
overnight courier service to such party to be notified at the address stated in
this Lease or such other address of which notice has been given to the other
party in
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accordance with the terms of this Paragraph 39. Notice deposited in the mail in
the manner hereinabove described shall be effective from and after the
expiration of three (3) days after it is so deposited. Notwithstanding any
provision of this Lease to the contrary however, Landlord may always give
Tenant notice by addressing or delivering same to the Premises. Until further
notice, the addresses for the parties shall be as follows:
As to Landlord: ATRIUM AT CLEARWATER, LIMITED
c/o Mackey/Krumm Ventures, Incorporated
1601 Forum Place, Suite 805
West Palm Beach, FL 33401
Attn: Walter J. Mackey, Jr.
With copies to: ATRIUM AT CLEARWATER, LIMITED
601 Cleveland Street, Suite 100
Clearwater, FL 33755
Attn: Property Manager
As to Tenant: Progressive Telecommunications
601 Cleveland Street, Suite 930
Clearwater, Florida 33755
Attn: Barry Shevlin
With copies to:
------------------------------------------
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40. SEVERABILITY. If any term or provision of this Lease, or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
41. RECORDATION. Tenant agrees not to record this Lease or any memorandum
hereof, but Landlord may record this Lease or a memorandum thereof, at its sole
election, and Tenant agrees to execute such memorandum upon request by
Landlord.
42. GOVERNING LAW. This Lease and the rights and obligations of the
parties hereto shall be interpreted, construed and enforced in accordance with
the laws of the State of Florida.
43. TIME OF PERFORMANCE. Except as expressly otherwise herein provided,
with respect to all required acts of Tenant, time is of the essence of this
Lease.
44. FORCE MAJEURE. Whenever a time period is herein prescribed for
Landlord or Tenant to take action, neither Landlord nor Tenant shall be liable
or responsible for, and there shall be excluded from the computation of such
period of time, any delays due to strikes, riots, acts of God, shortages of
labor or materials, war, governmental laws, regulations or restrictions,
financing, or any other cause whatsoever beyond the control of either Landlord
or Tenant.
45. TRANSFERS BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligations hereunder and in
the Premises, and, in such event and upon such transfer, Landlord shall be
released from any further obligations hereunder, and Tenant agrees to look
solely to such successor in interest of Landlord for the performance of such
obligations. However, Landlord shall remain liable for any adjudicated judgment
in favor of Tenant provided such judication has been rendered prior to such
transfer.
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46. BROKERS. Landlord and Tenant represent and warrant to each other that
neither of them has employed, engaged, or consulted with any broker in
connection herewith except for NONE ("Broker"). Landlord and Tenant hereby
agree to indemnify and to hold each other harmless against any loss, expense or
liability with respect to any claims for commissions or brokerage fees arising
out of any breach of the foregoing representation and warranty. Landlord has
agreed to pay Broker a commission in accordance with a separate written
agreement.
47. EFFECT OF DELIVERY OF THIS LEASE. Landlord has delivered a copy of
this Lease to Tenant for Tenant's review only, and the delivery hereof does not
constitute an offer to Tenant until or unless it has been fully executed by
both Tenant and Landlord.
48. CAPTIONS. The paragraph captions used herein are for convenience and
reference only.
49. JOINT AND SEVERAL LIABILITY OF TENANT. If there is more than one
person comprising Tenant, the obligations imposed upon Tenant hereunder shall
be joint and several. If there is a guarantor or guarantors of Tenant's
obligations hereunder, Landlord need not first proceed against Tenant before
proceeding against any such guarantor, nor shall any such guarantor be released
from its guaranty for any reason whatsoever, including, without limitation, any
amendment to this Lease, any waiver of any provision hereof or the failure to
give such guarantor any notice hereunder.
50. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof. There are no
terms, understandings, representations or warranties, express or implied, other
than those set forth herein. All prior communications, negotiations,
representations, agreements and understanding, whether oral or written, between
the parties hereto are merged herein.
51. AMENDMENTS. This Lease may not be modified or amended, except by an
instrument in writing and signed by both parties hereto.
52. BINDING EFFECT. This Lease shall be binding upon and inure to the
benefit of Landlord, its successors and assigns, and Tenant, its heirs,
personal representatives, successors and, to the extent assignment is permitted
under the provisions hereof, Tenant's assigns.
53. LEASEHOLD IMPROVEMENTS AND ACCEPTANCE OF PREMISES.
a) LEASEHOLD IMPROVEMENTS. The Leasehold Improvements shall consist of
the existing improvements in their "as is" condition as of the date of this
Lease and the "Landlord's Additional Work" as defined below in this Paragraph.
b) SUBSTANTIAL COMPLETION. The Leasehold Improvements shall be deemed
substantially completed at such time as the Premises are sufficiently complete
so as to allow Tenant to occupy and use the Premises for general office
purposes (whether or not Landlord is obligated to make improvements to the
Premises); provided however, that if a building or construction permit has been
obtained by Landlord from the City of Clearwater, Florida in order to complete
construction of improvements to the Premises, then Landlord shall also obtain a
certificate of occupancy for the Premises from the City of Clearwater, Florida
after which delivery of (a Certificate of Occupancy) the Premises shall be
deemed Substantially Complete. However, if Tenant is accepting any portion of
the Premises in their "as is" condition as of the date of this Lease, then
those "as is" improved portions of the Premises shall be deemed to be
Substantially Complete as of the date Tenant executes this Lease. Landlord, its
employees, agents and contractors shall be allowed to enter upon the Premises
at any and all reasonable times following the Commencement Date as is necessary
to complete any unfinished construction work, and such entry shall not
constitute an actual or constructive eviction of
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Tenant, in whole or part, nor shall it entitle Tenant to any abatement or
diminution of rent or relieve Tenant from any of its obligations under the
Lease.
c) "AS IS" CONDITION OF PREMISES. Notwithstanding anything to the
contrary as may be set forth herein, Landlord and Tenant agree that Tenant is
accepting the Premises in their current "as is" condition as of JANUARY 1,
1998, except for the work items set forth in subparagraph (f) below and that
any other tenant finish work, improvements, or equipment as may be needed by
Tenant for its specified use of the Premises shall be paid for exclusively by
Tenant and shall be installed by Tenant only after having received Landlord's
prior written approval for such improvements.
d) For purposes of this Lease, the Premises are already deemed to be
Substantially Complete as of the date Tenant executes this Lease with no permit
needed from the City of Clearwater.
e) Tenant shall be solely responsible for satisfying all governmental
regulations having jurisdiction over Tenant's use of the Premises or Tenant's
operations in the Building, including all occupational or use licenses or
permits. No exhaust system, electrical hook-up, or electric and/or gas
appliances shall be installed by Tenant without Landlord's prior approval which
approval shall not constitute compliance by Tenant with any governmental
approval as may be required herein of Tenant.
f) LANDLORD'S ADDITIONAL WORK. Except for those portions of the
Premises which Tenant is accepting in their "as is" condition, those
improvements which shall be the responsibility of Landlord to complete are
referred to as "Landlord's Additional Work" with the scope of such Additional
Work briefly sketched on the attached Exhibit "B", which shall also include
those specific items set forth below and unless so identified, Landlord shall
not be obligated to complete any other work or make any improvements to the
Premises. Landlord's Additional Work shall include:
(i) installation of Building Standard carpet (no border carpet)
throughout the premises
(ii) installation of separation wall dividing Tenant's portion of
the suite from the unused portion of the suite
g) TENANT ACCEPTANCE. Tenant and its agents have been provided with
full opportunity to inspect the condition and construction quality of the
Premises prior to executing this Lease and have thereby been deemed to have
accepted all such existing conditions as of the date Tenant executes this Lease
unless any such conditions are to be changed or modified according to the
definition of Landlord's Additional Work provided in this paragraph 53.
h) WALK THROUGH. Notwithstanding anything contained herein to the
contrary, Landlord and Tenant shall conduct a "walk-through" of the Premises
prior to taking occupancy for the purpose of confirming the condition of the
Premises for purposes of determining a punch list which Landlord will complete
after the Commencement Date. Tenant hereby acknowledges and consents to any
reasonable disruptions which may be caused by Landlord and/or its agents or
subcontractors in their efforts to complete the punch list items.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
multiple original counterparts on the day and year first above written.
WITNESSES: TENANT:
PROGRESSIVE TELECOMMUNICATIONS
/s/ Kathy Copenhaver By: /s/ Barry L. Shevlin
- ----------------------------------- ----------------------------------
/s/ Kelly (Illegible) As: President
- ----------------------------------- ----------------------------------
WITNESSES: LANDLORD:
ATRIUM AT CLEARWATER, LIMITED
a Florida Limited Partnership
By: /s/ Walter J. Mackey, Jr.
----------------------------------
Walter J. Mackey, Jr., President
Atrium at Clearwater, Incorporated,
General Partner
EXHIBITS ATTACHED:
"A" Real Property Description
"A-1" Site Plan
"B" Floor Plan of Premises
"C" Approved Plans & Specifications of Premises
"D" Rules and Regulations
"E" Expansion Right of First Offer. OMITTED
"F" Broker Disclosure Statement. OMITTED
"G" Radon Gas Disclosure
"H" Expansion Premises. OMITTED
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Tenant Landlord
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EXHIBIT "A"
LEGAL DESCRIPTION
ATRIUM AT CLEARWATER
601 Cleveland Street
Clearwater, Pinellas County, Florida 34615
Together with all those volumes of air space situate in the City of Clearwater,
Pinellas County, Florida, containing the third and fourth floors of a parking
garage structure and the ramp leading from the second floor to the third floor
thereof, as described in Parcels I and II as follows:
PARCEL I:
Commence at the Northeasterly corner of Lot 3, Block "6" MAGNOLIA PARK
SUBDIVISION as recorded in Plat Book 1, Page 70, Public Records of Hillsborough
County, Florida of which Pinellas County was formerly a part, as a point of
reference; thence North 89 degrees 45'53" West, along a Southerly right-of-way
of Park Street (Park Avenue-Plat) (a 60 foot right-of-way) 218.94 feet; thence
South 00 degrees 14'07" West, 15.0 feet to a point on the face of a precast
concrete wall, said point being the POINT OF BEGINNING; thence continue along
the face of said wall South 89 degrees 45'53" East, 189.21 feet; thence South
00 degrees 14'07" West, 206.42 feet; thence North 89 degrees 45'53" West, 94.38
feet to point "A" for convenience; thence North 89 degrees 45'53" West, 94.83
feet to the intersection of the face of said precast concrete wall and the face
of a masonry wall; thence North 00 degrees 14'07" East, 206.42 feet to POINT OF
BEGINNING. The lowest limits of said air space being the bottom of the support
beams for the third floor of the parking garage at the lowest level of said
beams, having an elevation of 45.71 feet. The upper limits of said air space
being an elevation of 64,21 feet elevations referenced to National Geodetic
Vertical Datum of 1929, Mean Sea Level-0.00.
PARCEL II:
Commence at the aforedescribed point "A" as a point of reference; thence North
00 degrees 14'07" East, 184.21 feet to the POINT OF BEGINNING of a 63.0 foot
strip being 31.50 feet on each side of the following described line; thence
South 00 degrees 14'07" West 162.0 feet to the POINT OF TERMINATION. The lower
limits of said air space being an inclined plane along the bottom of the
support beams for the ramp leading from the second to third floors of the
parking garage. The lower point of which is the POINT OF BEGINNING having an
elevation of 35.71 feet; the upper point of which is the Southerly boundary
having an elevation of 43.71 feet. The upper limits of said air space being the
lower limits of Parcel No. I above described.
PARCEL III:
Lots 1, 3, 3 and 4, Block 13 of GOULD AND EWINGS 1ST AND 2ND ADDITION TO
CLEARWATER-HARBOR, FLORIDA according to a map or plat thereof recorded in Plat
Book 1, Page 52 of the Public Records of Hillsborough County, Florida of which
Pinellas County was formerly a part, less road right-of-way, together with that
portion of said Block 13, also vacated railroad right-of-way described as
follows: Begin at Southeast corner of said Lot 2, Block 13; run thence East,
along the Northerly right-of-way of Park Street, 60.18 feet; thence Northerly
along the Easterly right-of-way line of said railroad right-of-way also the
West lines of Lots 7 and 8, Block "20" of said GOULD AND EWINGS 1ST AND 2ND
ADDITION, 229.0 feet more or less to the Southerly right-of-way line of
Cleveland Street; thence West, along the said right-of-way line, 6018 feet;
thence South along the Westerly right-of-way line of said railroad right-of-way
also the Easterly line of Lots 2 and 3, Block 13, of said GOULD AND EWINGS 1ST
AND 2ND ADDITION, 228.93 feet more or less to the POINT OF BEGINNING. All being
in Section 16, Township 29 South, Range 15 West, Pinellas County, Florida.
ALSO DESCRIBED AS:
Beginning at the Southeast corner of Lot 2, Block 13 of said GOULD AND EWINGS
1ST AND 2ND ADDITION; thence along the Northerly right-of-way of Park Street
(Park Avenue-Plat) (a 60 foot right-of-way), North 89 degrees 45'53" West,
110.22 feet to the Southwest corner of Lot 1, Block 13 of said GOULD AND EWINGS
1ST AND 2ND ADDITION; thence along the Eastern right-of-way of South Garden
Avenue, North 00 degrees 02'16" East, 227.94 feet to the apparent Southerly
right-of-way line of Cleveland Street as it now exists; thence South 89 degrees
50'01" East, 189.03 feet to the Easterly line of the vacated S.C.L.R.C.
right-of-way; thence South 04 degrees 42'26" West, 228.66 feet (229.0
feet-Deed) to the Northerly right-of-way of Park Street (Park Avenue-Plat) (a
60 foot right-of-way); thence North 89 degrees 45'53" West, 60.18 feet to the
POINT OF BEGINNING.
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EXHIBIT "A-1"
SITE PLAN
[SITE PLAN OF CLEVELAND STREET, GARDEN STREET AND PARK STREET]
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EXHIBIT "B"
FLOOR PLAN OF PREMISES
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EXHIBIT "C"
APPROVED PLANS & SPECIFICATIONS
Premises to be taken in "as-is" condition with the exception of the
installation of Building Standard carpeting and separation wall. Both shall be
at the Landlord's sole expense.
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4. AWNINGS, ETC.
No awnings or other projections over or around the windows or
entrances of the premises shall be installed by any tenant.
5. WALLS
No tenant shall mark, paint, drill into, or in any way deface any part
of the premises or the Building of which they form a part. No boring,
cutting, or stringing of wires shall be permitted, except with the
prior written consent of the landlord and as it may direct.
6. PASS KEY
All entrance doors in the premises shall be left locked when the
premises are not in use.
The landlord may retain a pass key to the leased premises and be
allowed admittance thereto at all times to enable its representative
to examine the said premises.
7. LOCKS
No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in
existing locks or the mechanism thereof unless landlord approves of
such change. Each tenant must, upon the termination of its tenancy,
return to the landlord all keys of offices and toilet rooms, either
furnished to, or otherwise procured by such tenant, and in the event
of the loss of any keys so furnished, such tenant shall pay to the
landlord the cost thereof.
Tenant shall not attach or permit to be attached additional locks or
similar devices to any door, transom or window on the premises; change
existing locks or the mechanism thereof; or make or permit to be made
any keys for any door thereof other than those provided by landlord.
(If more than two keys for one lock are desired, landlord will provide
them upon payment therefor by tenant).
8. PLUMBING
The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags, or other substances
shall be thrown therein. All damages resulting from any misuse of the
fixtures shall be borne by the tenant who, or whose employees, agents,
visitors, or licensees shall have caused the same.
9. HAZARDOUS SUBSTANCES
No tenant, nor any of tenant's employees, agents, visitors, or
licensees, shall at any time bring or keep upon the premises any
inflammable, combustible, or explosive fluid, chemical or substance.
10. MACHINERY AND/OR EQUIPMENT
Tenant shall not operate, or permit to be operated, any mechanical
machinery, steam engine, boiler, or stove without landlord's written
consent; tenant will not allow the use of oil, burning fluids,
kerosene, gasoline or other fuels within the premises.
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Tenant shall not be permitted to install vending machines or similar
types of electric appliances such as coffee makers, hot plates or
space heaters (except for such equipment as used in landlord approved
kitchen and dining areas) and no tenant shall obtain or accept for use
in the premises, ice, coffee service, catering, drinking water,
barbering, and bootblacking from any person not authorized by
landlord in writing to furnish such services, provided always, that
the charges for such services by persons authorized by landlord are
not excessive.
11. EXPLOSIVES
No article deemed as extra-hazardous on account of fire or explosion
shall be brought into the premises.
12. LOST OR STOLEN PROPERTY
Landlord will not be responsible for any lost or stolen personal
property, equipment, money or jewelry from tenant's premises or public
rooms or parking facilities, unless directly caused by the gross
negligence or willful misconduct of landlord, its agents or employees.
13. REMOVAL OF PROPERTY FROM PREMISES
All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during
the hours which the landlord or its agent may determine from time to
time. The landlord reserves the right to prescribe the weight and
position of all safes, which must be placed upon 2-inch thick plank
strips to distribute the weight. The moving of safes or other fixtures
or bulky matter of any kind must be made after previous notice to the
Manager of the Building. Any damage done to the Building or to the
tenants or to other persons in bringing in or removing safes,
furniture or other bulky or heavy articles shall be paid for by the
tenant.
Freight, furniture, business equipment, merchandise and bulky matter
of any description ordinarily shall be delivered to and removed from
the premises only in the freight elevator and through the service
entrance and corridors, but special arrangements will be made for
moving large quantities of furniture and equipment into or out of the
Building.
14. USE OF PREMISES
Landlord shall not permit the preparation of food for sale on the
Premises nor use of the facilities for the preparation of food for
sale without written consent. Tenant shall not use the Premises for
housing, lodging, sleeping nor any immoral or illegal purpose.
15. CONSUMPTION OF FOOD OR BEVERAGE
Tenant, its employees or visitors shall not be permitted to consume
food or beverages in the common areas (exterior).
16. JANITORIAL SERVICE
Tenant shall not employ their own janitors except with the written
consent of Landlord; when so employed, such janitors shall be subject
to the regulations and control of Landlord (but not as agent or
servant of Landlord).
17. BICYCLES, ETC.
No bicycles nor vehicles, except baby carriages and wheel-chairs,
shall be brought into the Building or on the Premises. No Tenant shall
cause or permit any unusual or objectionable odors to be produced upon
or permeate from the Premises.
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18. INVITEES
No Tenant shall invite to the Premises, or permit the visit of,
persons in such numbers or under such conditions as to interfere with
the use and facilities of the Building.
19. NUISANCES
No Tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of neighboring
buildings, whether by the use of any musical instrument, radio,
talking machine, musical noise, whistling, singing, or in any other
way. No Tenant shall throw anything out of the doors or windows.
20. SOLICITATION
Canvassing, soliciting and peddling at the Building is prohibited, and
Tenant shall cooperate to prevent the same.
21. LITTERING/LOITERING
No littering or loitering shall be permitted about the Building or
common areas.
22. NON-SMOKING PREMISES
Landlord has designated the Building and all areas within the Building
to be non-smoking areas and neither Tenant nor its invitees, customers
or employees shall be permitted to smoke within the Building or the
Premises.
23. NO ANIMALS
No birds, dogs, cats or other animals of any kind shall be brought
into or kept about the Building or the Premises, with the exception of
animals trained to assist handicapped persons.
24. ADDITIONAL RULES AND REGULATIONS
The Landlord reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to
time be needed for the safety, care and cleanliness of the Premises,
and for the preservation of good order therein, and any such other or
further rules and regulations shall be binding upon the parties
thereto with the same force and effect as if they had been inserted
herein at the time of the execution hereof. Such rules and regulations
which may be subsequently applied by Landlord shall not be binding
upon Tenant until a copy thereof has been served upon Tenant.
Landlord reserves the right by written notice to Tenant, to rescind,
alter or waive any rule or regulation at any time prescribed for the
Building when, in Landlord's reasonable judgment, it is necessary,
desirable or proper for the best interest of the Building and the
Tenants.
LANDLORD SHALL NOT CHANGE SUCH RULES AND REGULATIONS IF SUCH CHANGE SHALL
PREVENT TENANT FROM OPERATING WITHIN THE PREMISES, UNLESS TENANT SHALL THEN BE
PERMITTED TO TERMINATE THIS LEASE.
In the event of any inconsistency between the lease with Tenant and the rules
and regulations herein, the terms of the Lease shall control.
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EXHIBIT "E"
EXPANSION RIGHT OF FIRST OFFER
Omitted
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EXHIBIT "F"
DISCLOSURE STATEMENT
Omitted.
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EXHIBIT "G"
NOTICE CONCERNING RADON GAS
FROM: ATRIUM AT CLEARWATER, LIMITED, Landlord
TO: PROGRESSIVE TELECOMMUNICATIONS, Tenant
Section 404.056(8) requires that the following notification be
provided to you at the time of, or prior to, contract for sale and purchase of
any building or execution of a rental agreement for any building:
RADON GAS: Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
you county public health unit.
We hereby acknowledge receipt of the foregoing notification.
PROGRESSIVE TELECOMMUNICATIONS
DATE: December 5, 1997 /s/ Barry L. Shevlin
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BY: Barry L. Shevlin
TITLE: President
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EXHIBIT "H"
EXPANSION PREMISES
Omitted.
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Exhibit 10.8
SHOPPING CENTER LEASE
THIS SHOPPING CENTER LEASE, made and entered into as of the 3rd day of
NOVEMBER, 1999, and between Landlord as hereinafter defined and Tenant as
hereinafter defined.
W I T N E S S E T H
In consideration of the rent to be paid, the mutual covenants and
agreements herein contained, and of other good and valuable considerations,
the receipt and legal sufficiency of which are hereby acknowledged by both
parties hereto, Landlord hereby demises and rents unto Tenant, and Tenant
hereby leases from Landlord, certain premises now existing in Landlord's
Shopping Center named below and described in Exhibit "A" attached hereto, upon
the terms, covenants and conditions hereinafter contained.
ARTICLE I
FUNDAMENTAL LEASE PROVISIONS AND EXHIBITS
Section 1.1 Fundamental Lease Provisions.
A. SHOPPING CENTER: The Commonwealth Center
B. LANDLORD: Barrett Family Partnership I d/b/a The Commonwealth
Center
C. TENANT: Progressive Telecommunications Corporation, Inc.
D. LEASED PREMISES: 18469 U.S. Highway 19 North, Clearwater,
FL 33764
E. SIZE/DIMENSIONS: 70,000 square feet
F. PERMITTED USES: Business operation
G. LEASE TERM: 3 Years. Commencing the 1st day of November, 1999
and Terminating midnight October 31, 2002.
H. OPTIONS: See Exhibit "E"
I. RENT SCHEDULE: See Exhibit "C"
(All rents shall be plus applicable Florida rental tax.)
J. RENT COMMENCEMENT DATE: December 1, 1999 (52,000 sf)
May 1, 2001 (70,000 sf)
K. LEASE COMMENCEMENT DATE: November 1, 1999
L. RENTAL PAYMENT PLACE: Office of The Commonwealth Center,
c/o J B Management, Inc. 300 S. Duncan Ave., Suite 275,
Clearwater, FL 33755
M. PRORATA SHARE: 42% representing the percentage of the total
rentable space in the Shopping Center represented by the
number of rentable square feet in the Lease Premises.
N. COMMON AREA MAINTENANCE CONTRIBUTION: Tenant's proportionate
prorata share $70,000 CAP. annually _________________________
actual, not to exceed ____________
0. REAL ESTATE TAX CONTRIBUTION: Tenant's proportionate prorate
share based on actual cost.
P. INSURANCE CONTRIBUTION: Tenant's proportionate prorata share
based on actual cost.
Q. SECURITY DEPOSIT: $30,625.00
<PAGE> 2
cleaning, landscaping, policing and supervision of the common facilities, and
all other items properly constituting operating and maintenance costs according
to standard accounting practices as determined by Landlord, managing agent
or accountant. "Common Facilities" means all areas, space,
Section 1.2 Effect of Reference to a Fundamental Lease Provision. Each
reference in this Lease to any of the Fundamental Lease Provisions contained in
Section 1.1 shall be construed to incorporate all of the terms provided under
each such Fundamental Lease Provisions as hereunder amplified.
Section 1.3 Exhibits. The exhibits listed in this section and attached
to this Lease are incorporated herein by reference and are to be construed as a
part hereof.
Exhibit A. Legal Description.
Exhibit B. Plot Plan.
Exhibit C. Rent Schedule.
Exhibit D. Tenant/Landlord Work Schedule
Exhibit E. Renewal Option
Exhibit F. Sign Criteria
ARTICLE II
SHOPPING CENTER, LEASED PREMISES AND TERM
Section 2.1 Covenants of Landlord's Authority. Landlord represents and
covenants that: (1) prior to commencement of the Lease Term, it will have
either good title to or a valid leasehold interest in the land and building of
which the leased premises form a part, and (2) upon performing all of its
obligations hereunder, Tenant shall peacefully and quietly have, hold and enjoy
the premises for the term of this lease.
Section 2.2 Leased Premises. For the purpose of this lease, Leased
Premises shall extend to the exterior faces of all walls or to the building
line where there is no wall, or the center line of those walls separating the
Leased Premises from other leased premises in the Shopping Center, together
with the appurtenances specifically granted in this lease, but reserving and
excepting to Landlord the use of the exterior walls and the roof and the
obligation to install, maintain, use, repair and replace pipes, ducts,
conduits, and wires leading through the Leased Premises in locations which will
not materially interfere with Tenant's use thereof and serving other parts of
the Shopping Center.
Section 2.3 Term. The term of this lease shall commence on the date
set forth in Article 1, Section 1.1 G. and shall continue for the period set
forth therein. The fractional month, if any, between the commencement of the
Lease Term and the end of the month in which the Lease Term begins is
hereinafter referred to as the "Fractional Month".
Section 2.4 Statement as to Lease Term. After the commencement and
termination dates of the Lease Term shall have been determined as provided in
Section 2.3, Tenant, at Landlord's request, shall from time to time execute,
acknowledge and deliver written statements to the extent such statements are
applicable or accurate in recordable form: (1) ratifying this lease; (2)
specifying the commencement and termination dates of the Lease Term; (3)
certifying that this lease is in full force and effect and has not been
assigned, modified, supplemented or amended (except by Such writings as shall
be so stated); (4) that all conditions under this lease to be performed by
Landlord have been satisfied or stating those not performed; (5) that there
are no defenses or offsets against the enforcement of the lease by Landlord or
specifying any such defenses; (6) the date to which the rental has been paid;
(7) the actual number of square feet of floor space in the Leased Premises as
certified by Landlord's architect; and (8) that no rental has been paid in
advance or specifying any such advance rental.
ARTICLE III
RENTALS
Section 3.1 Fixed Minimum Annual Rent. Tenant shall pay to Landlord,
without demand and without deduction or set-off, at the rental payment place,
or such other address for the rental payment place as Landlord by notice in
writing to Tenant may from time to time direct, rent as follows: (a) Fixed Rent
shall be payable at the annual rate provided in Article 1, Section 1.1
I(Exhibit C), for each year of the Lease Term, in equal monthly installments in
advance on the first day of each month during the Lease Term. The Fixed Rent
for a Fractional Month (if any) shall be apportioned on a per
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Tenant shall reimburse Landlord for actual costs for repairs if Tenant
refuses or neglects to repair as required.
Section 6.3 Inspection. Landlord or its representatives shall have the
right to enter the Leased Premises at reasonable hours of any business day
during the Leased Term to ascertain if the premises are in proper repair and
condition.
Section 6.4 Sidewalks. Tenant agrees to use reasonable diligence to
keep the sidewalks and outside areas immediately adjoining the premises clean,
and at all times to broom-clean or otherwise keep said sidewalks and outside
areas free of trash, litter or obstructions of any kind.
Section 6.5 Replacement of Glass. At the commencement of the Lease
Term all glass in the Leased Premises shall be in good condition and undamaged.
Tenant will, at its own expense, replace all glass thereafter broken or
damaged.
ARTICLE VII
USE OF LEASED PREMISES
Section 7.1 Use of Leased Premises. Tenant covenants and agrees to use
the Leased Premises only for the permitted uses set forth in Article 1,
Section 1.1 F., and for no other Purpose.
The Leased Premises and all building and improvements thereon shall,
during the Lease Term, be used only and exclusively for lawful and moral
purposes and no part of the Leased Premises or improvements thereon shall be
used in any manner whatsoever for any purposes in violation of the laws,
ordinances, regulations or orders of the United States, or of the State, County
and/or City where the premises are located or the Fire Insurance Rating
Organization and/or the Board of Fire Insurance Underwriters, or any duly
constituted subdivision, department or board thereof Tenant shall comply with
all such laws, ordinances, regulations, or orders now in effect or hereafter
enacted or passed during the Lease Term insofar as the Leased Premises and any
signs of Tenant are concerned, and shall make at Tenant's own cost and expense,
all repairs, additions and alterations to the Leased Premises ordered or
required by such authorities, whether in order to meet the special needs of
Tenant, or by reason of the occupancy of Tenant, or otherwise.
Section 7.2 Rules and Regulations. Tenant's use of the Leased Premises
shall be subject, at all times during the Lease Term, to Landlord's right to
adopt from time to time, modify and/or rescind reasonable rules and regulations
not in conflict with any of the express provisions hereof governing the use of
the parking areas, malls, walks, driveways, passageways, signs, exteriors or
buildings, lighting and other matters affecting other tenants in and the
general management and appearance of the Shopping Center of which the Leased
Premises are a part, but no such rule or regulation shall discriminate against
Tenant. Tenant agrees to comply with all such Rules and Regulations upon notice
to Tenant from Landlord. Tenant also agrees to the following:
(a) All loading and unloading of goods shall be done only at such
time, in the areas, and through the entrances designated for such purposes by
Landlord.
(b) The delivery or shipping of merchandise, supplies and fixtures to
and from the Leased Premises shall be subject to such rules and regulations as
in the judgement of Landlord are necessary for the proper operation of the
Leased Premises or Shopping Center.
(c) All garbage and refuse shall be kept in the kind of container
specified by Landlord, or duly constituted public authority, and shall be
placed outside of the Leased Premises prepared for collection in the manner and
at the times and places specified by Landlord. If Landlord shall provide or
designate a service for picking up refuse and garbage, Tenant shall use same at
Tenant's cost. Tenant shall pay the cost of removal of any Tenant's refuse or
rubbish and maintain all common loading areas in a clean manner satisfactory to
the Landlord.
(d) No aerial shall be erected on the roof or exterior walls of the
Leased Premises or on the grounds without, in each instance, the written
consent of Landlord. Any aerial so installed without such written consent shall
be subject to removal without notice at any time.
(e) No loudspeakers, televisions, phonographs, radios or other devices
shall be used in a manner so as to be heard or seen outside of the Leased
Premises without the prior written consent of Landlord.
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(f) Tenant shall maintain the inside of the Leased Premises at a
temperature sufficiently high to prevent freezing of water in pipes and
fixtures inside the Leased Premises.
(g) The plumbing facilities shall not be used for any other purpose
than that for which they are constructed, and no foreign substance of any kind
shall be deposited therein, and the expense of any breakage, stoppage or damage
resulting from a violation of this provision shall be borne by Tenant.
(h) Tenant, at its expense, shall employ the services of a reputable
termite and pest extermination contractor at regular intervals as Landlord
may reasonably require.
(i) Tenant shall not burn any trash or garbage of any kind in or about
the Leased Premises, the Shopping Center, or within one mile of the outside
property line of the Shopping Center.
(j) Tenant agrees that Landlord shall have the right to prohibit the
continued use by Tenant of any illegal business operation, advertising or
interior display if, in Landlord's opinion, the continued use thereof would
impair the reputation of the Shopping Center as a desirable place to shop or is
otherwise out of harmony with the general character thereof, and upon notice
from Landlord, Tenant shall forthwith refrain from or discontinue such
activity.
(k) Tenant will not place or suffer to be placed or maintained on any
exterior door, wall or window of the Leased Premises any sign, awning or
canopy, or advertising matter or other thing of any kind, and will not place or
maintain any decoration, lettering, advertising matter or other thing except as
may be approved by the Landlord. *See bottom of this page 6.
(1) Tenant agrees that it will erect on the facade of its premises a
store identification sign in accordance with the sign criteria set forth by the
Landlord within 30 days following the opening of its store for business.
(m) Notwithstanding anything herein above to the contrary, tenant
agrees to comply with any modifications, additions, new rules and regulations
for the use and occupancy of the Shopping Center, as the Landlord, in its full
discretion, from time to time promulgates for the best interests of the
Shopping Center. Landlord shall have no liability for violation by any
other Tenant of the Shopping Center of any rules and regulations, nor shall such
violation or the waiver thereof excuse Tenant from compliance.
Section 7.3 Signs, Awnings, and Canopies. Landlord may erect and
maintain such suitable signs as it, in its sole discretion may deem appropriate
to advertise the Shopping Center. Tenant may erect and maintain on the exterior
of the Leased Premises only flat wall signs and under-canopy signs which shall
be of such size and type and in such locations as the City may approve.
Tenant shall keep insured and shall maintain such signs in good condition and
repair at all times, and such signs must be lighted at all times after sunset
when the Shopping Center is in operation, whether the Leased Premises are open
for business or not, unless Landlord shall by written approval given to Tenant
waive such requirement. If any damage is done to Tenant's signs, Tenant shall
repair same within five (5) days or Landlord shall have the right to repair
such signs and bill Tenant for cost of the repairs. *See bottom of this page 6.
Tenant will not place or suffer to be placed or maintained on any
exterior door, wall, or window of the Leased Premises, any sign, awning, or
canopy, or advertising matter or other thing of any kind, and will not place or
maintain any decoration, lettering or advertising matter on either the interior
or exterior glass of any window or door of the Leased Premises without first
obtaining Landlord's written approval and consent. Tenant further agrees to
maintain such sign, awning, canopy, decoration, lettering, advertising matter
or other things as may be approved by Landlord in good condition and repair at
all times. *See bottom of this page 6.
Section 7.4 Noise, Obstruction, and Nuisances. Tenant covenants that
it will not (i) display any merchandise or maintain any stands in front of the
Leased Premises or in the line of buildings in the shopping Center; (ii) erect
or maintain any barricade or scaffolding which may obscure tile signs,
entrances or show window of any other tenant's business; (iii) create or
maintain, or allow others to create or maintain, any nuisances, including
without limiting the foregoing general language, loud noises, sound effects,
offensive odors and smoke or dust in or about the premises; (iv) place or
maintain any signs in any parking area serving the Leased Premises; (v) commit
any waste; or (vi) maintain or allow to be maintained any excessively bright
lights, changing, flashing, flickering, or lighting devices or similar devices,
the effect of which will be visible from the exterior of the Leased Premises.
---------------
*Notwithstanding anything to the contrary herein contained, Landlord shall
approve signage for the leased premises (including awnings, lighting)
substantially similar to the same affixed to the building located at 2704 Alt.
19, N., Palm Harbor, FL 34683 commonly known as TALK.com.
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ARTICLE VIII
TENANT'S BUSINESS OPERATIONS
Section 8.1 Normal Operation. Tenant shall operate one hundred percent
(100%) of the Leased Premises during the entire Lease Term under the name(s)
set forth in Section 1.1 C., or such other name as Landlord shall approve in
writing, with due diligence and efficiency. Subject to inability by reason of
strikes or labor disputes; Tenant shall conduct its business in the Leased
Premises during the regular customary days and hours for such type of business
in the city or trade area in which the Shopping Center is located. Tenant shall
install and maintain at all times displays of merchandise in the display
windows, if any, of the Leased Premises. Tenant shall keep and display windows
and signs, if any, in the Leased Premises well lighted during the hours from
sundown to 11:00 p.m., unless either prevented from doing so by events beyond
the control of Tenant or such requirement is waived by Landlord.
Section 8.2 Relationship of the Parties. Nothing herein contained
shall be deemed or construed as creating the relationship of principal and
agent or of partnership or joint venture between the parties hereto; it being
understood and agreed that neither the method of computing rent nor any other
provisions contained herein nor any acts of the parties hereto shall be deemed
to create any relationship between the parties other than that of Landlord and
Tenant.
ARTICLE IX
ADDITIONS, ALTERATIONS, AND TRADE FIXTURES
Section 9.1 By Landlord. Landlord hereby reserves the right at any
time to make alterations or additions to the building in which the Leased
Premises are contained and to build additional stories thereon. Landlord also
reserves the right to construct other buildings or improvements in the Shopping
Center of common areas from time to time and to make alterations thereof or
additions thereto and to build additional stories on any such building
or buildings so constructed, provided such construction will not be part of the
CAM per 4.1. This excludes the actual leased premises.
Section 9.2 By Tenant. Tenant may from time to time, at its own
expense, alter, renovate or improve the interior of the Leased Premises
provided the same be performed in a good and workmanlike manner, in accordance
with accepted building practices and so as not to weaken or impair the strength
or substantially lessen the value of the building in which the Leased Premises
are located. No changes, alterations or improvements affecting the exterior of
the Leased Premises shall be made by Tenant without the prior written approval
of Landlord. Any work done by Tenant under the provisions of this Section shall
not interfere with the use by the other tenants of their premises in the
Shopping Center.
All alterations, decorations, additions and improvements made by
Tenant, or made by Landlord on Tenant's behalf as provided in this lease, shall
remain the property of the Tenant for the Lease Term or any extension or
renewal thereof, but they shall not be removed from the Leased Premises without
the prior written consent of Landlord.
Upon termination of this lease or upon the termination of any renewal
term thereof, Tenant shall remove such alterations, decorations, additions and
improvements and restore the Leased Premises as provided in Section 9.5, and if
Tenant fails to do so and moves from the Leased Premises, all such alterations,
decorations, additions and improvements shall become the property of Landlord.
Section 9.3 Indemnity and Insurance. Tenant shall indemnify and hold
Landlord harmless from any and all claims for damages or otherwise based upon
or in any manner growing out of any alterations or construction undertaken by
Tenant under the terms of this lease, including all costs, damages, expenses,
court costs and attorney fees incurred in or resulting from claims made by
other tenants or premises in the Shopping Center, their agents, employees,
patrons and invitees.
Before undertaking any alterations or construction, Tenant shall
obtain and pay for a public liability policy insuring Landlord and Tenant
against any liability which may arise on account of such proposed alteration or
construction work in limits of not less then $500,000.00 for any one person,
$1,000,000.00 for more than one person in any one accident and $100,000.00 for
property damage, and a certificate or copy of such policy shall be delivered to
Landlord prior to the commencement of such proposed work. Tenant shall also
maintain at all times fire insurance with extended coverage in the name of
Landlord and Tenant as their interest may appear in an amount adequate to cover
the
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cost of replacement of all alterations, decorations, additions or improvements
in and to the Leased Premises, and all trade fixtures therein, in the event of
fire or extended coverage loss. Tenant shall deliver to Landlord certificates
of such fire insurance policies which shall contain a clause requiring the
insurer to give Landlord ten (10) days notice of cancellation of such policies.
Section 9.4 Mechanic's Liens. If by reason of any alterations, repair,
labor performed or materials furnished to the Leased Premises for or on behalf
of Tenant, any mechanic's or other lien shall be filed, claimed, perfected or
otherwise established as provided by law against the Leased Premises, Tenant
shall discharge or remove the lien by bonding or otherwise within thirty (30)
days after notice from Landlord to Tenant of the filing of same.
Section 9.5 Trade Fixtures. Provided Tenant is not in default
hereunder, Tenant shall have the right, at the termination of this lease, to
remove any and all trade fixtures, equipment and other items of personal
property not constituting a part of the freehold which it may have stored or
installed in the Leased Premises, including but not limited to counters,
shelving, showcases, chairs, and movable machinery purchased or provided by
Tenant and which are susceptible to being moved without damage to the building,
provided this right is exercised before the lease is terminated or during the
ten (10) day period immediately following such termination and provided that
Tenant shall repair any damage to the Leased Premises caused thereby. The right
granted Tenant in this Section 9.5 shall not include the right to remove any
plumbing or electrical fixtures or equipment, heating or air conditioning
equipment, floor coverings (including wall-to-wall carpeting) glued or fastened
to the floors or any paneling, tile, or other materials fastened or attached to
the walls or ceilings, all of which shall be deemed to constitute a part of the
freehold, and, as a matter of course, shall not include the right to remove
any fixture or machinery that was furnished or paid for by the Landlord.
Buildings shall be left in a broom-clean condition. If Tenant shall fail to
remove its trade fixtures or other property at the termination of this lease or
within ten (10) days thereafter, such fixtures and other property not removed
by Tenant shall be deemed abandoned by Tenant, and, at the option of Landlord
shall become the property of Landlord.
ARTICLE X
TAXES AND INSURANCE
Section 10.1 Tenant's Taxes. Tenant covenants and agrees to pay
promptly when due all taxes imposed upon its business operation and its
personal property situated in the Leased Premises.
Section 10.2 Tenant's Participation in Real Estate Taxes. Landlord
will pay all real property taxes which may be levied or assessed by any lawful
authority against the land and improvements in the Shopping Center. Tenant
shall pay as additional rent hereunder all amount equal to its Prorata Share of
such taxes. Such amount shall be payable in advance on the first day of each
month, based upon Landlord's reasonable estimate thereof based on previous
years actual taxes. Following each calendar year, Landlord shall furnish Tenant
with a statement of the actual amount of such expense for such period, and
appropriate adjustment and payment shall be made for any excess or deficiency.
The initial monthly payment due hereunder shall be the amount provided in
Article I, Section 1.1 O. If the Lease Term ends on a date other than
December 31 of any year, Tenant's obligation for the period commencing
January 1 during such year and ending on the last day of the Lease Term shall
be prorated on a per diem basis and shall be payable by Tenant notwithstanding
that the taxes and assessments payable during such year have not been
determined as of the end of the Lease Term.
Section 10.3 Liability Insurance. Tenant shall remain at its own
expense public liability insurance covering the Leased Premises for the joint
benefit of Landlord and Tenant with coverage of not less than $500,000.00 for
personal injury, including death, for any one person, $1,000,000.00 for more
than one person in any one accident, and $100,000.00 for property damage. The
policy of insurance may be in the form of a general coverage or floater policy
covering these and other premises, provided that Landlord is specifically
covering therein. A duplicate copy of the policy or certificate of such
insurance shall be delivered to Landlord. Such liability insurance shall also
cover and include all exterior signs maintained by Tenant. Landlord shall carry
public liability insurance covering the exterior of the Leased Premises,
including but not limited to the sidewalks, malls and parking lot.
Section 10.4 Increase in Fire Insurance Premium. Tenant agrees that it
will not keep, use, sell or offer for sale in or upon the Leased Premises any
article which may be prohibited by the standard form of fire insurance policy.
Tenant agrees to pay any increase in premiums for fire and extended coverage
insurance which may be carried by Landlord on the Leased Premises or the
building of which they are a part, resulting from the type of merchandise sold
or services rendered
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by Tenant in the Leased Premises, whether or not Landlord has consented to the
same. In determining whether increased premiums are the result of Tenant's use
of the Leased Premises, a schedule, issued by the organization making the
insurance rate on the Leased Premises, showing the various components of such
rate, shall be conclusive evidence of the several items and charges which make
up the fire insurance rate on the Leased Premises.
Tenant shall not knowingly use or occupy the Leased Premises or any
part thereof, or suffer or permit the same to be used or occupied for any
business or purpose deemed extra-hazardous on account of fire or otherwise. In
the event Tenant's use and/or occupancy causes any increase or premium for the
fire, boiler and/or casualty rates on the Leased Premises or any part thereof
above the rate for the least hazardous type of occupancy legally permitted in
the Leased Premises, Tenant shall pay such additional premium on the fire,
boiler and/or casualty insurance policies. Tenant shall also pay in such event,
any additional premium on the rent insurance policy that may be carried by
Landlord for its protection against rent loss through fire. Bills for such
additional premiums shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due from and payable by Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid as, additional rent,
but such increases in the rate of insurance shall not be deemed a breach of
this covenant by Tenant.
Tenant shall pay as additional rent hereunder its Prorata Share of the
total premiums for liability and fire and extended coverage insurance
(including "Difference in Conditions" coverage) carried by Landlord with
respect to the Shopping Center. Such amount shall be payable in advance on the
first day of each month, based on Landlord's actual estimate thereof from time
to time. Following each calendar year, Landlord shall furnish Tenant with a
statement of the actual amount of such expense for said period, and appropriate
adjustment and payment shall be made for any excess or deficiency. The initial
monthly payment due hereunder shall be the amount provided in Article I,
Section 1.1. P. If the Lease Term ends on any date other than December 31 of
any year, Tenant's obligation for the period commencing January 1 during such
year and ending on the last day of the Lease Term shall be prorated on a per
diem basis and shall be payable by Tenant notwithstanding that the premiums
payable during such year have not been determined as the end of the Lease Term.
Section 10.5 Tenant's Insurance. During the Lease Term, Tenant, at its
own cost and expense, shall keep all furniture, fixtures, inventory and
equipment, whether supplied or owned by Tenant or by Landlord, and all glass
forming a part of the Leased Premises, including but not limited to plate
glass, insured to the extent of its full insurable value against loss or damage
by fire and windstorm, with extended coverage. Tenant shall also carry
business interruption coverage in amounts sufficient to pay the Fixed Rent
hereunder. Tenant agrees that this insurance and all other insurance carried by
Tenant shall contain a waiver of subrogation against Landlord. Tenant shall
deliver certified copies of all insurance policies to Landlord together with
proof that the premiums have been paid.
ARTICLE XI
DAMAGES, DESTRUCTION OR CONDEMNATION OF THE LEASED PREMISES
Section 11.1 Damage or Destruction by Fire or Other Casualty. If the
Leased Premises is damaged or destroyed by fire, flood, tornado, or by the
elements, or through any casualty, or otherwise, after the commencement of the
Lease Term, this lease shall continue in full force and effect, and Landlord at
its expense shall promptly restore, repair or rebuild the Leased Premises
including but not limited to the store front, to the same condition as it
existed when the possession of the Leased Premises were turned over to the
Tenant at the commencement of the Lease Term, within (90) days after such
damage or destruction. In the event Landlord fails to restore the Leased
Premises as aforesaid, Tenant's sole remedy against Landlord shall be to
terminate this lease as of the date of such casualty. Rent and additional rent,
if any, shall abate from the date of such damage or destruction until ten (10)
days after Landlord has repaired or restored the building in the manner and in
the condition provided in this Section and notified Tenant of such fact.
In the event that a part only of the Leased Premises is untenantable
or incapable of use for the normal conduct of Tenant's business therein, a just
and proportionate part of the rent shall be abated from the date of such damage
until (10) days after Landlord has completely repaired same and notified Tenant
of such fact.
In the event that the Leased Premises shall be damaged in whole or in
substantial part within
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the last twenty-four (24) months of the Lease Term or within the last
twenty-four (24) months of the last renewal term, if renewals are provided for
herein, Landlord or Tenant shall have the option, exercisable within ninety
(90) days following such damage, of terminating this lease, effective as of
the date of mailing notice thereof.
No damage or destruction to the Leased Premises shall allow Tenant to
surrender possession of the Leased Premises nor affect Tenant's liability for
the payment of rent or any other covenant contained herein, except as may be
specifically provided in this lease. Notwithstanding any of the provisions
herein to the contrary, Landlord shall have no obligation to rebuild the
premises unless the damage or destruction is a result of a casualty covered by
Landlord's insurance policy.
Tenant shall give to Landlord prompt written notice of any damage to
or destruction of any portion of the Leased Premises resulting from fire or
other casualty.
Section 11.2 Loss or Damage to Tenant's Property. Landlord shall not be
liable for any damage to property of Tenant or of others located on the Leased
Premises, nor for the loss of or damage to any property of Tenant, or of others
by theft or otherwise. Landlord shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or leaks from any part of the Leased Premises or
from the pipes, appliances or plumbing works or from the roof, street or
subsurface or from any other place or by dampness or by any other cause of
whatsoever nature. Landlord shall not be liable for any such damage caused by
other tenants or persons in the Leased Premises, occupants of property adjacent
to the Shopping Center, or public or quasi-public work.
Landlord shall not be liable for any latent defect in the Leased Premises or in
the building of which they form a part except for a period of one (1) year
from the date Tenant takes possession of the Leased Premises. All property of
Tenant kept or stored on the Leased Premises shall be so kept or stored at the
risk of Tenant only, and Tenant shall hold Landlord harmless from any claims
arising out of damage to the same, including subrogation claims by Tenant's
insurance carriers, unless such damage shall be caused by the willful act or
gross neglect of Landlord. Notwithstanding, the above Landlord shall be
responsible for any claims or damages arising from Landlord negligence or
willful misconduct.
Section 11.3 Condemnation. In the event the entire Leased Premises
shall be appropriated or taken under the power of eminent domain by any public
or quasi-public authority, this lease shall terminate and expire as of the
date of such taking, and Landlord and Tenant shall thereupon be released from
any further liability hereunder.
In the event more than fifteen percent (15%) of the floor area of the
Leased Premises shall be appropriated or taken under the power of eminent
domain by any public or quasi-public authority, Tenant and Landlord shall have
the right to cancel and terminate this lease as of the date of such taking
upon giving Landlord and Tenant notice of such election within thirty (30) days
after the receipt by Tenant from Landlord of notice that said Leased Premises
have been so appropriated or taken. In the event of such cancellation, Landlord
and Tenant shall thereupon be released from any further liability under this
lease. Immediately after any appropriation or taking, Landlord shall give
Tenant notice thereof. If this lease shall not be terminated as provided in this
section, then Landlord at its cost and expense shall immediately restore the
building to a complete unit of like quality and character abate of rent and
additional rent incurred as a result of the casualty.
All compensation awarded or paid upon such a total or partial taking
of the Leased Premises shall belong to and be the property of Landlord without
any participation by Tenant; provided, however, that nothing contained herein
shall be construed to preclude Tenant from prosecuting any claim directly
against the condemning authority in such condemnation proceedings for loss of
business, and/or depreciation to, damage to, and/or cost of removal of , and/or
for the value of stock and/or trade fixtures, furniture and other personal
property belonging to Tenant; provided further, that no such claim shall
diminish or otherwise adversely affect Landlord's award or the award(s) of any
and all ground and underlying lessor(s) and mortgagee(s).
ARTICLE XII
DEFAULT BY TENANT AND REMEDIES
SECTION 12.1 DEFAULT. If Tenant fails to pay any rental due hereunder
or if Tenant defaults in fulfilling any of the covenants of this lease,
Landlord may give Tenant notice thereof. If such default
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is not remedied within five (5) days following such notice, all of Tenant's
rights under this lease shall terminate, and Tenant shall immediately quit and
surrender the premises to Landlord, but Tenant shall continue liable for the
payment of rent and other sums due hereunder. If the nature of the default is
such that it cannot reasonably be cured within the period of 30 days other than
the payment of rent and work thereon shall be commenced within the period and
diligently prosecuted to completion, Tenant's rights under this lease shall not
terminate as a result of such default being thus cured or corrected.
If at any time during the term there shall be filed by or against
Tenant or against any successor tenant then in possession, in any court
pursuant to any statute either of the United States or of any state, a petition
(i) in bankruptcy, (ii) alleged insolvency, (iii) for reorganization, (iv) for
the appointment of a receiver, or (v) for an arrangement under the Bankruptcy
Act, or if a similar type of proceeding shall be filed, Landlord may terminate
Tenant's rights under this lease by notice in writing to Tenant, and thereupon
Tenant shall immediately quit and surrender the Leased Premises to Landlord,
but Tenant shall continue liable for the payment of rent and all other sums due
hereunder.
Section 12.2 Landlord's Rights on Default. If Tenant's rights under
this lease shall have terminated as above, Landlord may immediately, or at any
time thereafter, re-enter the Leased Premises and remove all persons and all or
any property therefrom, by a suitable action or proceeding at law, or by force
or otherwise possess and enjoy the premises, together with all additions,
alterations and improvements, and Landlord may, at its option, repair, alter,
remodel and/or change the character of the premises as it may deem fit and/or
at any time relet the Leased Premises or any part or parts thereof, as the
agent of Tenant or otherwise. The exercise by Landlord of any right granted in
the sentence immediately preceding shall not relieve Tenant from the obligation
to make all rental payments, and to fulfill all other covenants required by
this lease, at the time and in the manner provided herein, and if Landlord so
desires, all current and future rent and other monetary obligations shall
become due and payable. Tenant throughout the remaining term hereof shall pay
Landlord, no later than the last day of each month during the term, the then
current excess, if any, of the sum of the unpaid rentals over the proceeds, if
any, received by landlord from such reletting, if any. Landlord shall not be
required to relet the Leased Premises. The Landlord shall make reasonable
effort to relet the Leased Premises. If Landlord attempts to relet the Leased
Premises, Landlord shall be the sole judge as to whether or not a proposed
tenant is suitable and acceptable. Landlord's expenses incurred in connection
with such repair, alteration, remodeling or change, together with any other
expenses incurred by it in connection with the reletting of the Leased Premises
(including but not limited to brokerage fees, if any) shall be deemed
additional rentals payable hereunder.
In the event of a breach by Tenant of any of the covenants or
provisions hereof, Landlord shall have, in addition to any other remedies which
it may have, the right to invoke any remedy allowed at law or in equity to
enforce Landlord's rights or any of them, as if re-entry and other remedies
were not herein provided for.
Section 12.3 Non-Waiver Provisions. The failure of Landlord/and/or
Tenant to insist upon a strict performance of any of the terms, conditions and
covenants herein shall not be deemed to be a waiver of any rights or remedies
that Landlord may have and shall not be deemed a waiver of any subsequent
breach or default in the terms, conditions and covenants herein contained
except as may be expressly waived in writing.
The maintenance of any action or proceeding to recover possession of
the Leased Premises, or any installment or installments of rent or any other
monies that may be due or become due from Tenant to Landlord, shall not
preclude Landlord from thereafter instituting and maintaining subsequent
actions or proceedings for the recovery of possession of the premises or of any
other monies that may be due or become due from Tenant. Any entry or re-entry
by Landlord shall not be deemed to absolve or discharge tenant from liability
hereunder.
Section 12.4 Landlord's Expenses. In the event of litigation, the
non-prevailing party shall be liable for all attorney's fees incurred by both
the prevailing party and the non-prevailing party. If Tenant's rights
hereunder are not terminated, the amount of such expenses shall be deemed to
be additional rent hereunder and shall forthwith be due and payable by Tenant
to Landlord.
ARTICLE XIII
MORTGAGE FINANCING AND SUBORDINATION
Section 13.1 Subordination. This lease and all of Tenant's rights
hereunder are and shall be
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subordinate to any mortgages or deed of trust which Landlord may place upon the
Shopping Center. However, Tenant shall, upon request or either Landlord or the
holder of any mortgage or deed of trust on the Shopping Center, execute any
documents expressly subordinating this lease to any mortgage or mortgages now
or hereafter placed upon the Landlord's interest in the premises or future
additions thereto, and Tenant shall execute and deliver upon demand, such
further instruments subordinating this lease to the lien of any such mortgage
or mortgages, provided such subordination shall be upon the express condition
that this lease shall be recognized by the mortgagees and that the rights of
Tenant shall remain in full force and effect during the term of this lease and
any extension thereof, notwithstanding any default by the mortgagors with
respect to the mortgages or any foreclosure thereof, so long as Tenant shall
perform all of the covenants and conditions of this lease. Tenant agrees to
execute all agreements required by Landlord's mortgagee or any purchaser at a
foreclosure sale or sale in lieu of foreclosure by which agreements Tenant will
attorn to the mortgagee or purchaser.
Section 13.2 Priming the Lease. Any mortgagee may at its option elect
to subordinate the lien of its mortgage to this lease by executing and causing
to be recorded in the place where a deed to the Shopping Center would be
required to be recorded, an instrument evidencing such subordination.
ARTICLE XIV
OTHER PROVISIONS
Section 14.1 Indemnity. Tenant during the term hereof shall indemnify
and save harmless Landlord from and against any and all claims and demands
whether for injuries to persons or loss of life, or damage to property,
occurring within the Leased Premises arising out of the use and occupancy of
the Leased Premises by Tenant, its agents, contractors, employees, servants,
lessees or concessionaires, excepting however such claims and demands, whether
for injuries or persons or loss of life, or damage to property, caused by acts
or omissions of Landlord or arising out of the use of the Common Facilities as
defined in the lease. If, however, any liability arises in the common area
because of negligence of Tenant, Tenant's agents, employees, contractors,
invitees, or visitors, then in such event Tenant shall hold Landlord harmless.
In the event of litigation, the non-prevailing party shall be liable for all
attorney's fees incurred by both the prevailing party and the non-prevailing
party. If Tenant's rights hereunder are not terminated, the amount of such
expenses shall be deemed to be additional rent hereunder and shall forthwith be
due and payable by Tenant to Landlord.
Section 14.2. Definitions and Liability of Landlord. The term
"Landlord" as used in this lease means only the owner for the time being of the
building in which the Leased Premises are located or the owner of a leasehold
interest in the building and/or the land thereunder so that in the event of
sale of the building or an assignment of this lease, or a demise of the
building and/or land, Landlord shall be and hereby is entirely freed and
relieved of all obligations of Landlord hereunder and it shall be deemed without
further agreement between the parties and such purchaser(s), assignee(s), or
lessee(s) that the purchaser, assignee or lessee has assumed and agreed to
observe and perform all obligations of Landlord hereunder.
It is specifically understood and agreed that there shall be no
personal liability on the officers and employees of Barrett Family Partnership
I, Ltd, in respect to any of the covenants, conditions or provisions of this
lease; in the event a breach or default by Landlord of any of its obligations
under this lease, Tenant shall look solely to the equity of Landlord in the
Shopping Center for the satisfaction of Tenant's remedies.
Section 14.3 Assignment and Subletting. Tenant shall not assign this
Lease or sublet the Premises without the prior written consent of Lessor, which
consent will not be unreasonably withheld.
It is understood, however, that any such assignee shall be considered
as the tenant of the Lessor, and Lessor shall recover and be entitled to all
rents to be paid by such assignee. The current lessee shall be entitled to
recover any excess rents paid by assignee that exceed the rent provided for
hereunder.
Any such assignment or sublease, whether by operation of law or
otherwise, made without Lessor's prior written consent shall entitle Lessor to
declare Tenant in default hereunder with the same force and effect as though
all rentals due and to become due hereunder were due and payable and payment
thereof had been refused by tenant.
Notwithstanding any of the above, the Lessee shall remain as Guarantor
under this Lease.
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Section 14.4 Notices. Whenever notice shall or may be given to either
of the parties by the other, each such notice shall be registered or certified
mail to Landlord, Barrett Family Partnership I, LTD, d/b/a The Commonwealth
Center, c/o J B Management, Inc., 300 S. Duncan Avenue, Suite 275, Clearwater,
FL 33755.
Notice to tenant shall be addressed as specified in Article 1, Section
1.1 D., or in each case, to such other address as either may from time to time
designate in writing to the other. Any notice under this lease shall be deemed
to have been given at the time it is placed in the mail with sufficient postage
prepaid.
Section 14.5 Interest on Late Payments. See Addendum attached hereto.
Section 14.6 Short Form Lease. Tenant agrees not to record this lease
without the express written consent of Landlord and further agrees to execute,
acknowledge and deliver at any time after the date of this lease, at the
request of Landlord, a short form lease suitable for recording.
Section 14.7 Tenant's Notice to Landlord of Default. Should Landlord be
in default under any of the terms of this lease, Tenant shall give Landlord
prompt written notice thereof in the manner specified in Section 14.4 and Tenant
shall allow Landlord a reasonable length of time (in any event, not less than
thirty (30) days from the date of such notice) in which to Cure such default.
Section 14.8 Surrender of Leased Premises and Holding Over. At the
expiration of the tenancy hereby created, Tenant shall surrender the Leased
Premises in the same condition as the Leased Premises were in upon delivery of
possession thereof to Tenant, reasonable wear and tear excepted, and damage by
unavoidable casualty excepted to the extent that the same is covered by
Landlord's fire insurance policy with extended coverage endorsement, and Tenant
shall surrender all keys for the Leased Premises to Landlord at the place then
fixed for the payment of rent and shall inform Landlord of all combinations of
locks, safes and vaults, if any, in the Leased Premises. Tenant shall remove all
its trade fixtures as specified in Section 9.5 and any alterations or
improvements, before surrendering the Leased Premises, and shall repair any
damage to the Leased Premises caused thereby. Tenant's obligations to observe or
perform this covenant shall survive the expiration, whether or not with the
consent or acquiescence of Landlord, shall be deemed to be that of a tenancy at
will and in no event from month to month or from year to year, and it shall be
Subject to all the terms, covenants and conditions of this lease applicable
thereto, and no extension or renewal of this lease shall be deemed to have
occurred by such holding over.
Section 14.9 Lien of Landlord for Rent, Taxes, and Other Sums. Landlord
shall have, and Tenant hereby grants, a security interest in any furnishings,
equipment, fixtures, inventory, or other personal property of any kind belonging
to Tenant, or the equity of Tenant therein, on the Leased Premises. The security
interest is granted for the Purpose of securing the payment of rent,
assessments, charges, penalties, and damages herein covenanted to be paid by
Tenant, and for the purpose of securing the performance of all other obligations
of Tenant hereunder. Upon default or breach of any covenants of this lease,
Landlord shall have all remedies available under the Uniform Commercial Code
enacted in the State where the Leased Premises are located including, but not
limited to, the right to take possession of the above mentioned property and
dispose of it by sale in a commercially reasonable manner. Tenant hereby agrees
to sign a Financing Statement upon a request to do so by Landlord, for the
purpose of serving notice to third parties of the security interest herein
granted. In addition to the security interest granted to landlord, Landlord
shall also have a Landlord's lien on all the personal property of Tenant
located in the Leased Premises.
Section 14.10 Security Deposits. Tenant, contemporaneously with the
execution of this lease, has deposited with Landlord the Security Deposit as
defined in Section 1.1 Q. above, receipt of which is hereby acknowledged by
Landlord. This deposit shall be held by Landlord without liability for interest
as security for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this lease by Tenant to be kept and performed
during their term. If at any time during the term of this lease any of the rent
shall be overdue and unpaid, or any other sum payable by Tenant to Landlord
shall be overdue and unpaid, then Landlord may at its option appropriate and
apply the entire Security Deposit, or so much thereof as may be necessary, to
compensate the landlord for loss or damage sustained or suffered by landlord due
to such breach on the part of Tenant. Should the entire deposit, or any portion
thereof, be apportioned and applied by landlord for the payment of overdue rent
or other sums due and payable to Landlord by Tenant, then Tenant shall upon the
written demand of Landlord, remit to Landlord as additional rental a sufficient
amount in cash to restore said security to the original sum deposited, and
Tenant's failure to do so within five (5) days after receipt of such demand
shall constitute a default of this lease. Should Tenant comply
-11-
<PAGE> 12
with all of the terms covenants and conditions and shall promptly pay all of
the rental herein provided for, as it falls due, and all other sums payable by
Tenant to Landlord, the Security Deposit shall be returned in full to Tenant at
the end of this lease or upon the earlier termination of this lease.
Section 14.11 Entire and Binding Agreement. This Shopping Center Lease
contains all of the agreements between the parties hereto, and it may not be
modified in any manner other than by agreement in writing signed by all the
parties hereto or their successors in interest. The terms, covenants and
conditions contained herein shall inure to the benefit of and be binding upon
Landlord and Tenant and their respective successors and assigns, except as may
be otherwise expressly provided in this lease.
Section 14.12 Provisions Severable. If any term or provision of this
lease or the application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this lease, or the
application of such term or provision to persons or circumstances other than
those to which it is held invalid or unenforceable shall not be affected
thereby and each term and provision of this lease shall be valid and be
enforceable to the fullest extent permitted by law.
Section 14.13 Captions. The captions contained herein are for
convenience and reference only and shall not be deemed as a part of this lease
or construed as in any manner limiting or amplifying the terms and provisions
of this lease to which they relate.
Section 14.14 Rider. A rider consisting of Six (6) page(s) with
Exhibits lettered A,B,C,F and an Addendum is annexed hereto and made a part
hereof.
IN WITNESS THEREOF, Landlord and Tenant have duly executed this lease
as of the day and year first above written, each acknowledging receipt of an
executed copy hereof.
Signed, sealed and delivered LANDLORD
in the presence of: Barrett Family Partnership I d/b/a
The Commonwealth Center
/s/ Karen Adriance By: /s/ Cheryl J. Curtis
- ---------------------------------- ---------------------------------
as Agent for John P. Barrett, Jr.
- ---------------------------------- General Partner
Signed, sealed and delivered TENANT
in the presence of:
/s/ Karen Adriance By: /s/ Dr. (ILLEGIBLE)
- --------------------------------- ---------------------------------
Progressive Telecommunications
- --------------------------------- Corporation, Inc.
This original and any copy thereof shall serve as an original.
-12-
<PAGE> 13
ADDENDUM
This Addendum shall become part of the Lease between PROGRESSIVE
TELECOMMUNICATIONS CORPORATION, INC., (As Tenant), and BARRETT FAMILY
PARTNERSHIP I d/b/a THE COMMONWEALTH CENTER (As Landlord), on that Lease dated
the 3rd day of November, 1999.
It may be the desire of the Landlord to either remodel, revamp or realign the
shopping center in some specific mode or manner which is as yet undecided. As
long as it does not disturb the quiet enjoyment of the leased premises.
AIR CONDITIONING:
Tenant shall be responsible for the day to day maintenance of the air handling
units within the premises, including but not limited to, Freon, filters, belts
and motor. Tenant will provide its own air-conditioning contractor to do the
work as long as it is Tenant's responsibility to pay for the work as expressly
set forth herein above.
OTHER
Loitering/smoking is not permitted in front of the shopping center. Smoking
breaks will be taken in the rear of the building.
FOR LANDLORD FOR TENANT
---- ----
-13-
<PAGE> 14
EXHIBIT "A"
LEGAL DESCRIPTION
The following property in Pinellas County, Florida:
That part of Government Lot 4, in Section 20, Township 29 South, Range 16
East, Pinellas County, Florida, being more particularly described as follows:
Commencing at a point on the East right-of-way line of U.S. Highway 19, said
point located S. 89 degrees 19' 48" East, along the South line of said Section
20, a distance of 100.01 feet from the Southwest corner of Section 20, run N.
01 degrees 26' 21" East, 5 feet along the East right-of-way line of U.S.
Highway 19 for a Point of Beginning (POB #1); then continue N. 01 degrees 26'
21" East, 345 feet thence S. 89 degrees 19' 18" East, 175 feet; thence N. 01
degrees 26' 21" East, 200 feet; thence N. 89 degrees 19' 48" West, 175 feet to
the East right-of-way line of U.S. Highway 19; thence N. 01 degrees 26' 21"
East, along said East right-of-way line 615.56 feet; thence S. 89 degrees 26'
5O" East, 885.0 feet; thence S. 01 degrees 26' 21" West, 572 feet; thence N. 89
degrees 19' 48" West, parallel to the South line of Section 20, 263 feet;
thence S. 01 degrees 26' 21" West, 246 feet; thence North 89 degrees 19' 48"
West, 12 feet; thence S. 01 degrees 26' 21" West 344.37 feet; thence N. 89
degrees 19' 48" West, parallel to the South line of Section 20, 610.0 feet to
the Point of Beginning,
LESS THE FOLLOWING, to-wit:
That part of Government Lot 4, in Section 20, Township 29 South, Range 16 East,
Pinellas County, Florida, more particularly described as follows:
Commencing at a point on the East right-of-way line of U.S. Highway 19, said
point located S. 89 degrees 19' 48" E., along the South line of said Section
20, a distance of 100.01 feet from the Southwest corner of Section 20, run N.
01 degrees 26' 21" E., 5.00 feet along the East right-of-way line of U.S.
Highway 19 for a Point of Beginning; thence continue N. 01 degrees 26' 21" E.,
345.00 feet; thence S. 89 degrees 19' 48" E., 252.55 feet; thence S. 01 degrees
20' 21" W., 345.00 feet; thence N. 89 degrees 19' 48" W., 252.55 feet to the
Point of Beginning,
LESS THE FOLLOWING, to-wit:
That part of Government Lot 4, in Section 20, Township 29 South, Range 16 East,
Pinellas County, Florida, more particularly described as follows:
Commencing at the Southwest corner of Section 20, Township 29 South, Range 16
East, Pinellas County, Florida, run S. 89 degrees 19' 48" E., 100.01 feet;
thence N. 01 degrees 26' 21" E., 623.79 feet for a Point of Beginning; thence
continue N. 01 degrees 26' 21" E., 179.82 feet; thence S. 89 degrees 19' 48"
E., 210.24 feet; thence S. 01 degrees 26' 21" W., 179.82 feet; thence N. 89
degrees 19' 48" W., 210.24 feet to the Point of Beginning,
LESS THE FOLLOWING, to-wit:
That part of Government Lot 4, in Section 20, Township 29 South, Range 16 East,
Pinellas County, Florida, more particularly described as follows:
From the Southwest corner of Section 20, Township 29 South, Range 16 East,
Pinellas County, Florida, run S. 89 degrees 19' 48" E., 100.01 feet to the
East, right-of-way line of U.S. Highway 19; thence N. 01 DEGREES 26' 21" E.,
5.0 feet; thence S. 89 Degrees 19' 48" E., 415.65 feet for a Point of
Beginning; thence N. 01 degrees 25' 18" E., 123 feet; thence S. 88 degrees 34'
42" E., 164.40 feet; thence S. 01 degrees 26' 21" W.; 120.45 feet; thence N. 89
degrees 19' 48" W., 164.35 feet to the Point of Beginning.
FOR LANDLORD FOR TENANT
----- -----
-14-
<PAGE> 15
COMMONWEALTH CENTER -- SITE PLAN
EXHIBIT "B"
[SITE PLAN]
FOR LANDLORD FOR TENANT
----- -----
-15-
<PAGE> 16
EXHIBIT "C"
RENT SCHEDULE
This Exhibit "C" is part of the Lease between BARRETT FAMILY
PARTNERSHIP I, LTD. d/b/a THE COMMONWEALTH CENTER (As Landlord), and
PROGRESSIVE TELECOMMUNICATIONS CORPORATION, INC. (As Tenant), dated the 3rd day
of NOVEMBER, 1999.
<TABLE>
<CAPTION>
ANNUAL MONTHLY
RENT RENT
----------- ----------
<S> <C> <C>
Rent charges for 52,000 square feet @ $5.25 psf $273,000.00 $22,750.00
(12/1/99 to 4/30/01)* 7% sales tax $ 19,110.00 $ 1,592.50
----------- ----------
Total Rent charges $292,110.00 $24,342.50
Rent charges for 70,000 square feet @ $5.25 psf $367,500.00 $30,625.00
(5/1/01 to 10/31/02) 7% sales tax $ 25,725.00 $ 2,143.75
----------- ----------
Total Rent charges $393,225.00 $32,768.75
</TABLE>
- --------
* The first (1st), eleventh (11th) and twelfth (12th) months of this Lease are
abated to $(0) zero dollars.
Consumer Price Index Increase on first option to renew lease only. (4th year)
FOR LANDLORD FOR TENANT
----- -----
-16-
<PAGE> 17
EXHIBIT "D"
LANDLORD/TENANT WORK SCHEDULE
THIS EXHIBIT "D" is part of the Lease between BARRETT FAMILY
PARTNERSHIP I, d/b/a THE COMMONWEALTH CENTER (As Landlord), and PROGRESSIVE
TELECOMMUNICATIONS CORPORATION, INC., (As Tenant), dated the 3rd day of
NOVEMBER, 1999.
Lessee agrees to lease the space known as 18489 U.S. Hwy. 19, Clearwater, FL
33764, in "as is" condition except as provided for otherwise expressly written
in this lease.
Lessee must submit the architectural drawings for the proposed renovation to
the Lessor by 12/l/99, for Lessor's approval.
Lessee currently intends such architectural changes to the leased premises,
including but not limited to the interior, exterior facade and the landscaping
to give a look, feel and functionality substantially similar to that of the
building located at 2704 Alt. 19, N., Palm Harbor, FL 34663 commonly known as
Talk.com Landlord shall approve such architectural plans.
FOR LANDLORD FOR TENANT
----- -----
-17-
<PAGE> 18
EXHIBIT "E"
RENEWAL OPTION
This Exhibit "E" is part of the Lease between BARRETT FAMILY
PARTNERSHIP I d/b/a THE COMMONWEALTH CENTER (As Landlord), and PROGRESSIVE
TELECOMMUNICATIONS CORPORATION, INC., (As Tenant), dated the 3rd day
of NOVEMBER, 1999.
Tenant shall have the right, provided Tenant is not then in default pursuant to
the provisions of this lease, to elect to renew the terms of this lease for SIX
(6) period(s) of THREE (3) year(s), such renewal to be upon the same terms, and
subject to the same covenants and agreements as in this lease provided. CPI
increase at the beginning of year 4 only.
If Tenant so elects to renew the term of this lease, Tenant shall give notice to
Landlord in writing, at least two (2) months prior to the term hereof, of such
election.
Non-receipt of written notice by the Landlord prior to the two (2) months
specified herein shall cancel without prejudice the right of the Tenant to
renew this lease and the Landlord shall have no further obligation to extend
this lease for the Tenant.
FOR LANDLORD FOR TENANT
----- -----
-18-
<PAGE> 19
EXHIBIT "F"
SIGN SPECIFICATIONS AND CRITERIA
THIS EXHIBIT "F" IS PART OF THE LEASE BETWEEN BARRETT FAMILY PARTNERSHIP I
d/b/a THE COMMONWEALTH CENTER (AS LANDLORD), AND PROGRESSIVE TELECOMMUNICATIONS
CORPORATION, INC. (AS TENANT), DATED THE 3RD DAY OF NOVEMBER, 1999.
ALL SIGNS SHALL BE AS FOLLOWS AND SHALL BE MOUNTED ON THE FRONT FACADE OF
TENANT'S LEASED SPACE.
1. Wall mounted main identification signage shall be internally
illuminated raceway mounted channel letters. Returns to be fabricated out
of .040 aluminum painted bronze. Raceways painted to match color of building,
faces red, blue or green with gold or silver jewelite trim.
2. Letters to be minimum of 24" high with double row neon. Typefaces to
be helvetica bold, or helvetica medium. Others subject to Landlord's approval.
3. Message to run no more that 75% of Tenant's leased frontage. All
signage to be limited to one line of copy centered both horizontally and
vertically on mansard.
4. All electrical components shall be UL listed, wiring shall be UL
approved and finished sign to bear UL label.
5. Final hook-up to be done by licensed electrician.
6. Tenant's sign company shall be responsible for pulling sign permit
and complying with City of Clearwater regulations.
7. All sign specifications must be approved in writing by the Landlord or
his Agent prior to Tenants' purchasing and installing their individual
identification signs.
8. All signs and hook-up shall be at the sole expense of the Tenant.
9. All signs must be installed and in place within 30 days following
Tenant taking possession of the leased premises.
Tenant shall have the right to Install lit signage above store front. Landlord
shall provide tenant one space on property marquis. Above cost will be at
Tenant's expense using the Landlord's criteria.
Notwithstanding the foregoing Exhibit "F" there are express provisions
otherwise contained hereinabove.
FOR LANDLORD FOR TENANT
----- -----
-19-
<PAGE> 1
Exhibit 10.9
THIS AGREEMENT, entered into this 14th day of May, 1997 Between DEVIC RENTALS
and its assigns or successors hereinafter called the lessor, party of the
first part, and C.C.C. COMMUNICATIONS CORP. of the county____________________
and the State of Nevada hereinafter called the lessee or tenant, party of the
second part:
WITNESSETH, That the lessor does this day lease unto said lessee, and
said lessee does hereby hire and take as tenant under said lessor Room or Space
4417 S.E. 16th PLACE
SUITE 11 (approx. 2758 sq. ft.)
Situate in Lee County, State of Florida, to be used and occupied by the lessee
as Communications company and for other purpose or uses Whatsoever, for the
term of THIRTEEN MONTHS, subject and conditioned on the provisions of clause
ten of this lease beginning the 1st day of JULY, 1997, and ending the last day
of JULY, 1998, at and for the agreed total rental of $1600.00 per month
Dollars, payable as follows: MONTHLY ON THE FIRST, PLUS 6% sales tax.
(applicable tax rate is subject to change) A SECURITY DEPOSIT OF $1600.00 IS
REQUIRED AT LEASE SIGNING. LESSEE HAS AN OPTION TO RENEW FOR ONE YEAR NOTIFYING
LESSOR OF THE INTENTIONS NO LATER THAN 60 DAYS PRIOR TO TERMINATION. OPTION
YEAR RENTAL FEE WILL BE $1690.00 PER MONTH PLUS TAX.
Tenant agrees to pay a late charge of $10.00 per day if any rent should not be
paid within five (5) days after due date.
All payments to be made to the lessor on the first day of each and every month
in advance without demand at the office DEVIC RENTALS 12490 RIVERSIDE DR in the
City of FT. MYERS or at such place and to such other person, as the lessor may
from time to time designate in writing. The following express stipulations and
conditions are made a part of this lease and are hereby assented to by the
lessee:
FIRST: The lessee shall not assign this lease, nor sublet the premises, or any
part thereof nor use the same, or any part thereof, for any other purpose than
as above stipulated, nor make any alterations therein without the Landlord's
written consent. If lessee installs furniture, fixtures or other equipment with
the written consent of landlord, the said furniture, fixtures or other
equipment may be detached and removed by lessee at the expiration of this lease
by lapse of time or otherwise provided that lessee restores the premises
including the floors and walls to the same condition which they were in at the
commencement of the lease.
SECOND: All personal property place or moved in the premises above described
shall be at the risk of the lessee or owner thereof, and lessor shall not be
liable for any damage to said personal property unless it shall due to the
fault if the landlord, his employees or agents.
THIRD: That the tenant shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State
and City Government and of any and all their Departments and Bureaus applicable
to said premises, for the correction, prevention, and abatement of nuisances or
other grievances, in, upon or connected with said premises during said term;
and shall also promptly comply with and execute all rules, orders and
regulations of the Southeastern Underwriters Association for the prevention of
fires, at its own cost and expense.
<PAGE> 2
FOURTH: In the even the premises shall be destroyed or so damaged or injured by
fire or other casualty during the life of this agreement, whereby the same
shall be rendered untenantable, then the lessor shall have the right to render
said premises tenantable by repairs within sixty (60) days therefrom. If said
premises are not rendered tenantable within said time, it shall be optional
with either party hereto cancel this lease, and in the event of such
cancellation the rent shall be paid only to the date of such firs or casualty.
The cancellation herein mentioned shall be evidenced in writing.
FIFTH: The prompt payment of the rent for said premises upon dates named, and
the faithful observance of the rules and regulations printed upon this lease,
and which are hereby made a part of this covenant, are the conditions upon
which the lease is made and accepted and any failure on the part of the lessee
to comply with the terms of said lease, or any of said rules and regulations
now in existence shall at the option of the lessor, work a forfeiture of this
contract, and all of the rights of the lessee hereunder.
SIXTH: If the lessee shall abandon or vacate said premises before the end of
the term of this lease, or shall suffer the rent to be in arrears, the lessor
may, at his option, forwith cancel this lease.
SEVENTH: Lessee agrees to pay the cost of collection and reasonable attorney's
fee on any part of said rental that may be collected by suit or by attorney
after the same is part due, also attorney's fee to prevailing party should any
litigation result to enforce the terms of this agreement.
EIGHT: The lessee agrees that he will pay all charges for rent, and should said
charges for rent, herein provided for at any time remain due and unpaid for the
space of five days after the same shall have become due, the lessor may at its
option consider the said lessee tenant at sufferance and immediately re-enter
upon said premises and the entire rent for the rental period then next ensuing
shall at once be due and payable and may forwith be collected by distress or
otherwise. Landlord will supply water and sewer for domestic uses. Tenant is
responsible for all other utilities including but not limited to electric and
telephone.
NINTH: The lessor, or any of his agents, shall have the right to enter said
premises during reasonable business hours, (in emergency only, non business
hours included) to examine the same to make such repairs, additions or
alteration as may be deemed necessary for the safety, comfort, or preservations
thereof, or of said building, or to exhibit said premises, and to put or keep
upon the doors or windows thereof a notice "FOR RENT" at any time within Sixty
(60) Days before the expiration of this lease. The right of entry shall
likewise exist for the purpose of removing placards, sign, fixtures,
alterations, or additions, which do not conform to this agreement, or to the
rules and regulations of the building.
TENTH: Lessee hereby accepts the premises in the condition they are in at the
beginning of this lease and agrees to maintain said premises in the same
condition, order and repair as they are at the commencement of said term,
exception only reasonable wear and tear arising from the use thereof under this
agreement, and to make goof to said lessor immediately upon demand, any damage
to water apparatus, or electric lights or any fixture, appliances or
appurtenances of said premises, or of the building, caused by any act or
neglect of lessee, or any person or persons in the employ or under the control
of the lessee.
ELEVENTH: It is expressly agreed and understood by and between the parties to
this agreement, that the landlord shall not be liable for any damage or injury
by water, which may be sustained by the said tenant or other person or for any
other damage or injury resulting for the carelessness, negligence, or improper
conduct on the part of any other tenant, occupant, agent, or employees, or by
reason of the breakage, leakage, or obstruction of the water, sewer or soil
pipes, or other leakage in or about the said building.
TWELFTH: IF the lessee shall become insolvent or if bankruptcy proceedings
shall be begun by or against the lessee, before the end of said term the lessor
is hereby irrevocably authorized at its option, to forthwith cancel this lease,
as for a default. Lessor may elect to accept rent from such receiver, trustee,
or other judicial officer during the term of their occupancy in their fiduciary
capacity without effecting
<PAGE> 3
lessor's rights as contained in this contract but no title or interest in or to
the above described property by virtue of this contract.
THIRTEENTH: Lessee hereby waives and renounces any and all exemption rights he
may have now, or hereafter, under or by virtue of the constitution and laws of
the State of Florida, or of any other State, or of the United States, as
against the payment of said rental or any portion hereof, or any other
obligation or damage that may accrue under the terms of this agreement.
FOURTEENTH: This contract shall bind the lessor and its assigns or successors,
and their heirs, assigns, administrators, legal representatives, executors or
successors as the case may be, of the lessee.
FIFTEENTH: It is understood and agreed between the parties hereto that time is
of the essence of this contract and this applies to all terms and conditions
herein.
SIXTEENTH: It is understood and agreed between the parties hereto that written
notice mailed or delivered to the premises leased hereunder shall constitute
sufficient notice to the lessee and written notice mailed or delivered to the
office of the lessor shall constitute sufficient notice to the lessor, to
comply with the terms of this contract.
SEVENTEENTH: The rights of the lessor under the foregoing shall be cumulative,
and failure on the part of the lessor to exercise promptly any rights given
hereunder shall not operate to forfeit any of the said rights.
EIGHTEENTH: It is further understood and agreed between the parties hereto that
any charges against the lessee by the lessor for services or for work done on
the premises by order of the lessee or otherwise accuring under this contract
shall be considered as rent due and shall be included in any lien for rent due
and unpaid.
NINETEENTH: It is hereby understood and agreed that any signs or advertising to
be used, including awnings, in connection with the premises leased hereunder
shall be first submitted to the lessor for approval before installation of
same. All signs must conform to all City Ordinances and Codes as to sign,
dimension and content, if applicable, and are the responsibility of the tenant.
TWENTIETH: Lessee shall, at his expense, obtain a policy of public liability
insurance with a company or companies acceptable to the Lessor, and with
minimum liability limits of One Hundred Thousand Dollars/Three Hundred Thousand
Dollars ($100,000 - $300,000), and of burglary insurance to cover building
burglary damage. Lessee shall provide proof of such coverage and shall notify
all insurance companies to give landlord notification of any change in terms of
said lease or cancellation of same and list the landlord as additional insured
thereunder. Lessee shall also provide plate glass coverage for any and all
windows of any kind.
TWENTY-FIRST: The parties acknowledge that the air-conditioning unit (including
the heating element thereon) that is attached to the premises is in good
working order at the commencement of this lease, and tenant agrees to maintain
and complete any and all repairs to the air-conditioning unit hereinafter so
that the unit is returned to the landlord in good operating condition at the
termination of this lease; tenant shall replace all interior filters, if any,
that may be necessary periodically and repair the unit at his sole cost saving
the landlord harmless from the same. However, Landlord will be responsible for
repair and/or replacement of the compressor, unless damage is caused by lack of
tenant's proper maintenance and/or operation.
TWENTY-SECOND: Tenants shall be responsible for providing all necessary pest
control on the premises at their own expense.
<PAGE> 4
TWENTY-THIRD: Tenants shall be responsible for providing their own trash
pick-up. BFI provides commercial curb side (alley) pick up.
TWENTY-FOURTH: Tenants agree to list the minimum parking requirement on
certificate of use/zoning applications or similar forms, based in the space
rented being used as a general office and calculating parking spaces by
dividing the total square footage of the rented by the City of Cape Coral's
general office standard minimum. There will be no extra allowance allowed for
i.e. extra employees or company cars.
IN WITNESS WHEREOF, the parties have hereunto executed this instrument for the
purpose herein expressed, the day and year above written.
Signed, sealed and delivered
In the presence of: DEVIC RENTALS
/s/ Shirley R. Ezelle BY: /s/ Yanick Devic
- --------------------- ---------------------------
Shirley Ezelle As its LEASE MANAGER
As to Lessor YANIK DEVIC
Lessor
C.C.C. COMMUNICATIONS CORP.
/s/ Fran Boese BY: /s/ Jon Gilbert
- --------------------- ---------------------------
Fran Boese As its Controller
As to Lessee Jon Gilbert
Lessee
STATE OF FLORIDA
COUNTY OF LEE
BEFORE ME, A Notary Public in and for said State and County, personally came
YANNICK DEVIC as LEASE MGR. Of DEVIC RENTALS, to me well known to be the person
named in the foregoing lease, and acknowledged that he executed the same for
the purpose therein expressed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the 14th day of May, 1997.
/s/ Sandra J Franklin
-------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
AT LARGE
STATE OF FLORIDA
COUNTY OF LEE
BEFORE ME, A Notary Public in and for said State and County, personally came
Jon Gilbert as Controller of C.C.C. COMMUNICATIONS CORP., to me well known to
be the person named in the foregoing lease, and acknowledged that he executed
the same for the purpose therein expressed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the 14th day of May, 1997.
/s/ Frances G. Boese
-------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
AT LARGE
<PAGE> 1
Exhibit 10.13
PROMISSORY NOTE
$100,000.00 November 19, 1999
FOR VALUE RECEIVED, THE UNDERSIGNED, CEO of Progressive
Telecommunications Inc. having an address at 601 Cleveland Street Suite 930,
Clearwater, Florida 33755 hereby unconditionally promises to pay to the order
of: _____________ the principal sum of _____________________ plus interest on
the unpaid principal balance hereof at a rate of twelve percent (12%) per
annum. Payment consisting of the principal of _________________plus interest
accrued at 12% shall be due at the end of one year from the date of this note.
Progressive Telecommunications Corp. may at any time and from time to
time, prepay all or any part of the principal balance of this Promissory Note,
without penalty of premium, provided that concurrently with each such
prepayment Progressive Telecommunications Corp. shall pay all accrued interest
on the principal so prepaid to the date of such prepayment. In the event that
Progressive Telecommunications Corp., shall prepay all or any part of the
principal balance of this Note and there shall exist at the time of such
payment accrued but unpaid interest thereon, ___________________may apply such
payment to such accrued and unpaid interest and the remainder, if any, shall be
applied against the principal balance of this Note.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA (WITH GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPALS THEREOF).
PROGRESSIVE TELECOMMUNICATIONS CORP
BY: _______________________________
Barry L Shevlin
Chief Executive Officer
<PAGE> 1
Exhibit 11
PROGRESSIVE TELECOMMUNICATIONS CORP.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
9-30-99
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
1999 1998 1997
--------------------------------------------
<S> <C> <C> <C>
Average shares outstanding 8,177,529 7,175,837 7,175,837
Average common and common equivalent 8,177,529 7,175,837 7,175,837
shares outstanding
Net loss ($5,162,481) ($1,287,823) ($188,229)
Computation of Earnings Per Share = ($5,162,481) ($1,287,823) ($188,229)
Net Loss/Average common equivalent shares 8,177,529 7,175,837 7,175,837
Loss Per Share ($0.63) ($0.18) ($0.03)
</TABLE>
<PAGE> 1
Exhibit 21
List of Subsidiaries
<TABLE>
<CAPTION>
<S> <C> <C>
Progressive Telecommunications Nevada 6/18/79
Progressive Telecommunications Corp Nevada 7/8/96
Businessmall.com, Inc. Florida 6/21/99
Opus Assistant Inc. Delaware 7/26/99
The Yellow Page Directory.com Corp Delaware 10/1/99
CCC Merger Corporation Florida 12/29/98
C.C.C. Communications Corporation Nevada 1/21/97
Stormtel, Inc. Nevada 2/18/97
Eclectics Management Corporation Nevada 4/22/98
Liketel, Inc. Nevada 12/12/97
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 85,000
<SECURITIES> 0
<RECEIVABLES> 1,060,000
<ALLOWANCES> 419,000
<INVENTORY> 35,000
<CURRENT-ASSETS> 808,000
<PP&E> 1,140,000
<DEPRECIATION> 195,000
<TOTAL-ASSETS> 6,382,000
<CURRENT-LIABILITIES> 3,455,000
<BONDS> 547,000
0
0
<COMMON> 8,000
<OTHER-SE> 1,908,000
<TOTAL-LIABILITY-AND-EQUITY> 6,382,000
<SALES> 4,542,000
<TOTAL-REVENUES> 4,542,000
<CGS> 3,615,000
<TOTAL-COSTS> 9,565,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 263,000
<INTEREST-EXPENSE> 149,000
<INCOME-PRETAX> (5,162,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,162,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,162,000)
<EPS-BASIC> (0.63)
<EPS-DILUTED> (0.63)
</TABLE>
