<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
NET COMMAND TECH, INC.
- -------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
State of Florida 55-0672633
- ---------------------------------- ----------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
111 2nd Avenue N.E., Suite 1600, St. Petersburg, Florida 33701
- --------------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class to be so Name of each exchange on which each class
registered is to be registered
- ----------------------------- ------------------------------------------
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share
----------------------------------------------------------------
(Title of class)
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TABLE OF CONTENTS
<TABLE>
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PAGE
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PART I
<S> <C> <C>
Item 1. Description of Business.................................................................................1
Item 2. Management's Plan of Operations.........................................................................4
Item 3. Description of Property.................................................................................6
Item 4. Security Ownership of Certain Beneficial Owners and Management..........................................7
Item 5. Director, Executive Officers, Promoters and Control Persons.............................................9
Item 6. Executive Compensation.................................................................................10
Item 7. Certain Relationships and Related Transactions.........................................................11
Item 8. Description of Securities..............................................................................11
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters........12
Item 2. Legal Proceedings......................................................................................12
Item 3. Changes In and Disagreements with Accountants..........................................................14
Item 4. Recent Sales of Unregistered Securities................................................................14
Item 5. Indemnification of Officers and Directors..............................................................16
PART F/S
Financial Statement for Net Command Tech, Inc...................................................................17
Financial Statements for Satellite Access Systems, Inc..........................................................41
Unaudited Pro Forma Consolidated Financial Data.................................................................54
PART III
Item 1. Exhibits................................................................................................58
SIGNATURES......................................................................................................60
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Net Command Tech, Inc. ("NCT" or the "Company") is a St.
Petersburg-based software company engaged in the research and development,
marketing, and licensing of new communications technology.
The Company was organized in 1994 under the name Acunet, Inc.,
pursuant to the laws of the State of Delaware. It changed its name to Corsaire
Snowboard, Inc. in March 1995 and then to Net Command Tech, Inc. in May 1999.
Prior to February 1999, the Company did not engage in any commercial operations,
nor own any assets. In February 2000, the Company was domesticated in the State
of Florida and as a result is now a Florida corporation.
In February 1999, the Company acquired from Baraka Intracom,
Inc. ("Baraka") certain assets, consisting primarily of intellectual property,
including software, copyrights and trademarks, used in the transmission of video
data over the Internet or intranet. In June 1999, the Company acquired 100% of
the issued and outstanding common stock of Satellite Access Systems, Inc.
("SAS"), based in St. Petersburg, Florida, which had purportedly developed
certain intellectual property used in the high-speed transmission of data over a
narrow bandwidth environment. Since these acquisitions, the Company has been
involved in the attempted verification of the SAS technology and the further
refinement and development of its Baraka technology. The Company presently sells
certain remote surveillance products and intends to further develop its data
transmission capability.
The Company's executive offices are located at 111 Second
Avenue, N.E., Suite 1600, St. Petersburg, Florida 33701 and its telephone number
is (727) 898-5707.
THE MARKET
The Company perceives a market for cost effective remote
surveillance based upon the personal computer platform. As component costs
decline and technology improves, it has become practical to use standard
components to replace the more expensive custom designed products traditionally
used in remote surveillance systems. In the past several years, computer
processing power has increased over 1000 times, modem speed has increased over
100 times and video monitors and cameras can be purchased for less than $200.00.
By using standard components and programming interfaces, the Company is able to
provide remote video and audio monitoring products that are low cost, effective
and easy to install, configure and use. In addition, the products can be easily
upgraded.
The Company believes that in the video surveillance market
there are opportunities to secure market share by forming alliances with major
video camera manufacturers. In addition, the Company will be looking to form
alliances with major national security companies, which the Company believes
will facilitate its ability to reach end users.
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PRODUCTS
The Company currently offers a proprietary software product
known as EyeWatch Plus. EyeWatch Plus offers high-speed digital transmission of
real time video images and alarm capability from remote sites, via a standard
telephone line, ISDN, LAN ("Local Area Network"), or WAN ("Wide Area Network").
The unit can accommodate up to 16 black and white or color cameras at the
transmitting location. EyeWatch Plus can transmit up to 15 frames per second
(depending upon the speed of the connection), enabling remote surveillance and
audio capabilities from anywhere in the world. The product's features include,
among other things, alarm trigger input, automatic dial-out to predetermined
telephone numbers, a Windows operating system and video playback. The Company's
product offers users the ability to view an event as it is occurring as opposed
to the current method generally utilized which allows only for real-time
recording, without transmission to other locations.
The Company also offers NetWatch(TM) software which can be
integrated as an upgrade to an EyeWatch and EyeWatch Plus video camera
surveillance system or as part of a new installation. The NetWatch(TM) software,
which is among the first of any known surveillance system to allow multiple
simultaneous viewers, allows the Company to reach new markets such as day care
centers, restaurants and absentee owners. In addition, the Company's software
allows for remote verification of alarms. This is a significant improvement over
existing technology, and the Company believes that this feature will become
extremely important as more and more police departments begin to charge for
police dispatching to false alarm locations.
STRATEGY
The Company's strategy is to develop and leverage new
technologies to create a comprehensive portfolio of technologically advanced
applications and/or products for the telecommunications data transmission and
data storage markets. The key components of this growth strategy are as follows:
o EXPAND INTELLECTUAL PROPERTY PORTFOLIO. The Company
intends to continue developing its intellectual property portfolio. The Company
has currently identified product lines based on the same proprietary core
technology. Each of these identified products will enable surveillance and
security monitoring of locations previously unattainable. The Company intends to
enhance and improve its technology to perfect and market these identified
products and develop new products not yet identified.
o ESTABLISH RESEARCH AND DEVELOPMENT ALLIANCES. The
Company will seek to form alliances with major companies that service the
surveillance and security industry (e.g. transmission infrastructure, computer
technologies, select software providers). The Company will also seek to form
alliances with research and development firms to aggressively develop and bring
to market better products for the surveillance and security industry. The
Company's management believes that these alliances will bring access to
expertise and specialized equipment not currently available to the Company and
will provide a network of resources to help facilitate product development and
increased problem solving capabilities.
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o ESTABLISH STRATEGIC DISTRIBUTION ALLIANCES. The Company
will seek to commercialize its products by entering into licensing and royalty
arrangements with major corporations within the Company's targeted markets.
These markets include: camera and video capture cards, monitoring companies,
security companies and entertainment and software providers. The Company can
gain greater market share by licensing its products for remarketing rather than
marketing them directly because management believes that the Company's
technology can add value to existing products which already have gained market
acceptance.
COMPETITION
The Company's EyeWatch Plus software competes with several
existing surveillance systems in the market sold by companies such as
NovexCanada.com, Privid_eye.com and Vodomain.com. The Company believes it has a
competitive advantage in that its product is customizable and can be easily
installed on standard, off-the-shelf hardware, as opposed to expensive
custom-made hardware. In addition, the Company's product offers real-time video
and audio transmission to remote locations, an advantage over most systems that
only provide real-time recording. Furthermore, the Company's new NetWatch(TM)
product, scheduled for release in the second quarter of 2000, will add
functionality to better serve the market without having a significant increase
in cost to a distributor.
Although, the Company believes that its products offer unique
features, competition in the market of surveillance is intense. Many of the
existing players in the surveillance market, such as Almex Ltd., Tele site,
Quick Silver, 8X8.com, NovexCanada.com, Privid_eye.com and Vdomain.com, have
significantly greater engineering, manufacturing, marketing and financial
resources than the Company.
The Company's ability to compete successfully in this market
will be dependent on the development of strategic alliances with distributors
and dealers to license its technology. There can be no assurances that the
Company will be able to develop such alliances to market its products.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company has one trademark and five copyrights covering its
technology. However, there can be no assurances that the Company's proprietary
rights will not be challenged, invalidated or circumvented, or that the
Company's copyrights will provide complete proprietary protection to the
Company. The failure of any copyrights to provide protection to the Company's
technology may make it easier for the Company's competitors to offer technology
equivalent or superior to the Company's technology.
The Company also enters into confidentiality and
non-disclosure agreements with its employees, consultants and potential
customers, and controls access to and distribution of its documentation and
other proprietary information. Despite these precautions, it may be possible for
a third party to copy or otherwise obtain and use the Company's technology
without authorization, or to develop similar technology independently. There can
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be no assurance that the steps taken by the Company will prevent
misappropriation or infringement of its technology. In addition, litigation may
be necessary in the future to enforce or protect the Company's intellectual
property rights, or to determine the validity and scope of the proprietary
rights of others. Such litigation could result in substantial costs and
diversion of resources and could have a material adverse effect on the Company's
business, prospects, financial condition and results of operations.
MARKETING AND DISTRIBUTION
The Company will seek to market its products through
distributors. To date, the Company has three distributors and each his signed
five-year agreements to distribute its surveillance software and/or products.
One of these distributors is located in Florida and will focus on the South
American market, one in California which will focus on North America and one in
Australia which will focus on international sales.
EMPLOYEES
As of December 31, 1999, the Company had seven full-time
employees. Of this total, three were engaged in administration and four in
research and development. The Company has also retained one consultant for
business development and one consultant to act as controller.
ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS.
FORWARD LOOKING STATEMENTS
The following is a summary of the plan of operation for the
next twelve months. To the extent that such plan contains statements which are
not historical in nature, such statements are forward-looking statements which
involve risks and uncertainties. Forward-looking statements are typically
phrased using words such as "will," "may," "expect," "believe," "anticipate,"
"intend," "could," "estimate," or "continue" and similar expressions or
variations. Certain important factors may affect the Company's actual plan of
operations and could cause those plans to differ from any forward looking
statement contained herein or that are otherwise made on behalf of the Company.
These factors include, but are not limited to:
1. The Company's ability to commercialize its technology
will require additional capital. If the receipt of such capital is delayed, it
could have a material adverse effect on the Company's prospects. If the receipt
of additional capital proves unattainable, the Company will be unable to
succeed.
2. The Company's ability to commercialize its technology
will depend upon the success it has in forming joint venture, distributorship
and/or licensing arrangements with third parties. If these relationships cannot
be developed or sustained, the Company may be unable to succeed.
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3. The Company has expended substantial funds and resources in
connection with the acquisition and operation of SAS and the process of
verifying the SAS technology. There is ongoing litigation involving SAS that has
delayed the verification process, and events leading up to the litigation have
created considerable doubt in management's view as to the legitimacy of the SAS
technology. The ultimate resolution of the lawsuit, as well as the results of
the verification of the SAS technology, will materially affect the Company.
4. The Company depends upon a small number of key executive
officers, principally, Frank Musolino, Joseph Morgan and Robert Chalnick. The
loss of services of any of these individuals could have a material adverse
effect on the Company's business and prospects.
5. The Company's development depends on its ability to attract
and retain highly qualified technical personnel. Competition for personnel in
the technical field is intense. If the Company is unable to attract and retain
qualified personnel, it could have a material adverse effect on the Company's
business and prospects.
PLAN OF OPERATION
During the fiscal years ended December 31, 1998 and 1997, the
Company was substantially inactive and had no revenues. During the first and
second quarters of 1999, the Company began limited operations, with revenues
being generated from the sale of its EyeWatch and EyeWatch Plus products.
The Company has expended significant efforts in 1999 to
establish and expand its business through the purchase of intellectual
properties and other assets. In February 1999, a subsidiary of the Company
purchased assets, consisting primarily of the intellectual property EyeWatch,
from Baraka. This intellectual property included software copyrights and one
trademark used in connection with remote video surveillance products. As part of
this transaction, the Company acquired a license agreement with Sarnoff
Corporation for the use of MPEG-4. In July 1999, the Company terminated
this licensing agreement.
In June 1999, the Company acquired 100% of the issued and
outstanding common stock of SAS in exchange for 2,352,942 shares of common
stock. In addition, the Company advanced SAS a total of $3.0 million for the
payment of operating expenses and outstanding liabilities. SAS was purportedly
involved in the development of ultra high speed satellite and Internet
communications for the transmission of voice, date and video signals; technology
which the Company branded as V-Band(SM). The Company is presently attempting to
verify the technology that was acquired in this transaction. (See Part II, Item
2. "Legal Proceedings")
The Company intends to continue developing and marketing
products based on the technology purchased by the Company from Baraka. In
addition, it intends to identify and acquire additional complimentary technology
in order to enhance its existing products and develop new products.
The Company does not currently anticipate any purchases or
sales of plant or significant equipment or changes in the number of employees.
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LIQUIDITY
The Company has funded its operations in 1999 through the sale of
shares of common stock and through a loan from a third party which was
subsequently converted to equity. Sales of the Company's products have been
minimal and it is anticipated that product sales will remain insufficient to
cover operating expenses, including research and development. In addition, the
Company's subsidiary, SAS, has a significant amount of liabilities that must be
satisfied. Therefore, unless the Company can enter into licensing or joint
venture agreements, the Company will be required to generate funds through the
sale of debt and/or equity in order to finance its operations and growth in the
next twelve months. The Company believes it will be able to obtain the needed
capital, although, there can be no assurances that the Company will be
successful.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's executive offices are located at 111 2nd Avenue
NE, Suite 1600, St. Petersburg, Florida and subject to a lease between
Transcontinental Realty Investors, Inc. ("Transcontinental") and Aaxico Sales,
Inc. and SAS. The lease is for a term of four (4) years commencing June 30, 1996
and ending on June 30, 2000. The lease provides for base rent in the amount of
$13,003.67 per month for the balance of the term. The premises are used for
office space and research and development facilities and are suitable for such
purposes. The Company has subleased approximately 62% of this office space to
Global Resources Group, Inc. beginning on February 1, 2000 through the end of
the lease.
On March 22, 1999 the Company executed a lease for office
space located at 1550 Sawgrass Corporate Parkway, Suite 210, Sunrise, Florida.
The term of the lease is for four (4) years and five (5) months commencing on
July 1, 1999 and expiring on November 24, 2003. The lease provides for base rent
of $14.50 per rentable square foot which is approximately $6,500 per month for
the first year and increases by three percent (3%) on each anniversary
thereafter. In addition, the Company is responsible for paying its pro-rata
share of the landlord's operating expenses. The Company intended to use the
property as office space; however, it relocated to the St. Petersburg location.
The Company has subleased the space on the same terms and conditions as the
lease.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
At the close of business on December 31, 1999, the Company had
22,455,706 shares outstanding. The table below contains information concerning
each person who is (i) a director, (ii) a named executive officer; and (iii)
known by the Company to be the beneficial owner of more than five percent (5%)
of the Company's common stock.
<TABLE>
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NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENTAGE
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<S> <C> <C>
Frank Musolino(1) 7,210,610(2) 30.0%
601 South Harbour Island Blvd.
Suite 200
Tampa, FL 33602
Robert I. Chalnick(1) 640,000(3) 2.8%
111 2nd Avenue, NE
Suite 1600
St. Petersburg, FL 33701
Geoffrey Todd Hodges(1) 5,000 *
601 South Harbour Island Blvd.
Suite 200
Tampa, FL 33602
William R. Dunavant & 2,050,000 9.1%
Lucille Dunavant JTTE
2461 Provence Circle
Weston, FL 33327
Fever Holdings Limited 1,025,000 4.6%
c/o Banque Francaise De L'Orient
Attn: Mr. Martin Lynch
50 Curzon Street
London
England W1Y 7PN
Rene M. Hamouth 2,758,030 12.3%
530 Thetford Place
West Vancouver BC
Canada V75 IR9
</TABLE>
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<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENTAGE
- --------------------------------------------- ------------------------------------------- ----------------------
<S> <C> <C>
Satellite Access Systems, Inc. 2,352,942(4) 10.5%
111 2nd Avenue, NE
Suite 1600
St. Petersburg, FL 33701
Selport Overseas Limited 1,883,750 8.4%
c/o Modern Telnet Limited
45 Crawford Place
London W1H 2BY
Great Britain
Joseph Spitzer & 1,275,000 5.7%
Helen Spitzer JTTEN(5)
1446 59th Street
Brooklyn, NY 11219
All directors and officers as a 8,105,610 32.9%
group (four individuals)
</TABLE>
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* Less than 1%.
(1) Messrs. Musolino, Chalnick, and Hodges serve as directors on the Company's
Board of Directors. In addition, Messrs. Musolino and Chalnick serve as the
Company's President, and Executive Vice President of Finance, respectively.
(2) Includes warrants to purchase 959,110 shares of the Company's common stock
at an exercise price of $0.25 per share and 407,000 shares of the Company's
common stock held by Tehara Ltd., a company controlled by Mr. Musolino. Also
includes 100,000 shares and a warrant to purchase 625,000 shares at $4.00 per
share held by The First American Banking Corporation ("First American"). Mr.
Musolino indirectly owns the majority of the shares of First American.
(3) Includes option to purchase 90,000 shares of the Company's common stock at
an exercise price of $5.00 per share and warrants to purchase 250,000 shares at
$.25 per share.
(4) These shares are held of record by SAS, as nominee for 35 former
shareholders of SAS.
(5) In November 1999, the Spitzers commenced an action against the Company and
others alleging securities fraud and common law fraud in connection with their
purchase of the shares of common stock of the Company. In January 2000, the case
was settled. In connection with the settlement, the Spitzers transferred their
shares of common stock to a third party. See Part II, Item 2. Legal Proceedings.
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ITEM 5. DIRECTOR, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
<TABLE>
<CAPTION>
NAME AGE POSITION PERIOD OF SERVICE
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<S> <C> <C>
Frank Musolino 49 Chief Executive Officer, President and July 1999
Director
Robert I. Chalnick 57 Executive Vice President Finance and March 1999
Director
Geoffrey Todd Hodges 41 Director November 1999
Joseph Morgan 50 Vice President April 1999
Product Development
</TABLE>
FRANK MUSOLINO, has served as the Company's Chief Executive Officer and
President since September 1999. In addition, he has served on the Company's
Board of Directors since July 1999. He is currently the chief executive officer
and chairman of First American Holdings, Inc., a holding company, which owns the
majority of the shares of First American. During the past five (5) years, Mr.
Musolino has been the sole proprietor of FM Investments, a real estate and
investment company.
ROBERT I. CHALNICK, has served as the Company's Executive Vice President Finance
since March 1999. In addition, he has served on the Company's Board of Directors
since June 1999. From May 1998 to February 1999, Mr. Chalnick served as
executive vice president of Summus Technologies, Inc., a company which
specialized in software development. From October 1997 to April 1998, he served
as president of Chalnick Consulting, Inc., a company engaged in financial
consulting. Mr. Chalnick also served as executive vice president of KBS, Inc. a
company engaged in electronics contracting from 1996 through 1997. From October
1989 to September 1996, he was a partner at the CPA firm of Millward & Co. He
was a former partner at Touche Ross & Co.
GEOFFREY TODD HODGES, has served as the General Counsel of First American since
October 1999. From 1996 to 1999, Mr. Hodges was a shareholder in the law firm
Agliano, Hodges & Whittemore, P.A. Prior to 1996, he was a shareholder in the
law firm Shackleford, Farrior, Stallings & Evan, P.A.
JOSEPH MORGAN, has served as the Company's Vice President Product Development
since April 1999. From 1992 to 1998, Mr. Morgan was the founder and president of
U.S.A. Telecommunications Services, Inc., a company specializing in the
development of pre-paid cellular phones. U.S.A. Telecommunications was purchased
by SmartTalk Teleservices where Mr. Morgan was employed as vice president of
research and development until SmartTalk was purchased by AT&T. He was employed
by AT&T in its research and development division just prior to joining the
Company.
Mr. Chalnick received 50,000 shares of the Company's common stock upon his
appointment as a director. All other directors presently serve without
compensation.
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ITEM 6. EXECUTIVE COMPENSATION.
No executive officer of the Company was paid over $100,000 in
fiscal 1998, nor were any executive officers granted options in fiscal 1998.
EMPLOYMENT AGREEMENTS
On September 29, 1999, the Company entered into an employment
agreement with Mr. Musolino to serve as the Company's interim President and
Chief Executive Officer. The agreement is for a term of three (3) years and
provides that Mr. Musolino will serve as a consultant of the Company upon the
hiring of a president and chief executive officer. Mr. Musolino serves without
salary. However, the Company will reimburse Mr. Musolino for all out-of-pocket
business expenses incurred in connection with his employment. Pursuant to the
agreement, the Company issued Mr. Musolino warrants to purchase a total of
959,110 shares of the Company's common stock at an exercise price of $0.25 per
share. The warrant is for a term of five years and provides for the registration
of the shares underlying the warrant upon the filing of a registration
statement.
On March 1, 1999, the Company entered into an employment
agreement with Mr. Chalnick to serve as the Company's Executive Vice President
Finance. The agreement is for a term of three (3) years and is renewable for an
additional one (1) year term in the sole discretion of the Company's Board of
Directors. The agreement provides for an annual base salary of $132,000 plus an
annual bonus of not less than 50% of his base salary as determined by the Board
of Directors based upon the Company's results of operations. In addition to his
base salary, the agreement provides for a monthly car allowance of $800, club
membership fees up to $3,500 per year and a tax accounting reimbursement up to
$1,500 per year. The agreement further provides for the issuance of 250,000
shares of the Company's common stock and options to purchase 250,000 shares of
the Company's common stock at $5.00 per share exercisable for a period of five
years. The options vest in installments of 10,000 per month for the first
twenty-five (25) months from the date of grant. The agreement provides
separation pay equal to twelve (12) months base salary, if Mr. Chalnick is
terminated other than for cause, as defined in the agreement. Mr. Chalnick shall
also be entitled to receive his pro-rata bonus earned for the year and life,
medical and other insurance coverage for a period of twelve (12) months
following such termination.
On April 11, 1999, the Company entered into an agreement with
Mr. Morgan to serve as Vice President Product Development of the Company. The
agreement is for a term of two years at a base salary of $120,000 per year, plus
a bonus during the first year of not less than 50% nor more than 100% of Mr.
Morgan's salary based upon the operating results of the Company or his operating
division for that year. Mr. Morgan received 250,000 shares of common stock upon
the execution of the agreement and will receive options to purchase 250,000
shares at such time as the Company achieves $10 million dollars in annual sales.
On November 20, 1998, the Company entered into an agreement
with Mr. Dunavant to serve as president and director. The agreement, which was
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subsequently amended in March 1999, was for a term of three (3) years at an
initial salary of $200,000, plus bonuses. In addition, Mr. Dunavant was to
receive 1,000,000 shares of the Company's common stock plus an additional
1,000,000 shares at such time that the Company achieved annual earnings of $.50
per share, achieved annual sales revenue of $10,000,000 or achieved annual
before tax earnings of $5,000,000. On January 1, 1999, the Company and Mr.
Dunavant amended the agreement to provide for the issuance of 2,000,000 shares
of the Company's common stock, outright.
On June 18, 1999, Mr. Dunavant resigned from his position as
president and director of the Company. The Company and Mr. Dunavant entered into
an employment resignation and separation agreement which provides that Mr.
Dunavant is to receive his base salary and certain other benefits for twelve
(12) months. These benefits have not been paid since September 1999.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On August 31, 1999, the Company and First American entered
into an investment banking agreement (the "Banker's Agreement") pursuant to
which First American will provide certain services as a general advisor on
strategic relationships, mergers and acquisitions and as a financial advisor for
other matters. The Banker's Agreement is in effect until August 31, 2001. First
American received a non-refundable retainer in the amount of $15,000 and is
entitled to a monthly consulting fee of $5,000 during the term. In addition, the
Banker's Agreement provides for reimbursements of out-of-pocket expenses and
additional fees, in the form of cash, upon the closing of certain transactions.
First American received 235,000 shares of common stock and a warrant to purchase
625,000 shares at $4.00 per share in connection with services performed pursuant
to this agreement. Mr. Frank Musolino, the Chief Executive Officer, President
and a director of the Company, is also the principal shareholder of First
American Holdings, Inc., the parent company of First American.
ITEM 8. DESCRIPTION OF SECURITIES.
GENERAL
The Company's authorized capital consist of 100,000,000 shares
of common stock, par value of $0.001 per share. As of December 31, 1999, there
were 22,455,706 shares of common stock outstanding.
COMMON STOCK
Holders of the Company's common stock are entitled to one vote
for each share held on all maters submitted to a vote of the shareholders. There
is no cumulative voting with respect to the election of directors, with the
result that holders of more than 50% of the shares who vote in the election of
directors can elect all of the directors. Holders of common stock are entitled
to receive ratably such dividends, if any, as may be declared by the Board of
Directors of the Company out of funds legally available therefor. Upon the
liquidation, dissolution or winding up of the Company, the holders of common
stock are entitled to receive ratably the net assets of the Company after
payment of all debts and liabilities. Holders of common stock have no
preemptive, subscription, redemption or conversion rights.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock traded on the OTC Bulletin Board
under the symbol "NCDR." On June 11, 1999 the SEC issued a stop trading order
which prohibited securities broker dealers from soliciting trades and engaging
in market making activities for a period of 10 days through June 21, 1999; to
the Company's knowledge, as of the date hereof, securities broker dealers are
unable to satisfy the informational requirements of Section 15(c)2-11 of the
Securities Exchange Act of 1934, as amended and therefor cannot enter quotations
with respect to the Company's Common Stock or engage in market making
activities. The following quotations reflect broker-dealer prices until June 11,
1999, without retail markup, markdown or commission, and may not necessarily
represent actual transactions; thereafter, they reflect prices for isolated
transactions on an unsolicited basis.
COMMON STOCK
--------------------------------
QUARTER ENDED HIGH LOW
-------------- -------------- --------------
March 31, 1998 $ 2.54690 $ 0.62500
June 30, 1998 1.32851 0.37500
September 30, 1998 1.06250 0.50000
December 31, 1998 1.78110 0.28120
March 31, 1999 12.00000 9.50000
June 30, 1999 29.50000 10.87000
September 30, 1999 18.06000 8.00000
December 31, 1999 11.00000 1.00000
As of December 31, 1999, there were 655 shareholders of
record, holding 22,455,706 shares of the Company's Common Stock.
The Company has not declared any dividends on its common stock
since its inception, and has no present intention of paying any dividends on its
common stock in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
In June 1999, the Securities and Exchange Commission (the
"Commission") began an investigation of the Company pursuant to a Formal Order
of Investigation. The Company has cooperated fully with the Commission's staff
and supplied voluminous records. The commission's staff also took the testimony
of several individuals currently or previously employed by the Company. The
Commission's staff focused on the contents of various press releases issued by
the Company in late 1998 through June 1999, and whether those press releases
misrepresented material facts or omitted to disclose material facts concerning
certain business transactions involving the Company. The Company has been
informed by the Commission's staff verbally that
12
<PAGE> 15
it will not recommend to the Commission that an enforcement proceeding be
commenced against the Company.
In October 1999, the Company commenced an action in the
Circuit Court of the Ninth Judicial Circuit In and For Pinellas County, Florida,
against Glenn Kovar, Brent C. Kovar and Joy Kovar (the "Kovars") alleging
wrongful taking and refusal to return intellectual property, violation of the
Florida Trade Secrets Act, conversion and civil theft. On October 24, 1999, the
court entered a temporary injunction against the Kovars restraining them from
using, tampering with, altering, modifying, divulging, disclosing or adversely
affecting in any way the technology that was acquired in connection with the SAS
transaction. The court also temporarily enjoined the Kovars from attempting to
sell or convey the technology and ordered all software and firmware belonging to
SAS be delivered to a third party for safekeeping. The Kovars have filed a
motion to dissolve the temporary injunction alleging that the Company never
acquired SAS or its technology, that the acquisition agreement was fraudulently
induced and that the Company breached the terms of the acquisition agreement.
The Kovars have also counterclaimed against the Company and certain affiliates
asserting they are the owners of the intellectual property and that in
connection with the sale of stock of SAS, the Company and its affiliates
violated the antifraud provisions of the Florida Securities Investor Protection
Act, as well as common law fraud and breached various loan and employment
agreements. The Company has denied the allegations with respect to the
counterclaim.
It is the Company's intent to enforce its rights to the
technology, have the technology verified by independent authorities and if the
technology turns out to be deficient or non-existent, consider all alternatives,
including the commencement of additional legal proceedings against the Kovars.
In November 1999, Joseph Spitzer and Helene Spitzer,
shareholders in the Company, commenced an action in the United States District
Court for the Eastern District of New York against the Company and others,
alleging securities fraud and common law fraud in connection with their purchase
of common stock and warrants for approximately $1 million dollars. In January
2000, the case was settled without the payment of any money or other
consideration by the Company, which settlement resulted in a release of the
Company.
In November 1999, Charles C. Bream, the Company's former
president and chief executive officer, filed a demand for arbitration pursuant
to an employment agreement between Mr. Bream and the Company. In his demand, Mr.
Bream alleged wrongful termination by the Company and is seeking damages in
excess of $200,000. The Company has responded to Mr. Bream's demand alleging
that Mr. Bream voluntarily terminated his employment with the Company. The
Company has also alleged that it had a right to terminate Mr. Bream for cause
under the employment agreement. The arbitration is pending.
13
<PAGE> 16
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
On June 30, 1999, the Company's Board of Directors recommended
and approved the replacement of the Company's principal accountants, Strabala,
Ramirez & Associates, effective on June 30, 1999. Also, on June 30, 1999, the
Company's Board of Directors recommended and approved the replacement firm of
Ernst & Young LLP as its independent auditors, effective July 1, 1999. Prior to
the appointment of Ernst & Young LLP, the Company had not consulted with them on
the application of any accounting principles related to a specific or
contemplated transaction, or the type of audit opinion that might be rendered on
the Company's financial statements for the year ended December 31, 1999.
The audit reports of Strabala, Ramirez & Associates on the
Company's financial statements for the last two years did not contain a
qualified, adverse or disclaimed opinion. The audit report of Strabala, Ramirez
& Associates, dated May 6, 1999, was modified to emphasize that the Company did
not follow proper procedure for revival and renewal of a dissolved company. The
matter was described in the notes to the financial statements.
During the last two years and subsequent interim periods,
preceding this change, there have been no disagreements with Strabala, Ramirez &
Associates on any matter of accounting principles or practices, disclosure, or
auditing scope, which, if not resolved to the satisfaction of Strabala, Ramirez
& Associates, would have caused them to make reference to the subject matter of
such disagreements in connection with issuing their reports. Also, no reportable
events, within the meaning of Item 304(a)(1)(v) of Regulation S-K, have occurred
during the two most recently completed years and subsequent interim periods,
preceding this change.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In 1998, the Company issued a total of 2,742,030 shares of the
Company's common stock to various third parties in exchange for legal services
rendered to the Company. In addition, the Company issued 2,000,000 shares of the
Company's common stock to a director and an employee of the Company as
compensation for his services. The shares were issued pursuant to an exemption
from registration provided by Section 4(2) of the Securities Act. The Company
did not pay any commissions or fees in connection with these issuances.
In the months of January through February 1999, the Company
issued an aggregate of 77,500 shares of the Company's common stock to various
third parties in exchange for consulting and legal services rendered to the
Company. The shares were issued pursuant to an exemption from registration
provided by Section 4(2) of the Securities Act. The Company did not pay
commissions or fees in connection with these issuances.
In February 1999, the Company issued 3,108,750 shares of the
Company's common stock in connection with its acquisition of certain assets,
primarily intellectual property from Baraka. These shares were issued pursuant
to an exemption from registration provided by Section 4(2) of the Securities
14
<PAGE> 17
Act. The Company did not pay any commissions or fees in connection with these
issuances.
In the months of January through May 1999, the Company issued
an aggregate of 1,100,000 shares of the Company's common stock to certain
employees in connection with the execution of their employment agreements. The
shares were issued pursuant to an exemption from registration provided by
Section 4(2) of the Securities Act. The Company did not pay commissions or fees
in connection with these issuances.
In April 1999, the Company issued an aggregate of 185,000
shares of the Company's common stock to various individuals in connection with
their appointment to the Company's Board of Directors and for services rendered.
The shares were issued pursuant to an exemption from registration provided by
Section 4(2) of the Securities Act. The Company did not pay commission or fees
in connection with these issuances.
In February 1999, the Company issued a warrant to a third
party for the purchase of 625,000 shares at $.10 per share, in connection with a
$1,000,000 loan received from this third party. This warrant was exercised in
May 1999. In addition, in May 1999, the Company issued 150,000 shares of its
common stock to this third party in satisfaction of interest and penalties
accrued on the loan. Finally, in June 1999, the Company issued to this third
party 500,000 shares of common stock in full satisfaction of the $1,000,000
loan. The shares were issued pursuant to an exemption from registration provided
by Section 4(2) of the Securities Act. The Company did not pay any commissions
or fees in connection with these issuances.
In March and June 1999, the Company sold an aggregate of
3,000,000 shares of the Company's common stock in a private sale to Mr. Frank
Musolino, the Company's Chief Executive Officer, President and a director. The
Company received aggregate proceeds totaling $3,500,000. The shares were issued
in reliance on an exemption from registration provided by Section 4(2) of the
Securities Act. The Company issued 235,000 shares of the Company's common stock
and a warrant to purchase 625,000 shares of common stock to First American as a
commission in connection with the sale.
In April 1999, the Company issued an aggregate of 2,352,942
shares of common stock to SAS as nominee for 35 stockholders of SAS who tendered
their shares of common stock to the Company. These shares were issued pursuant
to an exemption from registration provided by Section 4(2) of the Securities
Act. The Company did not pay any commissions or fees in connection with these
issuances.
In July 1999, the Company also issued 5,000 shares of the
Company's common stock to a third party in exchange for services rendered. The
shares were issued pursuant to an exemption from registration provided by
Section 4(2) of the Securities Act. The Company did not pay any commissions or
fees in connection with these issuances.
In October 1999, Mr. Musolino exercised warrants for 2,800,000
shares by tendering unexercised warrants to the Company. In October 1999,
Tehara, Ltd. exercised warrants for 500,000 shares by tendering unexercised
warrants to the Company. As a result thereof the Company issued 2,436,000 and
15
<PAGE> 18
403,000 shares to Mr. Musolino and Tehara Ltd., respectively. These shares were
issued pursuant to an exemption from registration under Section 4(2) of the
Securities Act. The Company did not pay any commissions or fees in connection
with these issuances.
In October and November 1999 and January 2000, the Company
issued an aggregate of 13,000,003 shares of the Company's common stock to
approximately nine persons in consideration for $1.3 million. Mr. Musolino, the
Company's president and chairman of the board, acquired 11,650,343 shares of
this total through two trusts for the benefit of his children. These shares were
issued pursuant to an exemption from registration provided in Section 4(2) of
the Securities Act. The Company did not pay any commissions or fees in
connection with these issuances.
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company has authority under Section 607.0850 of the
Florida Business Corporations Act to indemnify its directors and officers to the
extent provided for in such statute. The Company's Articles of Incorporation
provide that the Company may insure, shall indemnify and shall advance expenses
on behalf of its officers and directors to the fullest extent not prohibited by
law. The Company has purchased an insurance policy to indemnify its officers and
directors. The Company was previously a Delaware corporation.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, it is the opinion of the
Securities and Exchange Commission that such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
There are no other contracts or arrangements that provide for
insurance or indemnification of a controlling person, director or officer of the
Company that would affect his or her liability in that capacity.
16
<PAGE> 19
PART F/S
FINANCIAL STATEMENT FOR NET COMMAND TECH, INC.
INDEPENDENT AUDITORS' REPORT
TO: The Board of Directors
Net Command Tech, Inc. (formerly known as Corsaire, Inc. and
Corsaire Snowboard, Inc.)
Weston, Florida
We have audited the accompanying balance sheets of Net Command Tech, Inc.
(formerly known as Corsaire, Inc. and Corsaire Snowboard, Inc.), as of December
31, 1998 and 1997, and the related statements of operations, changes in
stockholders' equity and cash flows for the years ended December 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Net Command Tech, Inc.
(formerly known as Corsaire, Inc. and Corsaire Snowboard, Inc.) as of December
31, 1998 and 1997 and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial statements, the Company did not follow
proper procedures for revival and renewal of a dissolved corporation as required
under the laws of the State of Delaware. The Company continued to file reports
and issue stock under the assumed entities' file number.
STRABALA, RAMIREZ & ASSOCIATES, INC.
/s/ Strabala, Ramirez & Associates, Inc.
May 6, 1999
Irvine, California
17
<PAGE> 20
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................ $ -- $ 20
----------- -----------
Total current assets ................................... -- 20
----------- -----------
Total Assets ................................................ $ -- $ 20
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Liabilities ........................................... $ -- $ --
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, authorized 25,000,000 shares:
5,784,889 and 3,041,859 outstanding in
1998 and 1997, respectively .............................. 5,785 3,042
Paid-in capital ............................................. 3,510,180 3,076,748
Prepaid stock-based officer compensation .................... -- --
Accumulated deficit ......................................... (3,515,965) (3,079,770)
----------- -----------
Total Stockholders' Equity ............................. -- 20
----------- -----------
Total Liabilities and Stockholders' Equity .................. $ -- $ 20
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 21
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
Revenues .................................. $ -- $ --
--------- ---------
Expenses
Officers' compensation .................. -- 51,309
Consulting services ..................... -- --
Legal fees and expenses ................. 436,175 --
Other general and administrative expenses 20 15
--------- ---------
Total expenses ........................ 436,195 51,324
--------- ---------
Loss before provision for income taxes .. (436,195) (51,324)
Provision for income taxes ................ -- --
--------- ---------
Net loss .................................. $ (436,195) $ (51,324)
========= =========
Net loss per share ........................ $ (0.09) $ (0.02)
========= =========
Weighted average shares outstanding ....... 4,711,426 3,041,859
========= =========
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 22
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------------------
PREPAID STOCK
ADDITIONAL BASED OFFICER TOTAL
NUMBER OF PAR PAID-IN ACCUMULATED COMPEN- STOCKHOLDERS'
SHARES VALUE CAPITAL DEFICIT SATION EQUITY
------ ----- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 ........ 3,041,859 3,042 3,076,748 (3,028,446) (51,309) 35
12/97 Accrued officer compensation 51,309 51,309
Net loss for year ............. (51,324) (51,324)
--------- ----- --------- ---------- ------- -------
BALANCE, December 31, 1997 ........ 3,041,859 3,042 3,076,748 (3,079,770) -- 20
1/98 Stock issued for
professional services ......... 350,000 350 196,525 196,875
6/98 Stock issued for
professional services ........ 2,393,030 2,393 236,907 239,300
Net loss for year ............. (436,195) (436,195)
--------- ----- --------- ---------- ------- -------
BALANCE, December 31, 1998 ........ 5,784,889 $5,785 $3,510,180 $(3,515,965) $ -- $ --
========= ===== ========= ========== ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 23
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................ $(436,195) $ (51,324)
Adjustments to reconcile net loss to net
Cash used in operating activities
Issuance of common stock for consulting and legal services
and satisfaction of amounts due officer .............. 436,175 51,309
Changes in assets and liabilities:
Decrease in accounts payable ............................. -- --
Decrease in refundable deposit ........................... -- --
--------- ---------
Net cash used in operations ..................................... (20) (15)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution from shareholder ............................ -- --
--------- ---------
Net cash provided by financing ............................... -- --
--------- ---------
Net decrease in cash and cash equivalents ....................... (20) (15)
Cash and cash equivalents - beginning of period ................. 20 35
--------- ---------
Cash and cash equivalents - end of period ....................... $ 0 $ 20
========= =========
Interest and income taxes paid .................................. $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 24
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Net Command Tech, Inc. (formerly known as Corsaire, Inc.) (the "Company") was
incorporated in Delaware in 1994 under the name Acunet Corporation. It became
inactive in 1990, and there are no corporate records or minutes available to
document the activities of the corporation until January 1994.
In March 1995, the Company changed its name from Acunet Corporation to Corsaire
Snowboard, Inc. with offices in Canada. The Company became inactive March 1,
1997 and remained so until July 15, 1997 when it was revived in Delaware under
the name Corsaire, Inc. The Company again changed its name to Net command Tech,
Inc. on May 1999.
The Company's principal business purpose has been the identification and
evaluation of prospective merger and acquisition opportunities.
The Company's shares are traded in the over-the-counter market.
a) CASH AND CASH EQUIVALENTS. Cash equivalents consist of short-term, highly
liquid investments that are readily convertible into cash and were purchased
with maturities of less than three months.
b) CURRENCY TRANSLATION. The accompanying financial statements are expressed in
U.S. dollars. The Company maintains an office in Fort Lauderdale, Florida and no
longer has operations in Canada. Any expenditures and obligations in Canadian
currency were translated at the exchange rate prevailing when they were
incurred. Assets and liabilities at December 31, 1997 and 1998, where
applicable, have been translated at the year-end exchange rates. There were no
significant exchange or translation gains or losses during these years.
c) VALUATION OF SHARES ISSUED FOR SERVICES. The Company accounts for stock-based
compensation at fair market value, in accordance with SFAS No. 123, ACCOUNTING
FOR STOCK-BASED COMPENSATION. SFAS No. 123 establishes a fair value based method
of accounting for stock based compensation.
d) BASIC AND DILUTED LOSS PER SHARE. Net loss per share is determined by
dividing net loss by the weighted average number of common shares outstanding
during the year.
e) 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
the disclosure of contingent assets and liabilities at the date of the financial
statements and that affect revenues and expenses during the period reported.
Estimates are adjusted to reflect actual experience when necessary. Significant
22
<PAGE> 25
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
estimates are used to account for fair market value of the Company's common
stock exchanged for services of consultants and professionals.
f) NEW ACCOUNTING STANDARDS. Effective January 1, 1998, Corsaire adopted
Statement of Financial Accounting Standard No. 131, "Disclosures about Segments
of an Enterprise and Related Information" (SFAS 131). SFAS 131 establishes
standards for defining operating segments and for reporting information about
operating segments in financial statements. It also establishes standards for
related disclosures about products, geographic areas, and major customers.
Corsaire's reportable operating segments did not change as a result of adopting
SFAS 131.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative
Instruments and Hedging Activities." This statement, which is effective January
1, 2000, requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position, measure those instruments at
fair value and recognize changes in the fair value of derivatives in earnings in
the period of change unless the derivative qualifies as an effective hedge that
offsets certain exposures. This statement is not expected to have a significant
effect on the company's financial statements.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5 "Reporting on the Costs of Start-up Activities." This
statement is effective for 1999, but is not expected to have a significant
effect on the company's Financial Statements.
(2) RELATED PARTY INFORMATION
a) THE WORTHINGTON COMPANY. In January 1994, this company received 289,867
shares of common stock in exchange for payments of filing fees for the Company.
Additionally, 250,000 shares were issued to the Worthington Company. Of these
shares, 250,000 shares were canceled in January 1996.
b) CONTRACT WITH COMPANY PRESIDENT. In March 1995, the Company entered into a
two-year agreement with its then President. The agreement provided that he would
assist the Company in the identification and evaluation of prospective merger
and acquisition opportunities, and to arrange for the financing of such
acquisitions and/or mergers. No such merger or acquisition occurred, nor were
any financing arrangements made during that time. In accordance with the
agreement, the Company issued 2,250,000 shares of Corsaire common stock to the
then President. These 2,250,000 shares were recorded as compensation for the
period through May 30, 1997, and have been prorated and charged to expense
accordingly. The shares were issued pursuant to Regulation S of the Securities
and Exchange Commission (pertaining to offers and sales made outside the United
States to non-US investors) which requires a holding period of forty days before
they may be traded. These shares have been valued at $.10 per share, the fair
market value at the contract date. The Company did not issue the appropriate
forms 1099 or W-2 at the time of the transaction.
23
<PAGE> 26
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
c) SHARES ISSUED TO COMPANY LEGAL COUNSEL AND ACTING SECRETARY. The Company,
from time to time, issued shares in exchange for services totaling 2,743,030
shares, of which 350,000 shares were registered.
(3) CONSULTING AND LEGAL SERVICES
In 1997 and 1998, the Company issued common stock which was registered with the
Securities and Exchange Commission on Form S-8 to various individuals, including
consultants and the Company's general counsel for legal services. These shares
have been valued at the bid price at the dates of issuance. Of the 495,000
shares issued, the fair market value of shares of $522,500 was for consulting
services and $471,875 was for legal fees and expenses.
In June 1998, an additional 2,393,030 shares bearing a restrictive legend were
issued for legal services performed in 1998. These shares were issued in
settlement of legal expenses of $239,300 due to the corporate secretary of the
Company. The Company determined that this amount represented fair market value
for a large restricted share block. It represented 22% of the bid price per
share at the time of issuance ($0.43).
(4) PROVISION FOR INCOME TAXES
The Company has had net operating losses during the years ending December 31,
1997 and 1998. These losses were predominantly non-cash exchanges of stock for
services which were not reported to the Internal Revenue Service. As such, they
would not be deductible for tax purposes until declared as compensation by the
recipients. Therefore no income tax expense (benefit) has been recorded by the
Company.
(5) SUBSEQUENT EVENTS TO 12/31/98 BALANCE SHEET
On February 19, 1999, Baraka Intercom, Inc., a California corporation which is a
100% owned subsidiary of Modern Telenet Limited, a corporation in England and
Wales, sold its internet technology division to Net Command Tech, Inc. The
price for the internet technology division was $510,000, based on $10,000 cash
and the value of the shares of the Company ($10.00 per share) delivered to the
seller's escrow agent (50,000 shares plus an additional amount up to 50,000
shares). If, after one year from the closing date, the price of the shares is
less than $10.00 per share, and shares above and beyond that value shall be
returned to the Company. Of this value, $450,000 represented the purchase of
intellectual property, including software, a license agreement, trademarks and
other property. The remaining $50,000 is consideration for a non-competition
provision of the agreement for 5 years.
On February 19, 1999, fifty-one percent (51%) of Modern Telenet Limited was
purchased by the Company. Modern Telenet Limited
24
<PAGE> 27
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
was founded on January 13, 1999 and was established with capital of
50,000 British Pounds divided into 24,500 A shares and 25,500 B shares at one
British Pound per share. The Company bought the 25,500 B shares. Additionally,
the Company is obligated under an option agreement to purchase the 24,500 A
shares from the holder of the stock or assignees, at an agreed price that the
founder of Modern Telenet Limited and Net Command Tech, Inc. may agree or,
failing agreement, a formula based on net income of Modern Telenet Limited. The
business of this Company and the technology acquired are known as video
streaming which allows a computer the ability to transmit video and audio
signals over the Internet. This includes the ability to have video conferencing
and makes a computer a cable television broadcast transmitter.
On February 19, 1999, the Company signed an exclusive distribution agreement
with Modern Telenet Limited, providing for certain specific non-US Territories.
As part of the acquisition, the Company signed an agreement with a bank to
obtain the release of the security interest granted in the bank's favor over
certain items or property of Modern Telenet Limited and Baraka Intracom, Inc. In
return, the Company issued 1,005,000 fully paid shares of common stock to the
bank pursuant to the bank's rights as pledgee and issued an additional 20,000
fully paid shares of its common stock to the bank to be held by the bank (or its
nominee) absolutely and beneficially. The bank also received assignment, by way
of security, and all the rights under put options in respect of the remaining
49% interest (not owned by the Company) in the share capital of Modern Telenet
Limited. In addition, Modern Telenet Limited, and Baraka Intracom, Inc., along
with some other entities, are joint guarantors of debts of certain parties
related prior to acquisition of Modern Telenet Limited and Baraka Intracom, Inc.
in the amounts of $34,691,800.
As of April 26, 1999, Corsair has been conducting a due diligence review as part
of its acquisition of Satellite Access Systems, Inc. ("SAS") a private high
technology corporation based in Florida. The due diligence period will end no
later than forty-five days after its commencement on April 26, 1999. The
acquisition transaction is a stock-for-stock exchange, with SAS becoming a
controlled subsidiary of the Company. The acquisition is intended to qualify as
a tax-free corporate reorganization under the appropriate section of the
Internal Revenue Service Code.
(6) STATUS OF ENTITY
During the course of preparing the delinquent Form 10-QSB's and Form 10-KSB's
for the periods ended December 31, 1996 through December 31, 1998 and for the
quarter ended March 31, 1999, present management uncovered the following:
1) That the State of Delaware requires that the revival and renewal of a
Certificate of Incorporation of an administratively dissolved corporation be
effectuated through the execution and filing of a certificate on the authority
of those who were the directors of the corporation at the time of its
expiration.
2) That prior management of the Company apparently did not file such a
certificate, but instead filed an original Certificate of Incorporation under
the same name
25
<PAGE> 28
NET COMMAND TECH, INC.
(FORMERLY KNOWN AS CORSAIRE, INC. AND CORSAIRE SNOWBOARD, INC.)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
as the dormant corporation which was to have been revived (Acunet Corporation)
and continued to file reports with the SEC under the SEC file umber of Acunet
Corporation.
3) That prior management of the Company, on other occasions, incorporated a new
company with the same name as a dissolved (or dormant) company that had its
class of common stock registered under Section 12(g) of the Securities Exchange
Act 1934, continued to file reports under the non-revived company's file number
and in the process, issued a significant amount of shares in these companies to
then president of the company.
4) That in September 1996, Mr. Paul L. Parshall, Company president until March
1995, had been enjoined by the United States District Court, Utah (SEC v. Axiom
Securities Solutions, Inc. and Paul L. Parshall, Civil Action No. 2-96CV-08245J)
from violating the anti-fraud provisions of the federal securities laws and was
barred from serving as an officer or director of a company filing reports with
the SEC. In addition, in September 1996, he was the subject of administrative
proceedings before the SEC barring him from participating in penny stock
offerings and association with a broker/dealer, investment company, investment
advisor, transfer agent or municipal securities dealer.
The Company, validly existing as a corporation under Delaware law, while
continuing to report under SEC File No. 0-177772 has determined to file a Form
10-SB covering its common stock in order to properly register its common stock
under the Securities Exchange Act, 1994 and correct the existing deficiency.
(7) GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company has sustained substantial
operating losses in the current year. In addition, the Company has used
substantial amounts of working capital in its operations. On December 31, 1998,
the Company had an accumulated deficit of $3,515,965.
In view of these matters, the ability of the Company to continue its operations
is dependent upon its ability to meet its financing requirements, and the
success of its future operations. Management believes that actions presently
being taken to fulfill the Company's financing requirements will provide the
opportunity for the Company to continue as a going concern.
26
<PAGE> 29
NET COMMAND TECH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash ........................................................... $ -- $ 30,830
Receivables from officers and affiliates ....................... -- 15,014
Marketable securities .......................................... -- 63,002
Deposit ........................................................ -- 12,508
---------- ----------
Total current assets .............................................. -- 121,354
Property and equipment, net ....................................... -- 72,537
Intangible assets ................................................. -- 8,113,225
Deposit ........................................................... -- 12,300
Total assets ...................................................... $ -- $ 8,319,416
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................... $ -- $ 644,570
Accrued expenses ............................................... -- 1,938,410
Note payable on demand ......................................... -- 72,000
Current portion of capital lease obligations ................... 44,765
Customer deposits in dispute and other contingent expense....... -- 2,842,967
---------- ----------
Total current liabilities ......................................... -- 5,542,712
Capital lease obligations ...................................... -- 54,868
---------- ----------
Total liabilities ................................................. -- 5,597,580
Stockholders' equity:
Common stock, $0.001 par value, authorized 100,000,000 shares:
5,784,889 and 19,182,206 outstanding at December 31, 1998 and
September 30, 1999, respectively ............................. 5,785 19,182
Additional paid-in capital ..................................... 3,510,180 11,617,191
Accumulated deficit ............................................ (3,515,965) (8,914,537)
---------- ----------
Total stockholders' equity ........................................ -- 2,721,836
Total liabilities and stockholders' equity ........................ $ -- $ 8,319,416
========== ==========
</TABLE>
See accompanying notes.
27
<PAGE> 30
NET COMMAND TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------------
1998 1999
--------------- ----------------
<S> <C> <C>
Expenses:
Salaries and wages $ -- $ 1,964,883
Professional services 436,175 1,221,887
General and administrative 20 1,331,397
Depreciation and amortization -- 931,450
--------- ----------
Total expenses 436,195 5,449,617
Interest and other income -- 51,045
--------- ----------
Net loss $ 436,195 $ (5,398,572)
========= ==========
Basic and diluted net loss per share $ (0.09) $ (0.36)
========= ==========
Weighted average shares outstanding for computing basic and
diluted net loss per share 4,711,426 15,173,537
========= ==========
</TABLE>
See accompanying notes.
28
<PAGE> 31
NET COMMAND TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------
ADDITIONAL TOTAL
NUMBER OF PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES PAR VALUE CAPITAL DEFICIT EQUITY
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 5,784,889 $ 5,785 $ 3,510,180 $(3,515,965) $ --
Shares issued for cash 4,275,000 4,275 4,659,500 -- 4,663,775
Shares issued for compensation 3,258,125 3,258 1,234,830 -- 1,238,088
Shares issued for professional services 402,500 402 152,537 -- 152,939
Shares issued to acquire technology 3,108,750 3,109 1,168,379 -- 1,171,488
Shares issued to acquire a business 2,352,942 2,353 891,765 -- 894,118
Net loss -- -- -- (5,398,572) (5,398,572)
---------------------------------------------------------------
Balance at September 30, 1999 (unaudited) 19,182,206 $19,182 $ 11,617,191 $(8,914,537) $ 2,721,836
===============================================================
</TABLE>
See accompanying notes.
29
<PAGE> 32
NET COMMAND TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1998 1999
----------------------------------
<S> <C> <C>
Operating activities
Net loss .................................................................. $ (436,195) $(5,398,572)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ........................................ -- 931,450
Shares of common stock issued for services ........................... 436,175 1,391,027
Changes in operating assets and liabilities:
Increase in receivables from officers and affiliates ................. -- (15,014)
Decrease in marketable securities .................................... -- 106,100
Increase in deposit .................................................. -- (12,300)
Decrease in accounts payable and accrued expenses ................... -- (881,206)
Decrease in customer deposits in dispute and other
contingent expenses ................................................ -- (679,250)
----------- -----------
Net cash used in operating activities ..................................... (20) (4,557,765)
Investing activities
Purchases of fixed assets ................................................. -- (64,656)
----------- -----------
Net cash used in investing activities ..................................... -- (64,656)
Financing activities
Payments on capital leases ................................................ -- (10,524)
Proceeds from sale of common stock ........................................ -- 4,663,775
----------- -----------
Net cash provided by financing ............................................ -- 4,653,251
Net increase (decrease) in cash ........................................... (20) 30,830
Cash beginning of period .................................................. 20 --
----------- -----------
Cash end of period ........................................................ $ -- $ 30,830
=========== ===========
Supplemental schedule of non-cash investing and financing activities:
Shares of common stock issued for purchase of business ............... $ -- $ 894,118
----------- -----------
Shares of common stock issued for purchase of technology ............. $ -- $ 1,171,488
=========== ===========
</TABLE>
See accompanying notes.
30
<PAGE> 33
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(1) BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Net Command Tech, Inc. (the "Company") was organized as a Delaware Corporation
during 1994. The Company is a technology and software enterprise, engaged in the
development and marketing of intellectual properties, that were purchased during
1999, and are employed in the transmission of data over telephony and Internet
connections. The Company did not have operations, or significant assets, during
the periods prior to 1999 presented in the financial statements.
On June 25, 1999, the Company purchased the outstanding common stock of
Satellite Access Systems, Inc. ("SAS"), which was engaged in the development and
marketing of intellectual property used in high-speed transmission of data over
narrow bandwidth communications mediums, including telephone lines, satellite
connections and wireless telephony (See Note 2). Commencing in October 1999,
litigation arose between the Company and the former principal stockholders of
SAS regarding ownership and validity of the SAS intellectual properties (See
Note 11). As a result, the intellectual property acquired in the SAS purchase
has not been independently validated and may not yet have been developed to the
point that it can be commercially marketed or licensed, or may not exist.
BASIS OF PRESENTATION
INTERIM FINANCIAL INFORMATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and notes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of normal, recurring
accruals, have been included. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further information, refer to
the consolidated financial statements and notes thereto as of and for the year
ended December 31, 1998 included in the Company's Form 10-K included in the
Company's Form 10SB.
GOING CONCERN: The accompanying financial statements have been prepared on the
basis that the Company is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. As
of September 30, 1999, the Company had generated no revenue during any of the
periods reported in the financial statements; but had incurred operating losses
of $5,465,710 and $436,195 during the nine months ended September 30, 1999, the
year ended December 31, 1998, and had an accumulated deficit of $8,981,675 and
$3,515,965 at the end of each of those periods. The Company has a net working
capital deficiency of $5,421,358 as of September 30, 1999, and also continues to
be in default of $72,000 of bank debt that was assumed in the acquisition of
SAS. Finally, as mentioned above and in Note 11, the Company has been prevented
31
<PAGE> 34
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
from testing and verifying the existence and commercial viability of the
intellectual property acquired in the purchase of SAS, thus preventing its
commercial exploitation as had been planned by management.
Through September 30, 1999,the Company has been dependent on the generation of
cash from the sale of stock, principally to affiliates of the Chief Executive
Officer. There are, otherwise, no currently available sources of cash and the
Chief Executive Officer is under no obligation to purchase any more stock or
fund the Company's operations in any way. The continuation of the Company is
dependent upon its ability to generate sufficient cash to support the further
development of technologies, including the SAS intellectual properties, for
commercial exploitation. The ability of the Company to generate cash from the
SAS technologies is further dependent upon the resolution of litigation
surrounding the SAS purchase, the effective testing and validation of the
technologies and, ultimately, the effective development of commercial
applications for the technologies. These uncertainties raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that may result from the
outcome of these uncertainties.
BASIS OF CONSOLIDATION: The consolidated financial statements include the
accounts of Net Command Tech, Inc. and its wholly-owned subsidiary, Satellite
Access Systems (together, the Company). All significant intercompany balances
and transactions have been eliminated in consolidation.
SIGNIFICANT ACCOUNTING POLICIES
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION: The Company has not generated revenue in any period
presented.
Prior to its acquisition by NCT, SAS entered into various third party contracts
for the license of its technologies, the sale of services related to its
technologies and the sale of services related to components of its technologies.
Customer advance deposits and cash retainers had been received in connection
with substantially all such contracts. However, SAS had not successfully
delivered contracted services or technologies under these contracts. In
addition, as discussed in Note 9, substantially all counterparties to SAS's
contracts have made claims for return of the customers' advance deposits and
other damages. SAS has entered into settlement agreements with substantially all
of the customers that provide for return of the deposits and, in certain
instances, damages. These liabilities were assumed in connection with the
acquisition of SAS.
MARKETABLE SECURITIES: Marketable securities, which consist of common stock, are
stated at market value as determined by the most recently traded price of each
security at the balance sheet date. All marketable securities are defined as
32
<PAGE> 35
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
trading securities under the provisions of Statement of Financial Accounting
Standards No. 115 (SFAS 115), ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. Management determines the appropriate classification of its
investments in marketable equity securities at the time of acquisition and
reevaluates such determination at each balance sheet date. Securities that are
acquired and held principally for the purpose of selling them in the near-term
are classified as trading securities and any unrealized holding gains and losses
are included in the statement of operations. The cost of investments sold is
determined on the specific identification or the first-in, first-out method.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation
is computing using the straight-line method. The Company has assigned useful
lives from three to five years to its operating assets.
LONG-LIVED ASSETS: The recoverability of long-lived assets (including
intangibles) is evaluated by an analysis of operating results and consideration
of other significant events or changes in the business environment. If an asset
is generating operating losses and there is a likelihood that such operating
losses will continue, the Company will determine if impairment exists based on
the undiscounted expected future cash flow from the asset before interest.
Impairment losses would be measured based on the amount by which the carrying
amount exceeds fair value.
INTANGIBLE ASSETS: Intangible assets consist of intellectual property, a
non-compete agreement and goodwill that are amortized on a straight-line basis
over their estimated lives of 3 years.
RESEARCH AND DEVELOPMENT: Substantially all activities of the Company relate to
the development of its intellectual property. The Company's policy is to expense
research and development as incurred until a state of technological feasibility
has been achieved. Following the achievement of technological feasibility, the
Company's policy is to capitalize costs related to prototype development and
technical drawings.
STOCK-BASED COMPENSATION: The Company accounts for stock-based compensation
using Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES, AND RELATED INTERPRETATIONS. The Company has adopted the disclosure
requirements of Statement of Financial Accounting Standards (SFAS) No. 123
ACCOUNTING FOR STOCK--COMPENSATION.
BASIC AND DILUTED LOSS PER SHARE: Net loss per share is determined by dividing
net loss by the weighted average number of shares outstanding during the year.
RECENT PRONOUNCEMENTS: In June 1998, the Financial Accounting Standards Board
issued Statement No. 133 (SFAS 133), ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES, which is effective for the Company as of January 1, 2001.
The Statement will require the Company to recognize all derivatives on the
balance sheet at fair value. The Company has not yet determined the effect that
33
<PAGE> 36
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
adopting SFAS 133 will have on its operations or financial position, if any. The
Company currently does not have any derivative financial instruments on its
balance sheet.
(2) ACQUISITION OF SATELLITE ACCESS SYSTEMS
Pursuant to an Acquisition Contract dated April 23, 1999, on June 25, 1999, the
Company acquired the outstanding common stock of Satellite Access Systems in
exchange for 2,352,942 shares of its common stock, valued at $0.38 per share by
an independent appraiser. The terms of the acquisition contract provide for the
contingent issuance of options to purchase approximately 1,500,000 shares of Net
Command common shares upon the achievement by SAS of $10,000,000 in revenues.
The acquisition has been accounted for as a purchase, in which the purchase
price is allocated to the assets acquired and liabilities assumed based upon
their respective fair values. The excess of the purchase price over the fair
value of the net assets and liabilities is recorded as goodwill and is being
amortized over three years.
As is more fully described in Note 11, the Company has been prevented from
testing and validating the intellectual property acquired in the purchase of
SAS, and has therefore not been able to assign any value to this technology. The
purchase price allocation is therefore preliminary pending the testing,
validation and valuation of the intellectual property. For purposes of the
accompanying financial statements, the purchase price component of intellectual
property is included in goodwill which is being amortized over three years.
The purchase price has been allocated to the assets and liabilities acquired as
follows:
Assets acquired:
Marketable securities $ 169,102
Property and equipment 55,833
Deposit 12,508
-------------------
237,443
Less liabilities assumed in purchase consideration:
Note payable 72,000
Accounts payable and accrued expenses 2,078,490
Customer deposits in dispute and other contingent
expenses 3,522,217
Capital lease obligations 110,157
-------------------
5,782,864
Fair value of stock issued 894,118
Cash advances prior to purchase 1,398,653
-------------------
Goodwill $ 7,838,192
===================
As previously noted, the Company's allocation of the purchase price is
preliminary, subject to testing, verification and valuation of the intellectual
property.
34
<PAGE> 37
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(3) PROPERTY AND EQUIPMENT
Property and equipment consists of:
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(Unaudited)
Office equipment ............ $ -- $ 7,734
Computer equipment .......... -- 88,379
Leasehold improvements ...... -- 7,792
--------
-- 103,905
Less accumulated depreciation -- 31,368
--------
$ -- $ 72,537
========
Depreciation expense amounted to $-0- and $31,368 in the nine months ended
September 30, 1998 and 1999, respectively.
(4) INTANGIBLE ASSETS
Intangible assets consist of the following:
USEFUL
DECEMBER 31, SEPTEMBER 30, LIVES
1998 1999 (YEARS)
------------ ------------- -----
(Unaudited)
Goodwill ..................... -- $7,838,192 3
Intellectual property ........ -- 1,175,115 3
------- ----------
-- 9,013,307
Less: Accumulated amortization -- (900,082)
-------- ----------
$ -- $8,113,225
======== ==========
In February 1999, the Company acquired intellectual property, including
software, copyrights and trademarks, used in the transmission of video data over
the Internet or intranet as well as certain non-compete agreements in exchange
for 3,108,750 shares of the Company's common stock. The Company has recorded
this intellectual property at $1,125,115, based on the fair value of the shares
tendered, and is amortizing the cost on the straight line basis over its useful
life of three years. As discussed in Note 2, certain intellectual property
acquired in the SAS acquisition has not yet been verified or valued. Amounts
associated with this technology are included in goodwill pending the allocation.
35
<PAGE> 38
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(5) NOTE PAYABLE
The Company has outstanding borrowings under a line of credit with a local
financial institution in the amount of $72,000, which was due on April 30, 1999.
The interest rate is 9.5% and is payable monthly. The loan is secured by
substantially all of the SAS' assets. The balance is currently in default for
non-payment, however the bank has not exercised its remedies under the credit
agreement, principally to demand payment. The outstanding balance has been
classified as current in the financial statements as of September 30, 1999.
(6) COMMITMENTS AND CONTINGENCIES
LEASES
The Company conducts its operations in leased facilities. The leases expire in
June 30, 2000 and require monthly payments including sales taxes of
approximately $16,000. Facility and equipment rent expense under noncancelable
operating leases for the nine months ended September 30, 1999, totaled
approximately $64,500.
The following is a schedule by year of the approximate future minimum rental
payments required under these leases:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31: LEASES LEASES
------------------------ ------------------------------------
<S> <C> <C>
1999 $ 13,008 $44,190
2000 52,031 101,422
2001 46,771 19,500
------------------------------------
Total minimum lease payments 111,810 $165,112
===================
Less amount representing interest (12,177)
------------------
Present value of net minimum lease payments 99,633
Less current maturities (44,765)
------------------
Capital lease obligation $ 54,868
==================
</TABLE>
36
<PAGE> 39
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
COMMITMENTS AND CONTINGENCIES
Customer Advances in Dispute and other Contingent Expenses: The Company assumed
certain customer advances in dispute and other contingent expenses in its
acquisition of SAS. These matters consist of the following:
SEPTEMBER 30,
1999
-------------------
Customer advances in dispute $ 2,324,832
Disputes over sales of stock 250,000
Employment contingencies 133,135
Defaulted service contract 135,000
-------------------
$ 2,842,967
===================
CUSTOMER ADVANCES IN DISPUTE: SAS entered into various third party contracts for
the license of its technologies, the sale of services related to its
technologies, and the sale of services related to components of its
technologies. Customer advance deposits and cash retainers have been received in
connection with substantially all contracts. However, SAS has not successfully
delivered contracted services or technologies to the satisfaction of the
customers under these agreements. As a result, the customers have made claims
for the return of the deposits and, in some instances, have entered into
litigation against SAS and the Company to recover amounts paid and damages.
DISPUTES OVER SALES OF STOCK:
During October 1996 Aaxico entered into an agreement to purchase a portion of
SAS' common stock in return for $575,000. During 1996 and 1997 amounts totaling
$500,000 were received from Aaxico, however, no shares were issued. A suit was
filed by Aaxico requesting repayment of the cash it had provided to SAS in
addition to the issuance of 235,294 shares of NCT's common stock. Cash payments
totaling $715,000 were made to settle this dispute.
On May 29, 1997 an unrelated third-party individual entered into an agreement to
obtain 12,500 shares of SAS (for a price of $20 per share). Subsequently the
individual has requested repayment of the $250,000 deposit which was allowable
under the agreement.
EMPLOYMENT CONTINGENCIES: SAS has certain contingent liabilities resulting from
employment related matters. The Company's management believes that it has
adequately provided for the probable resolution of such contingencies.
DEFAULTED SERVICE CONTRACTS: SAS has accrued unpaid obligations under two
separate contracts for professional services.
An inactive foreign subsidiary of the Company has guaranteed the debt of its
minority shareholder in the amount of $1.5 million.
37
<PAGE> 40
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(7) STOCKHOLDERS' EQUITY
LEGAL AND CONSULTING EXPENSES: During the nine months ended September 30, 1998
and 1999, the Company issued common stock to various individuals in exchange for
legal and consulting services. The value of the shares issued for these services
was $436,578 and $152,939 in 1998 and 1999, respectively.
STOCK OPTIONS AND WARRANTS: The following table summarizes the stock option and
warrant activity for nine months ended September 30, 1999:
<TABLE>
<CAPTION>
PER SHARE
NUMBER OF SHARES OPTION/WARRANT PRICE
--------------------------------------
<S> <C> <C>
Outstanding at December 31, 1998 -- --
Granted 5,634,110 $0.25 - $5
Exercised -- --
Forfeited -- --
Canceled -- --
-------------------------------------
Outstanding at September 30, 1999 5,634,110 $0.25 - $5
-------------------------------------
Exercisable at September 30,1999 5,204,110 $0.25 - $5
=====================================
</TABLE>
The fair value for these options and warrants was estimated at the date of grant
using the Black-Scholes pricing model with the following assumptions:
<TABLE>
<CAPTION>
1999
---------------
<S> <C>
Risk free interest rate 6.1%
Volatility factor of the expected market price of the
Company's common stock N/A
Dividend yield --
Weighted average expected life of options and warrants (in years) 5.0
</TABLE>
The Minimum Value option valuation model was developed for use in estimating the
fair value of traded options and warrants which have no vesting restrictions and
are fully transferable. In addition, valuation models require the input of
highly subjective assumptions. Because the Company's stock options and warrants
have characteristics significantly different from those of traded options and
warrants, and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options.
38
<PAGE> 41
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(8) NET LOSS PER SHARE
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------
1998 1999
------------------- --------------------
<S> <C> <C>
Numerator (Basic and Diluted):
Net loss $(436,195) $ (5,569,156)
=================== ====================
Denominator (Basic and Diluted):
Weighted average shares 4,711,426 15,173,537
=================== ====================
</TABLE>
Unexercised options and warrants to purchase -0- and 5,634,110 shares of the
Company's common stock at December 31, 1998 and September 30, 1999,
respectively, were not included in the computations of diluted loss per share
because assumed conversion would be antidilutive.
(9) SUBSEQUENT EVENTS
LEGAL PROCEEDINGS: In October 1999, the Company commenced an action against the
former owners of SAS, alleging wrongful taking and refusal to return
intellectual property, violation of the Florida Trade Secrets Act, conversion
and civil theft. On October 24, 1999, the court entered a temporary injunction
against the former owners restraining them from using, tampering with, altering,
modifying, divulging, disclosing or adversely affecting in any way the
technology that was acquired in connection with the SAS transaction. The court
also temporarily enjoined the former owners from attempting to sell or convey
the technology and ordered all software and firmware belonging to SAS be
delivered to a third party for safekeeping. The former owners have filed a
motion to dissolve the temporary injunction alleging that the Company never
acquired SAS or its technology, that NCT breached the terms of the acquisition
agreement. The former owners have also filed claims against the Company and
certain affiliates asserting they are the owners of intellectual property and
that in connection with the sale of stock of SAS, the Company and its affiliates
violated the antifraud provisions of the Florida Securities Investor Protection
Act, as well as common law fraud and breached various loan and employment
agreements. The Company has denied the allegations with respect to the
counterclaim.
In November 1999, certain shareholders in the Company commenced an action
against the Company and others, alleging securities fraud and common law fraud
in connection with their purchase of common stock and warrants for approximately
$1,000,000. In January 2000, the case was settled without the payment of any
money or other consideration by the Company, which settlement resulted in a
release of the Company.
In November 1999, the Company's former president and chief executive officer
filed a demand for arbitration pursuant to an employment agreement between the
former president and the Company. In his demand, the former president alleged
wrongful termination by the Company and is seeking damages in excess of
$200,000. The Company has responded to the demand alleging that the former
39
<PAGE> 42
NET COMMAND TECH, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
president voluntarily terminated his employment with the Company. The Company
has also alleged that it had a right to terminate the former president for cause
under the employment agreement. The arbitration is pending.
STOCK PURCHASES: In October 1999, the Company's chief executive officer
exercised warrants for 2,800,000 shares by tendering unexercised warrants to the
Company. In October 1999, the Company's chief executive officer exercised
warrants for 500,000 shares by tendering unexercised warrants to the Company. As
a result thereof, the Company issued 2,436,000 and 403,000 shares to the
Company's chief executive officer and to a company controlled by the chief
executive officer, respectively. These shares were issued pursuant to an
exemption from registration under Section 4(2) of the Securities Act. The
Company did not pay any commissions or fees in connection with these issuances.
In February 2000, the Company issued an aggregate of approximately 13,000,000
shares of the Company's common stock in consideration for $1.3 million. The
Company's president and chief executive officer purchased 11,650,343 shares of
this total. These shares were issued pursuant to an exemption from registration
provided in Section 4(2) of the Securities Act. The Company did not pay any
commissions or fees in connection with these issuances.
40
<PAGE> 43
FINANCIAL STATEMENTS FOR SATELLITE ACCESS SYSTEMS, INC.
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
Net Command Tech, Inc.
and
Satellite Access Systems, Inc.
We have audited the accompanying balance sheets of Satellite Access Systems,
Inc. as of December 31, 1998 and 1997 and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for each of the two
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Satellite Access Systems, Inc.
at December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States.
The accompanying financial statements have been prepared assuming that Satellite
Access Systems, Inc. will continue as a going concern. As more fully described
in Note 1, certain conditions raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
As discussed in Note 6, Net Command Tech, Inc. acquired the outstanding common
stock of the Company on June 25, 1999.
/s/ Ernst & Young LLP
Tampa, Florida
February 16, 2000
41
<PAGE> 44
SATELLITE ACCESS SYSTEMS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------------------- --------------
1997 1998 1999
----------------------------- --------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current Asset: Marketable securities .............. $ -- $ 115,500 $ 169,102
Property and equipment, net ........................ 133,558 53,739 55,833
Deposit ............................................ 12,508 12,508 12,508
Intangible assets, net ............................. 5,962 -- --
Deferred tax asset ................................. 90,335 -- --
----------- ----------- -----------
Total assets ....................................... $ 242,363 $ 181,747 $ 237,443
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Note payable on demand ........................ $ -- $ 72,000 $ 72,000
Accounts payable and accrued expenses ......... 134,798 1,672,938 2,078,490
Customer deposits in dispute and other
contingent expenses ......................... 2,799,348 3,449,849 3,522,217
Advance from Net Command Tech, Inc. ........... -- -- 1,398,653
Current tax liability ......................... 90,335 -- --
Current portion of capital lease obligations .. 35,129 45,931 45,764
----------- ----------- -----------
Total current liabilities .......................... 3,059,610 5,240,718 7,117,124
Note payable ....................................... 72,000 -- --
Capital lease obligations .......................... 130,956 85,025 64,393
Stockholders' equity (deficit):
Common stock, $.001 par value, 25,000,000
shares authorized, 3,623,587, 3,661,587 and
4,567,500 shares issued and outstanding at
December 31, 1998, 1997 and June 30, 1999,
respectively ................................ 3,624 3,662 4,568
Additional paid-in capital .................... 31,376 96,338 255,037
Accumulated deficit ........................... (3,055,203) (5,243,996) (7,203,679)
----------- ----------- -----------
Total stockholders' equity (deficit) ............... (3,020,203) (5,143,996) (6,944,074)
----------- ----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) $ 242,363 $ 181,747 $ 237,443
=========== =========== ===========
</TABLE>
See accompanying notes.
42
<PAGE> 45
SATELLITE ACCESS SYSTEMS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------------- -------------------------------
1997 1998 1998 1999
---------- -------------- -------------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Operating expenses:
Disposal of equipment ....... $ 196,922 $ 1,196,608 $ 224,046 $ 24,439
General and administrative .. 1,481,431 335,997 261,208 1,517,336
Salaries and wage related ... 353,175 241,239 116,908 266,922
Loss on marketable securities -- 275,763 -- 54,868
Depreciation and amortization 93,611 87,071 43,699 43,267
----------- ----------- ----------- -----------
Total operating expenses ......... 2,125,139 2,136,678 645,861 1,906,832
Other income (expense):
Other income ................ 21,020 5,335 -- --
Interest expense ............ (16,649) (57,450) (28,725) (52,851)
----------- ----------- ----------- -----------
4,371 (52,115) (28,725) (52,851)
----------- ----------- ----------- -----------
Net loss ......................... $ 2,120,768 $ 2,188,793 $ 674,586 $ 1,959,683
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
43
<PAGE> 46
SATELLITE ACCESS SYSTEMS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK ADDITIONAL STOCKHOLDERS'
----------------------------- PAID-IN ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL DEFICIT (DEFICIT)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 3,623,587 $3,624 $31,376 $(934,435) $(899,435)
Net loss -- -- -- (2,120,768) (2,120,768)
-----------------------------------------------------------------------------
Balance at December 31, 1997 3,623,587 3,624 31,376 (3,055,203) (3,020,203)
Sales of common stock 38,000 38 64,962 -- 65,000
Net loss -- -- -- (2,188,793) (2,188,793)
-----------------------------------------------------------------------------
Balance at December 31, 1998 3,661,587 3,662 96,338 (5,243,996) (5,143,996)
Issuances of common stock
for compensation and bonus 905,913 906 158,699 -- 159,605
Net loss -- -- -- (1,959,683) (1,959,683)
-----------------------------------------------------------------------------
Balance at June 30, 1999 (unaudited) 4,567,500 $4,568 $255,037 $(7,203,679) $(6,944,074)
=============================================================================
</TABLE>
See accompanying notes.
44
<PAGE> 47
SATELLITE ACCESS SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------- ------------- ----------------------------------
1997 1998 1998 1999
-------------------- ------------- ----------------- ---------------
(Unaudited)
<S> <C> <C> <C> <C>
Operating activities:
Net loss $ (2,120,768) $ (2,188,793) $ (674,586) $(1,959,683)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 93,611 87,071 43,699 43,267
Disposal of equipment 196,922 1,196,608 224,046 24,439
Losses on marketable securities -- 275,763 -- (371,095)
Issuances of common stock for
compensation and bonus -- -- -- 159,605
Changes in operating assets and
liabilities:
Customer deposits in dispute
and other contingent expenses 1,611,348 175,501 479,501 72,368
Deposit 13,117 -- -- --
Deferred tax asset (35,666) 90,335 90,335 --
Advances from Net Command
Tech, Inc. -- -- -- 1,398,653
Accounts payable and accrued
expenses (21,585) 1,447,805 35,879 405,552
-------------------- ---------------- ------------- ---------------
Net cash provided by (used in) operating
activities (219,851) 1,084,290 198,874 (226,894)
Investing activities:
Proceeds from sale of marketable equity
securities -- 83,737 -- 317,493
Purchases of equipment (186,116) (1,197,898) (224,046) (69,800)
-------------------- ---------------- ------------- ---------------
Net cash used in investing activities (186,116) (1,114,161) (224,046) 247,693
Financing activities:
Proceeds from sales of common stock -- 65,000 65,000 --
Proceeds from note payable 72,000 -- -- --
Payments on capital lease obligations (34,203) (35,129) (23,414) (20,799)
-------------------- ---------------- ------------- ---------------
Net cash provided by (used in) financing
activities: 37,797 29,871 41,586 (20,799)
Net increase (decrease) in cash (368,170) -- 16,414 --
Cash at beginning of year 368,170 -- -- --
-------------------- ---------------- ------------- ---------------
Cash at end of year $ -- $ -- $ 16,414 $ --
==================== ================ ============= ===============
</TABLE>
45
<PAGE> 48
SATELLITE ACCESS SYSTEMS, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Supplemental disclosure of cash flow
information and noncash investing and
financing activities
Cash paid during the year for interest $ 19,406 $ 51,450 $ 28,812 $ 10,174
Marketable equity securities received as a
deposit for services $ -- $ 475,000 $ -- $ 425,963
Issuances of common stock for compensation
and bonus $ -- $ -- $ -- $ 159,605
</TABLE>
See accompanying notes.
46
<PAGE> 49
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Satellite Access Systems, Inc. (the "Company") was incorporated in 1996 under
Nevada State Laws. The Company is a technology and software enterprise engaged
principally in the development and marketing of intellectual property used in
high-speed transmission of data over narrow bandwidth communications mediums,
including telephone lines, satellite connections and wireless telephony
connections.
On June 25, 1999, Net Command Tech, Inc. ("Net Command") purchased all of the
Company's outstanding common stock (See Note 6). Commencing in October 1999,
litigation arose between Net Command and the former principal stockholders of
the Company regarding the ownership and validity of the Company's intellectual
property (See Note 6). As a result, the Company's intellectual property has not
been independently validated and may not yet have been developed to the point
that it can be commercially marketed or licensed, or may not exist.
BASIS OF PRESENTATION
INTERIM FINANCIAL INFORMATION: The financial statements as of June 30, 1999 and
for the six months then ended, and the related amounts in the footnotes have
been provided for convenience. As noted above, the Company was purchased on June
25, 1999. In the opinion of management no significant transactions or events
occurred during the period June 26, 1999 to June 30, 1999. The June 30, 1999
financial statements are unaudited, but in the opinion of management reflect all
normal recurring adjustments necessary for the fair presentation of the results
of those periods. Operating results for the six months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the full
fiscal years.
GOING CONCERN: The accompanying financial statements have been prepared on the
basis that the Company is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. As
of June 30, 1999, the Company had generated no revenue and, as discussed in
"Revenue Recognition", collected advance payments from customers that, along
with certain cash damages, are planned to be returned to the respective
customers. These customer liabilities and related losses contribute
significantly to a working capital deficiency and stockholders' deficit of
$6,948,022 and $6,944,074, respectively, at June 30, 1999. In addition, the
Company is in default of $72,000 of bank debt. Finally, as mentioned above, the
Company's intellectual property has not yet proven to have commercial viability
and may not exist. Accordingly, the commercial exploitation, license or sale of
the Company's intellectual property is uncertain. On June 25, 1999, the
Company's outstanding common stock was acquired by Net Command (See Note 6). Net
47
<PAGE> 50
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
Command has funded the payments of $2,493,592 ($1,398,653 as of June 30, 1999)
of the Company's obligations between June 25, 1999 and September 30, 1999. The
ability of Net Command to further fund the Company's obligations is not certain.
In addition, as discussed in Note 6, the former principal owners have commenced
legal action to rescind the acquisition by Net Command. If this action is
successful, Net Command may not be obligated to fund any further liabilities.
The accompanying financial statements do not include any adjustments that may be
required should it or Net Command become unable to realize its assets (tangible
and intangible) or satisfy its obligations.
SIGNIFICANT ACCOUNTING POLICIES
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION: The Company has entered into various third-party contracts
for the license of its technologies, the sale of services related to its
technologies and the sale of services related to components of its technologies.
Customer advance deposits and cash retainers have been received in connection
with substantially all such contracts. However, the Company has not successfully
delivered contracted services or technologies under these contracts.
Accordingly, no revenue has been recorded in the accompanying financial
statements. In addition, as discussed in Note 5, substantially all
counterparties to the Company's contracts have made claims for return of the
customers' advance deposits and other damages. The Company has entered into
settlement agreements with substantially all of the customers that provide for
return of the deposits and, in certain instances, damages.
MARKETABLE SECURITIES: Marketable securities, which consist of common stock, are
stated at market value as determined by the most recently traded price of the
security at the balance sheet date. All marketable securities are defined as
trading securities under the provisions of Statement of Financial Accounting
Standards No. 115 ("SFAS 115"), ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. Management determines the appropriate classification of its
investments in marketable equity securities at the time of acquisition and
reevaluates such determination at each balance sheet date. Securities that are
acquired and held principally for the purpose of selling them in the near-term
are classified as trading securities and any unrealized holding gains and losses
are included in the statement of operations. The cost of investments sold is
determined on the specific identification or the first-in, first-out method.
48
<PAGE> 51
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
PROPERTY AND EQUIPMENT: Property and equipment is stated at cost. Depreciation
is computed using the straight-line method over the estimated useful lives of
the respective assets (generally two to five years).
RESEARCH AND DEVELOPMENT: Substantially all activities of the Company relate to
the development of its intellectual property. The Company's policy is to expense
research and development as incurred until a state of technological feasibility
has been achieved. Following the achievement of technological feasibility, the
Company's policy is to capitalize costs related to prototype development and
technical drawings. The Company's technologies have not yet reached a state of
technological feasibility. Accordingly, all costs have been expensed in the
accompanying financial statements.
STOCK COMPENSATION: The Company accounts for employee stock-based compensation
in accordance with Accounting Principles Board Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES, AND RELATED INTERPRETATIONS. During 1998 and 1999,
common stock was issued to employees in lieu of cash compensation and, as
discussed in Note 6, as a bonus.
INCOME TAXES: The Company accounts for income taxes using the liability method
in accordance with the provisions of Statement of Financial Accounting Standards
No. 109, ACCOUNTING FOR INCOME TAXES.
(2) PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
DECEMBER 31,
------------------------------
1997 1998
------------------------------
Office equipment $ 31,486 $ 31,486
Computer equipment and software 221,260 222,550
Leasehold improvements 2,343 2,343
------------------------------
255,089 256,379
Less accumulated depreciation (121,531) (202,640)
------------------------------
$ 133,558 $ 53,739
==============================
49
<PAGE> 52
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
During 1998 and 1997, the Company abandoned or disposed of equipment with a net
book value of $1,196,608 and $178,829, respectively. The equipment had been
intended for use under certain customer contracts (See "Revenue Recognition").
(3) NOTES PAYABLE
The Company has outstanding borrowings of $72,000 under a bank line of credit
that bears interest of 9.5%. The balance is currently in default for nonpayment;
however, the bank has not exercised its remedies, principally to demand payment,
under the credit agreement. The outstanding balance has been classified as
current in the financial statements as of December 31, 1998 and June 30, 1999.
(4) INCOME TAXES
The components of the income tax provision (benefit) are as follows:
Year ended December 31,
-----------------------------
1997 1998
------ -------
Current:
Federal $(30,453) $(77,132)
State (5,213) (13,203)
--------- ---------
(35,666) (90,335)
Deferred:
Federal 30,453 77,132
State 5,213 13,203
--------- ---------
35,666 90,335
--------- ---------
Total tax provision (benefit) $ -- $ --
========= =========
A reconciliation of the differences between the effective income tax rate and
the statutory federal tax rate follows:
Year ended December 31,
-----------------------------
1997 1998
------ -------
Tax at U.S. statutory rate $(721,061) $(744,190)
State taxes, net of federal benefit (76,808) (79,390)
Valuation allowance 796,221 822,988
Other 1,648 591
--------- ---------
$ -- $ --
========= =========
Significant components of the Company's deferred tax assets and liabilities are
as follows:
Year ended December 31,
-----------------------------
1997 1998
------ -------
Noncurrent deferred tax assets:
Accrued liabilities $ 1,238,088 $ 1,466,180
Net operating loss carryforward 0 444,801
Other 0 59,761
---------- ----------
Gross deferred tax asset 1,238,088 1,970,742
Less: Valuation Allowance (1,147,753) (1,970,742)
---------- ----------
Net noncurrent deferred tax asset (liability) $ 90,335 $ --
========== ==========
Generally accepted accounting principles require a valuation allowance to
reduce the deferred tax assets reported if, based on the weight of the
evidence, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. After consideration of all the evidence, both
positive and negative, management has determined that valuation allowances of
$1,970,742 and $1,147,753 are appropriate as of December 31, 1998 and 1997,
respectively.
The Company has net operating loss carryforwards for tax purposes at December
31, 1998 of approximately $1,182,000 which expire in 2018.
(5) COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases its corporate headquarters under a noncancelable operating
lease expiring June 30, 2000. The Company also leases certain telecommunications
and office equipment and fixtures under noncancelable operating leases expiring
2001.
50
<PAGE> 53
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
The following is a schedule by year of the future minimum rental payments
required under these leases:
CAPITAL OPERATING
YEAR ENDING DECEMBER 31: LEASES LEASES
------------------------ ------------- ----------
1999 $52,031 $176,758
2000 52,031 101,422
2001 46,771 19,500
------------- ----------
Total minimum lease payments 150,833 $297,680
==========
Less amount representing interest (19,877)
-------------
Present value of net minimum lease payments 130,956
Less current maturities (45,931)
-------------
Capital lease obligation $85,025
=============
Rent expense under operating leases amounted to $147,684 and $142,112 during
1998 and 1997, respectively.
CUSTOMER ADVANCES IN DISPUTE AND OTHER CONTINGENT EXPENSES:
Customer advances in dispute and other contingent expenses consisted of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1997 1998 JUNE 30, 1999
------------------ -------------------- --------------------
<S> <C> <C> <C>
Customer advances in dispute $1,764,348 $2,349,849 $2,639,082
Disputes over sales of stock 965,000 965,000 615,000
Employment contingencies -- -- 133,135
Defaulted service contracts 70,000 135,000 135,000
------------------ -------------------- --------------------
$2,799,348 $3,449,849 $3,522,217
================== ==================== ====================
</TABLE>
CUSTOMER ADVANCES IN DISPUTE: The Company has entered into various third-party
contracts for the license of its technologies, the sale of services related to
its technologies, and the sale of services related to components of its
technologies. Customer advance deposits and cash retainers have been received in
connection with substantially all contracts. However, the Company has not
successfully delivered contracted services or technologies to the satisfaction
of the customers under these agreements. As a result, the customers have made
claims for the return of the deposits and, in some instances, have entered into
litigation against the Company to recover amounts paid and damages. The Company
has entered into settlement agreements with certain customers. In other cases,
the Company has made estimates of its range of possible loss, and accrued its
best estimate within the range.
51
<PAGE> 54
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
DISPUTES OVER SALES OF STOCK:
During October 1996 Aaxico entered into an agreement to purchase a portion of
the Company's common stock for $575,000. During 1996 and 1997 amounts totaling
$500,000 were received from Aaxico; however, no shares were issued. A suit was
filed by Aaxico requesting repayment of cash plus 235,294 shares of Net Command
Tech, Inc. common stock. Cash payments totaling $715,000 ($350,000 during the
first half of 1999; $365,000 in the second half of 1999) were made to settle
this dispute.
On May 29, 1997 an unrelated third-party individual entered into an agreement to
obtain 12,500 shares of SAS (for a price of $20 per share). Subsequently, the
individual requested repayment of the $250,000 deposit which was allowable under
the agreement.
EMPLOYMENT CONTINGENCIES: The Company has certain contingent liabilities
resulting from employment-related matters. Management believes that it has
adequately provided for the probable resolution of these matters.
DEFAULTED SERVICE CONTRACTS: The Company has accrued unpaid obligations under
two separate contracts for professional services.
(6) SALE OF THE COMPANY
Pursuant to an Acquisition Contract dated April 23, 1999, as amended, Net
Command purchased the outstanding common stock of the Company in exchange for
2,352,942 shares of Net Command common stock (the Acquisition). The terms of the
Acquisition Contract provided for the contingent issuance of options to purchase
approximately 1,500,000 shares of Net Command common shares upon the achievement
by the Company of $10,000,000 in revenues. The Acquisition was closed on June
25, 1999. Immediately preceding the closure of the Acquisition, the Company
issued 692,500 shares of its common stock as a bonus to the Company's Chief
Technology Officer, who was also the majority stockholder. The shares of the
Company were valued at $122,055 and charged to expense in the accompanying
financial statements.
Following the Acquisition, the former principal owners of the Company refused to
surrender the Company's intellectual property to Net Command for testing and
verification. As a result, in October 1999, Net Command commenced an action
against the former principal owners, alleging wrongful taking and refusal to
return intellectual property, violation of Florida Trade Secrets Act, conversion
and civil theft. The court entered a temporary injunction against the former
principal owners restraining them from using, tampering with, altering,
modifying, divulging or adversely affecting in any way the technology that was
acquired in connection with the Acquisition. The court also temporarily enjoined
the former principal owners from attempting to sell or convey the technology and
ordered all software and firmware belonging to the Company to be delivered to a
third party for safekeeping. The former principal owners of the Company filed a
motion to dissolve both the temporary injunction alleging that Net Command never
acquired the Company or its technology, and render the Acquisition Agreement as
52
<PAGE> 55
SATELLITE ACCESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998 AND 1997
null and void. The former principal owners have also counter claimed against Net
Command, asserting that they are the owners of the intellectual property and
that in connection with their sale of common stock, Net Command violated
antifraud provisions of the Florida Securities Investor Protection Act, as well
as common law fraud and breached various loan and employment agreements. Net
Command has denied the allegations of the former principal owners and intends to
enforce its rights to the intellectual property, and have it verified by
independent authorities.
53
<PAGE> 56
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated statements of
operations of Net Command Tech, Inc. for the year ended December 31, 1998 and
the nine months ended September 30, 1999 include the historical and pro forma
effects of the acquisition of Satellite Access Systems, Inc., which was
consummated on June 25, 1999. The unaudited pro forma condensed consolidated
statements of operations for the year ended December 31, 1998 and the nine
months ended September 30, 1999 give effect to the acquisition as if it had
occurred at the beginning of each period presented.
The pro forma adjustments are based upon currently available
information, as well as upon certain assumptions that management believes are
reasonable. The acquisition was accounted for under the purchase method of
accounting.
The unaudited pro forma consolidated financial statements are
not necessarily indicative of either future results of operations or results
that might have been achieved had the foregoing transaction been consummated as
of the beginning of each period presented. The unaudited pro forma consolidated
financial statements should be read in conjunction with the notes thereto and
the historical consolidated financial statements of the Company, together with
the related notes thereto, included in this registration statement.
54
<PAGE> 57
NET COMMAND TECH, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HISTORICAL ACQUIRED PRO FORMA
COMPANY (c) BUSINESS (a) ADJUSTMENTS (b) PRO FORMA (d)
----------- ------------ ------------------ -------------
<S> <C> <C> <C> <C>
Expenses:
Salaries and wages ............. $ -- $ 241,239 $ -- $ 241,239
Professional services .......... -- -- -- --
General and administrative ..... 436,175 335,997 -- 772,172
Disposal of equipment .......... -- 1,196,608 -- 1,196,608
Loss on marketable securities .. -- 275,763 -- 275,763
Depreciation and amortization .. -- 87,071 2,575,114 2,662,185
----------- ----------- ----------- -----------
Total expenses .................... 436,175 2,136,678 2,575,114 5,147,967
Interest and other expense ........ -- 52,115 -- 52,115
----------- ----------- ----------- -----------
Net loss .......................... $ 436,175 $ 2,188,793 $ 2,575,114 $ 5,200,082
=========== =========== =========== ===========
Net loss per share ................ $ (0.09) $ (0.74)
=========== ===========
Weighted average shares outstanding 4,711,426 7,064,368
=========== ===========
</TABLE>
See accompanying notes to the unaudited pro forma consolidated financial
statements.
55
<PAGE> 58
NET COMMAND TECH, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
HISTORICAL ACQUIRED PRO FORMA
COMPANY(c) BUSINESS(a) ADJUSTMENTS(b) PRO FORMA (d)
---------- ----------- ----------------- -------------
<S> <C> <C> <C> <C>
Expenses:
Salaries and wages ............. $ 2,032,021 $ 266,922 $ -- $ 2,298,943
Professional services .......... 1,221,887 -- -- 1,221,887
General and administrative ..... 1,331,397 1,517,336 -- 2,848,733
Loss on marketable securities .. -- 54,868 -- 54,868
Disposal of equipment .......... -- 24,439 -- 24,439
Depreciation and amortization .. 931,450 43,267 1,931,336 2,906,053
------------ ------------ ------------ ------------
Total expenses .................... 5,516,755 1,906,832 1,931,336 9,354,923
Interest and other income (expense) 51,045 (52,851) -- (1,806)
------------ ------------ ------------ ------------
Net loss .......................... $ 5,465,710 $ 1,959,683 $ 1,931,336 $ 9,356,729
============ ============ ============ ============
Net loss per share ................ $ (0.36) $ (0.58)
============ ============
Weighted average shares outstanding 15,173,537 16,219,289
============ ============
</TABLE>
See accompanying notes to the unaudited pro forma consolidated financial
statements.
56
<PAGE> 59
NET COMMAND TECH, INC.
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1998 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(a) Represents historical operating results of Satellite Access Systems, Inc.
prior to acquisition of its stock by the Company.
(b) Includes adjustments to reflect amortization expense for goodwill recorded
as a result of the acquisition. Goodwill is being amortized over its
estimated life of three years. See Note 2 to the historical unaudited financial
statements of Net Command Tech for the allocation of the purchase price which
is preliminary.
(c) This column represents the historical results of operations of the Company.
(d) Pro forma weighted average shares includes 2,352,942 shares of common stock
issued in connection with the acquisition of Satellite Access Systems, Inc. as
if these shares were issued on the first day of each of the periods presented.
57
<PAGE> 60
PART III
ITEM 1. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- --------------------- --------------------------------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation, as amended on March 7, 1995, July 15, 1997, May 3, 1999
and January 12, 2000, of Net Command Tech, Inc. in Delaware
3.2 Certificate of Domestication in the State of Florida including Articles of Incorporation
3.3 By-laws of Net Command Tech, Inc.
3.4 Articles of Incorporation of Satellite Access Systems, Inc.
3.5 By-laws of Satellite Access Systems, Inc.
10.1 Contract for Sale and Purchase of Internet Technology Division dated February 1, 1999 by
and between the Company and Baraka Intracom, Inc.
10.2 Tax Free Acquisition Agreement dated April 21, 1999 by and between Satellite Access, Inc.
and the Company
10.3 Office Lease dated July 1, 1996 by and between SAS and Transcontinental Realty Investors,
Inc.
10.4 Lease Agreement dated March 22, 1999 by and between the Company and Sawgrass Plaza
Associates
10.5 Employment Agreement dated September 29, 1999 by and between the Company and Frank Musolino
10.6 Employment Agreement dated March 1, 1999 by and between the Company and Robert I. Chalnick
10.7 Employment Agreement dated April 11, 1999 by and between the Company and Joseph Morgan
10.8 Employment Agreement dated November 20, 1998 by and between the Company and Roger Dunavant
10.9 Employment Resignation and Separation Agreement dated June 18, 1999 by and between the
Company and Roger Dunavant
10.10 Addendum to Office Lease dated July 1, 1996 by and between SAS and Transcontinental Realty
Investors, Inc.
</TABLE>
58
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- --------------------- --------------------------------------------------------------------------------------------
<S> <C>
10.11 Amendment to Office Lease dated July 31, 1996 by and between SAS and Transcontinental
Realty Investors, Inc.
10.12 Square Footage Amendment dated May 7, 1999 by and between the Company and Sawgrass Plaza
Associates
10.13 Addendum to Employment Agreement dated March 1, 1999 by and between the Company and Robert
Chalnick
10.14 Addendum to Employment Agreement dated January 1, 1999 by and between the Company and
Roger Dunavant
10.15 Addendum to Employment Agreement dated March 1, 1999 by and between the Company and Roger
Dunavant
10.16 Interim Closing Agreement dated April 26, 1999 by and between the Company and Satellite
Access Systems, Inc., as amended by addendum no. 1 dated May 14, 1999, addendum no. 2
dated June 2, 1999 and addendum no. 3 dated June 10, 1999
10.17 Final Closing Memorandum dated June 25, 1999 by and between the Company and Satellite
Access Systems, Inc., as extended by the extension of Final Closing Memorandum dated June
25, 1999
21 Subsidiaries
</TABLE>
59
<PAGE> 62
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of
1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
NET COMMAND TECH, INC.
By: /s/ Frank Musolino
----------------------------------
Name: Frank Musolino
Title: President and Chairman of the
Board
Date: March 10, 2000
--------------------------
60
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- --------------------- --------------------------------------------------------------------------------------------
<S> <C>
3.1 Certificate of Incorporation, as amended on March 7, 1995, July 15, 1997, May 3, 1999
and January 12, 2000, of Net Command Tech, Inc. in Delaware
3.2 Certificate of Domestication in the State of Florida including Articles of Incorporation
3.3 By-laws of Net Command Tech, Inc.
3.4 Articles of Incorporation of Satellite Access Systems, Inc.
3.5 By-laws of Satellite Access Systems, Inc.
10.1 Contract for Sale and Purchase of Internet Technology Division dated February 1, 1999 by
and between the Company and Baraka Intracom, Inc.
10.2 Tax Free Acquisition Agreement dated April 21, 1999 by and between Satellite Access, Inc.
and the Company
10.3 Office Lease dated July 1, 1996 by and between SAS and Transcontinental Realty Investors,
Inc.
10.4 Lease Agreement dated March 22, 1999 by and between the Company and Sawgrass Plaza
Associates
10.5 Employment Agreement dated September 29, 1999 by and between the Company and Frank Musolino
10.6 Employment Agreement dated March 1, 1999 by and between the Company and Robert I. Chalnick
10.7 Employment Agreement dated April 11, 1999 by and between the Company and Joseph Morgan
10.8 Employment Agreement dated November 20, 1998 by and between the Company and Roger Dunavant
10.9 Employment Resignation and Separation Agreement dated June 18, 1999 by and between the
Company and Roger Dunavant
10.10 Addendum to Office Lease dated July 1, 1996 by and between SAS and Transcontinental Realty
Investors, Inc.
10.11 Amendment to Office Lease dated July 31, 1996 by and between SAS and Transcontinental
Realty Investors, Inc.
10.12 Square Footage Amendment dated May 7, 1999 by and between the Company and Sawgrass Plaza
Associates
10.13 Addendum to Employment Agreement dated March 1, 1999 by and between the Company and Robert
Chalnick
10.14 Addendum to Employment Agreement dated January 1, 1999 by and between the Company and
Roger Dunavant
10.15 Addendum to Employment Agreement dated March 1, 1999 by and between the Company and Roger
Dunavant
10.16 Interim Closing Agreement dated April 26, 1999 by and between the Company and Satellite
Access Systems, Inc., as amended by addendum no. 1 dated May 14, 1999, addendum no. 2
dated June 2, 1999 and addendum no. 3 dated June 10, 1999
10.17 Final Closing Memorandum dated June 25, 1999 by and between the Company and Satellite
Access Systems, Inc., as extended by the extension of Final Closing Memorandum dated June
25, 1999
21 Subsidiaries
</TABLE>
<PAGE> 1
EXHIBIT 3.1
CERTIFICATION OF INCORPORATION
OF
ACUNET CORPORATION
FIRST: The name of the corporation is:
ACUNET CORPORATION
SECOND: Its registered office in the State of Delaware is located at 25
Greystone Manor, Lowes, DE 19958-9776, County of Sussex. The registered agent in
charge thereof is Harvard Business Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the corporation is
authorized to issue is 50,000,000 shares having a par value of $0.001 per share.
FIFTH: The business and affairs of the corporation shall be managed by
or under the direction of the board of directors, and the directors need not be
elected by ballot unless required by the bylaws of the corporation.
SIXTH: The names and addresses of the persons who are to be directors
of the corporation until the first meeting of stockholders or until their
successors are elected:
PAUL L. PARSHALL
106 HEISCHMAN AVE.
WORTHINGTON, OH 43085
SEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of Delaware, the board of directors is authorized to amend or repeal
the bylaws.
EIGHTH: The corporation reserves the right to amend or repeal any
provision in this Certificate of Incorporation in the manner prescribed by the
laws of Delaware.
NINTH: The incorporator is Harvard Business Services, Inc., whose
mailing address is 25 Greystone Manor, Lowes, DE 19958-9776. The powers of the
incorporator are to terminate upon the filing of this certificate of
incorporation.
TENTH: To the fullest extent permitted by the Delaware General
Corporation Law, a director of this corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
ELEVENTH: This company will acquire the assets & certain liabilities,
subject to Directors approval, of the predecessor corporation of the same name
originally incorporated in 1987.
I, Richard H. Bell, for the purpose of forming a corporation under the
laws of the State of Delaware do make and file this certificate, and do certify
that the facts herein stated are true; and have accordingly signed below, this
25th day of January, 1994.
Signed and Attested to by: /s/ RICHARD H. BELL
---------------------------------------
Richard H. Bell, President & Secretary
HARVARD BUSINESS SERVICES, INC.
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF ACUNET CORPORATION
ACUNET CORPORATION, a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of ACUNET CORPORATION
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, To authorize a reverse stock split of its common stock, one share for
each 100 shares, reducing the issued and outstanding shares from 50,000,000 to
500,000 shares. To authorize an increase of common shares authorized from
500,000 to 25,000,000 with a par value of $0.001.
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Articles thereof numbered "THE FIRST" & "THE FOURTH:" so that,
as amended said Article shall be and read as follows:
FIRST: The name of the corporation is CORSAIRE SNOWBOARD, INC.
FOURTH: The total number of shares of stock which the corporation is
authorized to issue is 25,000,000 shares having a par value of $0.001 per
share.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted by a quorum of shareholders of the
corporation on March 3, 1995. There are 50,000,000 outstanding shares, of which
28,986,734 shares voted for the amendment and 0 against in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
FIFTH: That this amendment shall become effective at 9:00 a.m. on the 7th day
of March, 1995.
IN WITNESS WHEREOF, said ACUNET CORPORATION has caused this certificate to be
signed by its Authorized officer, this 7th day of March, 1995.
BY: /s/ Paul L. Prashall
----------------------------------------
Authorized Officer, President/Director
<PAGE> 3
STATE OF DELAWARE
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
CORSAIRE, INC. (formerly known as CORSAIRE SNOWBOARD, INC.), a
corporation organized under the laws of Delaware, the charter of which was
voided for non-payment of taxes, now desires to procure a restoration, renewal
and revival of its charter, and hereby certifies as follows:
1. The name of this corporation is CORSAIRE, INC. (formerly
known as CORSAIRE SNOWBOARD, INC.)
2. Its registered office in the State of Delaware is located
at 25 Greystone Manor Street, City of Lewes Zip Code 19958
County of Sussex the name and address of its registered
agent is HARVARD BUSINESS SERVICES, INC. 25 Greystone
Manor, Lewes, Delaware 19958.
3. The date of filing of the original Certificate of Incorporation
in Delaware was January 25, 1994.
4. The date when restoration, renewal, and revival of the charter of
this company is to commence is the 28th day of February, 1997,
same being prior to the date of the expiration of the charter.
This renewal and revival of the charter of this corporation is to
be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1997,
at which time its charter became inoperative and void for
non-payment of taxes and this certificate for renewal and
revival is filed by authority of the duly elected directors of
the corporation in accordance with the laws of the State of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section
312 of the General Corporation Law of the State of Delaware, as amended,
providing for the renewal, extension and restoration of charters, CORSAIRE,
INC., (formerly known as CORSAIRE SNOWBOARD, INC.) the last and acting
authorized officer hereunto set his/her hand to this certificate this 15th day
of July 1997.
BY:/s/ Carmine J. Bua
------------------
CARMINE J. BUA
TITLE OF OFFICER: Assistant Secretary
-------------------
<PAGE> 4
CERTIFICATE OF MERGER
BETWEEN
Corsaire, Inc.
A Delaware Corporation
And
Net Command Tech Inc.
A Delaware Corporation
FIRST: This Certificate of Merger is hereby entered into by Corsaire, Inc., a
corporation organized and existing under the laws of the State of Delaware
and Net Command Tech Inc., a corporation organized and existing under the
laws of the State of Delaware.
SECOND: The name of the surviving corporation shall be Corsaire, Inc.
THIRD: An Agreement of Merger has been approved, adopted, certified, executed
and acknowledged by each of the constituent corporations in accordance with
Section 251 of the General Corporation Law of the State of Delaware.
FOURTH: The Certificate of Incorporation of the Surviving Corporation shall
be amended by changing article thereof numbered "FIRST" so that, as amended
said Article shall be and read as follows:
FIRST: The name of the corporation is NET COMMAND TECH INC.
FIFTH: The executed Agreement of Merger is on file at an office of the
surviving corporation at 62 Indian Trace, Suite 286, Weston, FL 33326.
SIXTH: A copy of the agreement of merger will be provided upon request and
without cost.
IN WITNESS WHEREOF, the above named entities have executed this Certificate
of Merger on this 3 day of May, 1999.
/s/ William R. Dunavant
--------------------------------
BY: William R. Dunavant
President, Corsaire, Inc.
/s/ William R. Dunavant
--------------------------------
BY: William R. Dunavant
President, Net Command Tech Inc.
<PAGE> 5
ARTICLES OF MERGER
Pursuant to the provisions of Section 252 of the Delaware Corporations Act, the
undersigned corporations adopt the following Articles of Merger for the purpose
of effecting a merger.
1. The name and state of incorporation of each of the consultant
corporations participating in this merger are as follows:
Corporation State of Incorporation
CORSAIRE, INC. Delaware
NET COMMAND TECH, INC. Delaware
2. The Agreement and Plan of Merger for merging Net Command Tech,
Inc. with and into Corsaire is annexed hereto as Exhibit "A," and made a part
of, these Articles of Merger. The Articles of Amendments changing the name of
Corsaire, Inc. to NET COMMAND TECH, INC. are attached as Exhibit "B."
3. The merger of Net Command Tech, Inc. with and into Corsaire is
permitted by the laws of Delaware, the state of incorporation and organization
of Net Command Tech, Inc. and Corsaire, Inc.
4. The majority of shareholders of Net Command Tech, Inc. entitled to
vote on the merger approved and adopted the attached Plan and Agreement of
Merger by written consent on May 3, 1999.
5. The Board of Directors of Corsaire approved and adopted the
attached Agreement and Plan of Merger on May 3, 1999. Approval by the
shareholders of Corsaire was not required for the merger.
6. The effective time and date of the merger shall be upon the filing
of the Certificate of Merger these Articles of Merger in Delaware.
Executed on May 3, 1999.
Corsaire, Inc. Net Command Tech, Inc.
a Florida Corporation a Delaware Corporation
By: /s/ William R. Dunavant By: /s/ William R. Dunavant
--------------------------------- --------------------------------
William R. Dunavant, William R. Dunavant,
President President and Chairman
<PAGE> 6
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
NET COMMAND TECH INC.
Net Command Tech Inc. ("Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting by the Board of Directors of the Corporation
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable. The resolution setting forth the proposed amendment is as follows:
RESOLVED, the certificate of Incorporation of this corporation be
amended by changing Article Four(th) thereof so that as amended said Article
shall be and read as follows:
The total number of shares of stock which the corporation is
authorized to issue is 100,000,000 shares having a par value of
$0.001 per share.
SECOND: That thereafter, a written consent of a majority of the
stockholders of said corporation in accordance with Section 228 of the General
Corporation Law of the State of Delaware voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
Net Command Tech Inc.
By: /s/ Frank Musolino
---------------------------------------------------
Frank Musolino, President & Chief Executive Officer
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF DOMESTICATION
The undersigned, Frank Musolino, President,
------------------------------ -------------------------
(Name) (Title)
of Net Command Tech, Inc. , a foreign Corporation,
------------------------------------------------
(Corporation Name)
in accordance with Florida Statutes, section 607.1801 does hereby certify:
1. The date on which corporation was first formed was January 25, 1994.
2. The jurisdiction where the above named corporations was first formed,
incorporated, or otherwise came into being was Delaware.
3. The name of the corporation immediately prior to the filing of this
Certificate of Domestication was Net Command Tech, Inc. (formerly
Corsaire, Inc.)
4. The name of the corporation, as set forth in its articles of incorporation,
to be filed pursuant to ss. 607.0202 and 607.0401 with this certificate is
Net Command Tech, Inc.
5. The jurisdiction that constituted the seat, siege, social principal place
of business or central administration of the corporation, or any other
equivalent thereto under applicable law immediately prior to the filing of
the Certificate of Domestication was Delaware.
I am President, of Net Command Tech, Inc.
and am authorized to sign this certificate of Domestication on behalf of the
corporation and have done so this 14th day of January, 2000.
/s/ Frank Musolino
-------------------------------------
(Authorized Signature)
Filing Fee:
Certificate of Domestication $ 50.00
Articles of Incorporation and Certified Copy $ 78.75
-------
Total to domesticate and file $128.75
<PAGE> 2
ARTICLES OF INCORPORATION
OF
NET COMMAND TECH, INC.
The undersigned incorporator, for the purpose of forming a corporation for
profit under the Florida Business Corporation Act, hereby adopts the following
Articles of Incorporation:
ARTICLE I
The name of the corporation is NET COMMAND TECH, INC. (the "Corporation").
ARTICLE II
The Corporation is organized for the purpose of transacting any and all
lawful business for which corporations may be formed under the Florida Business
Corporation Act, and all amendments and supplements thereto, or any law enacted
to take the place thereof (collectively, the "Act").
ARTICLE III
The Corporation is authorized to issue 100,000,000 shares of common stock,
with a par value of $.001 per share.
ARTICLE IV
The address of the principal office of the Corporation, and its mailing
address, is 111 2nd Avenue NE, Suite 1600, St. Petersburg, Florida 33701.
ARTICLE V
The street address of the Corporation's initial registered office is
Thomas J. Hess, Esq., Vazquez & Hess, LLP 601 Brickell Key Drive, Suite 802,
Miami, FL 33143.
ARTICLE VI
The Corporation shall indemnify, and advance expenses to, to the fullest
extent authorized or permitted by the Act, any person made, or threatened to be
made, a party to any action, suit or proceeding by reason of the fact that he
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another corporation.
<PAGE> 3
Unless otherwise expressly prohibited by the Act, and except as otherwise
provided in the foregoing sentence, the Board of Directors of the Corporation
shall have the sole and exclusive discretion, on such terms and conditions as
it shall determine, to indemnify, or advance expenses to, any person made, or
threatened to be made, a party to any action, suit, or proceeding by reason of
the fact that he is or was an employee or agent of the Corporation, or is or
was serving at the request of the Corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
Except for any person who is or was a director or officer of the Corporation,
or any person who is or was serving at the request of the Corporation as a
director or officer of another corporation, no employee or agent of the
Corporation may apply for indemnification or advancement of expenses to any
court of competent jurisdiction.
ARTICLE VII
The name and address of the incorporator of the Corporation in Florida is
Thomas J. Hess, Esq., 601 Brickell Key Drive, Suite 802, Miami, Florida 33131.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation as of the 31st day of January, 2000.
/s/ Thomas J. Hess
--------------------------------
Thomas J. Hess
Incorporator (Florida)
<PAGE> 4
ACCEPTANCE BY REGISTERED AGENT
Having been named to accept service of process for NET COMMAND TECH, INC.
at the place designated in the articles of incorporation: (i) I agree to act in
this capacity; (ii) I agree to comply with the provisions of all statutes
relative to the proper and complete performance of my duties; and (iii) I
accept the duties and obligations of acting as registered agent pursuant to
Section 607.0505 of the Florida Business Corporation Act.
Dated as of the 31st day of January, 2000
/s/ Thomas J. Hess
------------------------------------
Thomas J. Hess, Esq.
The foregoing instrument was acknowledged before me on this 31st day of
January 2000 by Thomas J. Hess, Esq., who is personally known to me and who has
(has not) taken an oath.
/s/ Paula Febres
-------------------------------------
Notary Public, State of Florida
[SEAL] Paula Febres
-------------------------------------
(Print Name)
My Commission Expires July 1, 2003.
Dated as of the 31st day of January, 2000.
<PAGE> 1
EXHIBIT 3.3
BY-LAWS
OF
ACUNET CORPORATION
ARTICLE I
OFFICES
The principal office of the corporation in the State of Ohio shall be located
in the City of Columbus in the County of Franklin. The corporation may relocate
its principal office, or have such other offices, within the United States of
America as the Board of Directors may designate or as the business of the
corporation may require from time to time.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders shall be held
on the Third Friday of March in each year beginning with the next year, for the
purpose of electing Directors and for the transactions of such other business
as may come before the meeting. If the election of Directors shall not be held
on the day designated herein for any annual meeting of the shareholders, or at
any adjournment thereof, the Board of Directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter as
conveniently may be.
SECTION 2. SPECIAL MEETINGS. Special Meetings of the shareholders, for any
purpose, unless otherwise prescribed by statute, may be called by the President
or by the directors, or by holders of not less than Ten Percent (10%) of all
the outstanding shares of the corporation entitled to vote at such meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any place,
within or without the State, unless otherwise prescribed by statute, as the
place of meeting of any annual or special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the corporation.
SECTION 4. NOTICE OF MEETING. Written notice stating the place, day and hour of
the meeting, and for special meetings, the purpose for which the meeting is
called, shall unless otherwise prescribed by statute, be delivered not less than
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by direction of the Chairman, or the Secretary, or the
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting. If mailed, such notices shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder at his or her
address as it appears on the stock transfer books of the corporation.
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other purpose, the Board of Directors of the corporation may provide
that the stock transfer books shall be closed for purpose of determining
shareholders entitled to notice of or to vote at a meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend,
as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
SECTION 6. VOTING LISTS. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make available a complete
list of the shareholders entitled to vote at any meeting of shareholders or any
adjournment thereof, with the address of and the number of shares held by
each, at least (10) days before such meeting or adjournment thereof. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the meeting.
SECTION 7. QUORUM. The majority of the outstanding shares voting of the
corporation that are entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. At such meeting at which a
quorum shall be present or represented, any business may be transacted at the
meeting as originally noticed. The majority of shareholders present at the
meeting may continue to transact business until adjournment.
SECTION 8. PROXIES. At all meetings of shareholders, a shareholder may vote in
person or by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting.
SECTION 9. VOTING OF SHARES. Subject to the provisions, each outstanding share
eligible to vote shall be entitled to one vote upon each matter submitted to a
vote at a meeting of the shareholders. Upon denial of any stockholder, the vote
for directors and upon any question before them shall be by ballot. All
elections for directors shall be decided by expressed will of the quorum,
except where a quorum is not obtained, in which case the will of the plurality
shall carry. All other questions shall be decided by quorum vote except as
otherwise provided by the Certificate of Incorporation of the Laws of the State
of Incorporation.
<PAGE> 2
SECTION 10. VOTING OF SHARES BY CERTAIN SHAREHOLDERS. Shares outstanding in the
name of another corporation may be voted by such officer, agent, or proxy as
the by-laws of such corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such corporation shall determine.
Shares held by an administrator, executor, guardian, or conserver may be voted
by him or her, either in person or by proxy, without transfer of shares into
his or her name. Shares outstanding in the name of a trustee may be voted by
him or by her, either in person or by proxy, but no trustee shall be entitled
to vote shares held by him or her without a transfer of such shares into the
name of the trustee.
Shares outstanding in the name of the receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his or her name if authority to do
so is contained in an appropriate order of the court by which such receiver was
appointed; such court order shall be presented to the Secretary of the
Corporation before the shares are voted.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred from the name of the shareholder to
another.
Shares of its own stock belonging to the Corporation shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time.
SECTION 11. INFORMAL ACTION BY SHAREHOLDER. Unless otherwise provided by law,
any action required to be taken at a meeting of the shareholders, or any other
action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
SECTION 12. CUMULATIVE VOTING. Unless otherwise provided by law, at each
election of Directors, every shareholder entitled to vote in such election
shall have the right to vote, in person or by proxy, the number of shares owned
by him or her for as many persons as there are Directors to be elected and for
whose election he or she has a right to vote, or to cumulate his or her votes
by giving one candidate as many votes as the number of such Directors
multiplied by the number of his or her shares shall equal, or by distributing
such votes on the same principle among any number of candidates.
SECTION 13. ORDER OF BUSINESS. The order of business at all meetings of
stockholders shall be as follows:
1) Roll Call;
2) Proof of notice of meeting or waiver of notice;
3) Reading of minutes of previous meeting;
4) Reports of Officers;
5) Reports of Committee;
6) Election of Directors;
7) Unfinished Business;
8) New Business.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation shall be
managed by its Board of Directors.
SECTION 2. NUMBER, TENURE, AND QUALIFICATIONS. The number of Directors shall
be not less than one nor more than nine as directed by the Board of Directors.
The initial Board may be one director. Each Director shall hold office until the
next annual meeting of the shareholders and until successor has been elected
and qualified. Additional directors may be added by majority vote of the
then-existing board.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held, without other notice than this by-law, immediately after, and at the
same place as, each annual meeting of the shareholders. The Board of Directors
shall hold a regular meeting on First day of each month, without notice of
meeting other than this Article and Section of these By-laws.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the President or any Director. The person or
persons authorized to call such a special meeting of the Board of Directors may
fix the place for holding such meeting.
SECTION 5. NOTICE. Notice of any special meeting of the Board of Directors
shall be given at least five days previous thereto by written notice delivered
personally or by certified mail, return receipt requested, which notice shall
be deemed to be delivered when deposited in the United States mail. Any
Director may waive notice of any meeting. The attendance of Director at a
meeting shall constitute a waiver of notice for such meeting, except where a
Director attends a meeting for the express purpose of objecting to the
transaction of business because the meeting was not lawfully called or convened.
SECTION 6. QUORUM. A majority of the number of Directors fixed by these By-laws
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than a majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
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SECTION 8. ACTION WITHOUT A MEETING. Any action that might be taken by the
Board of Directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed before such
action by a majority of the Directors.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of the majority of the remaining Directors
through less than a quorum of the Board of Directors, unless otherwise provided
by law. A Director elected to fill a vacancy shall be elected for the unexpired
term of his or her predecessor in office. Any directorship to be filled by
reason of an increase in the number of Directors may be filled by the Board of
Directors for a term of office continuing only until the next election of
Directors by the shareholders.
SECTION 10. COMPENSATION. By resolution of the Board of Directors, each
Director may be reimbursed for expenses of attending any meeting and may be
paid stated salary as a Director, or a fixed sum for attendance at each meeting
of the Board of Directors, or both. No such payment shall preclude any Director
from serving the corporation in any other capacity and receiving compensation
thereof.
SECTION 11. PRESUMPTION OF ASSENT. A Director who is present at a meeting of
the Board of Directors at which any action or corporate matter is taken shall
be presumed to have assented to the action taken unless his or her dissent
shall be entered into the minutes of the meeting or unless he or she file his
or her dissent with the person acting as the secretary of the meeting before
the adjournment of the meeting or within three days thereafter. Such right of
dissent shall not apply to any Director who voted in favor of such action.
SECTION 12. SPECIAL POWERS. The Board of Directors shall have the right to
re-incorporate the Company, to declare splits or reverse splits of the stock
of the Company, or otherwise act on matters concerning the corporate status and
capital structure of the Company.
ARTICLE IV
STRUCTURE OF THE BOARD OF DIRECTORS
SECTION 1. NOMINATIVE OFFICES. The named offices by the Board of Directors
shall be that of a President, a Vice President, a Treasurer, and a Secretary. A
single Director may hold more than one named office, but not more than two.
Such Directors who do not hold a named office shall be called and considered
Members-at-Large of the Board of Directors.
SECTION 2. ELECTION AND TERM OF OFFICE. The named offices of the Board of
Directors shall be filled by election of the Board of Directors at the annual
meeting of the shareholders. The term of office shall coincide with the term of
directorship, or, by appointment by the Board of Directors to fill a vacancy
caused by the resignation, death, or removal from office of a Director who
holds a named office, only for the unexpired term of that director, until the
next election of Directors by the shareholders. A candidate for election to
the Board of Directors shall be presented with the named office, if any, to the
shareholders for their votes.
SECTION 3. PRESIDENT. The President shall be the chief executive officer of the
corporation and, subject to the control of the Board of Directors, shall
control all business affairs of the corporation including, but not restricted
to, routine purchasing of inventory, sales and marketing strategies pursued,
hiring and firing of employees of the corporation, determination of salaries of
employees, risk management, etc. and the devolution of any of these duties to
subordinates as he or she deems necessary and appropriate. He or she shall
execute the decisions of the Board of Directors in a timely manner, and shall
advise and report directly to the Board of Directors on the condition of the
corporation, or on any other relevant corporate matter, as requested by any
Director.
SECTION 4. VICE PRESIDENT. A Vice President of the corporation shall carry out
such duties as prescribed by the Board of Directors in the appointment of him
or her to that position. A Vice President may, at the discretion of the Board
of Directors upon his or her appointment, be designated with a prefix title
(e.g. "Senior"), and may be assigned a suffix descriptor of his or her general
or specific area of activity or activities (e.g. "Marketing"). In general a
Vice President shall report directly to the President, but may from time to
time report directly to the Board of Directors if expressly requested to do so
by the Board of Directors or any Director.
SECTION 5. SECRETARY. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and the Board of Directors; (b) see that all
notices are duly given in accordance with the provisions of these By-laws or as
required by law; (c) be custodian of the corporate records and of the seal of
the corporation; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, certificates for shares of the corporation which have
been authorized by the Board of Directors or the shareholders; (f) have general
charge of the stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Chairman or the Board of
Directors.
SECTION 6. TREASURER. The Treasurer shall: (a) have custody of and be
responsible for all funds and securities of the corporation; (b) receive and
give receipts for all money due and payable to the corporation, and deposit
all such moneys in the name of the corporation in such banks or other
depositories as shall be designated by the Board of Directors; and (c) in
general perform all of the duties incident to the office of the Treasurer and
which may be assigned to him from time to time by the Chairman of the Board of
Directors.
SECTION 7. SALARIES. The salaries of the named Directors shall be raised from
time to time by the Board of Directors, and no such Director shall be prevented
from receiving such salary because he is a Director or otherwise an Officer as
described in Article V or employed in some other capacity by the corporation.
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ARTICLE V
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or limited to specific events.
SECTION 2. LOANS. No loans shall be contracted on behalf of the corporation and
no evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or limited
to specific areas or events.
SECTION 3. CHECKS, DRAFTS, ET CETERA. All checks, drafts, or other orders for
payment of money, notes or other evidence of indebtedness issued in the name of
the corporation shall be signed by the President and Treasurer, or such officer
or officers or agent or agents of the corporation and in such manner as from
time to time shall be determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in such bank or
other depositories as the Board of Directors shall designate.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the
corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and the Secretary
or by such other officer or officers as shall be authorized by the Directors in
conformity with applicable law, and sealed with the corporate seal. All
certificates for shares are issued, with the number of shares and the date of
issue, shall be entered on the transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be canceled,
except that in the case of a lost, destroyed, or mutilated certificate a new
one may be issued therefore upon such terms and indemnity to the corporation
as the Board of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the corporation shall be
made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative(s), who shall furnish
proper evidence of the authority to transfer, or by his or her duly authorized
attorney, and on surrender for cancelation of the certificates of such shares.
The person or other entity in whose name the shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for all
purposes.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall end on the last day of December of
each year.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law and its articles of incorporation, except that no
such dividend shall be paid except from accrued profits.
ARTICLE IX
CORPORATE SEAL
The Directors, at their discretion, may provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation,
the state of incorporation, year of incorporation, and the words "Corporate
Seal."
ARTICLE X
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be given
to any shareholder or Director of the corporation, a waiver thereof in writing,
signed by the person entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XI
AMENDMENTS
These By-laws may be altered or amended or replaced by the Board of Directors
at any meeting thereof.
I, Paul Parshall, President of Board of Directors of the Company certify the
foregoing By-laws of the Corporation were duly adopted by the shareholders on
January 25, 1994.
/s/ Paul L. Parshall
--------------------------------------------
Paul L. Parshall, President & Director
4
<PAGE> 1
EXHIBIT 3.4
ARTICLES OF INCORPORATION
OF
SATELLITE ACCESS SYSTEMS, INC.
The undersigned proposes to form a corporation under the laws of the State of
Nevada, relating to private corporations, and to that end hereby adopts
articles of incorporation as follows:
ARTICLE ONE
NAME
The name of the corporation is SATELLITE ACCESS SYSTEMS, INC.
ARTICLE TWO
LOCATION
The registered office of this corporation is at 318 North Carson Street, Suite
214, City of Carson City, State of Nevada, 89701. The resident agent is State
Agent and Transfer Syndicate, Inc.
ARTICLE THREE
PURPOSES
This corporation is authorized to carry on any lawful business or enterprise.
ARTICLE FOUR
CAPITAL STOCK
The amount of the total authorized capital stock of this corporation is $25,000
as 25,000,000 shares each with a par value of one mill ($.001). Such shares are
non-assessable.
ARTICLE FIVE
DIRECTORS
The initial governing board of this corporation shall styled directors and
shall have two members. The names and addresses of the members of the first
board of directors are:
Glenn A. Kovar Brent C. Kovar
11810 Oak Ridge Dr. 4850 Osprey Dr., South, Bldg. G-204
Parrish FL 34219 St. Petersburg FL 33711
<PAGE> 2
ARTICLE SIX
ELIMINATING PERSONAL LIABILITY
Officers and directors shall have no personal liability to the corporation or
its stockholders for damages for breach of fiduciary duty as an officer or
director. This provision does not eliminate or limit the liability of an
officer or director for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law or the payment of dividends and/or
distributions in violation of NRS 78.300.
ARTICLE SEVEN
INCORPORATORS
The name and address of the incorporator is: Elizabeth R. Brogan, 318 North
Carson Street, Suite 214, Carson City, Nevada 89701.
ARTICLE EIGHT
PERIOD OF EXISTENCE
The period of existence of this corporation shall be perpetual.
ARTICLE NINE
AMENDMENT OF ARTICLES OF INCORPORATION
The articles of incorporation of the corporation may be amended from time to
time by a majority vote of all shareholders voting by written ballot in person
or by proxy held at any general or special meeting of shareholders upon lawful
notice.
ARTICLE TEN
VOTING OF SHARES
In any election participated in by the shareholders, each shareholder shall
have one vote for each share of stock he owns, either in person or by proxy as
provided by law. Cumulative voting shall not prevail in any election by the
shareholders of this corporation.
IN WITNESS WHEREOF the undesigned, ELIZABETH R. BROGAN, for the purpose of
forming a corporation under the laws of the State of Nevada, does make, file
and record these articles, and
<PAGE> 3
certifies that the facts herein stated are true; and I have accordingly hereunto
set my hand this day, April 26, 1996.
INCORPORATOR:
/s/ Elizabeth R. Brogan
-----------------------------------------------
Elizabeth R. Brogan
STATE OF NEVADA
COUNTY OF CARSON CITY
On April 26, 1996, Elizabeth R. Brogan personally appeared before me, a notary
public, and executed the above instrument.
/s/ John A McQuirk
-----------------------------------------------
SIGNATURE OF NOTARY
[SEAL] John A McQuirk
Notary Public Nevada
Appt. Recorded in Carson City
My Appt. Exp. March 10, 1998
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
State Agent and Transfer Syndicate, Incorporated hereby certifies that on April
26, 1996, we accepted appointment as Resident Agent for the above named
corporation in accordance with Sec. 78.090, NRS 1957.
IN WITNESS WHEREOF, I have hereunto set my hand this April 26, 1996.
/s/ Elizabeth R. Brogan
-----------------------------------------------
Elizabeth R. Brogan for
State Agent and Transfer Syndicate, Incorporated
<PAGE> 1
EXHIBIT 3.5
BYLAWS
SAS
SATELLITE ACCESS SYSTEMS, INC.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Florida shall
be located in the Plaza Towers building, 16th floor, 111 Second Ave. N.E. St.
Petersburg, FL 33701. The corporation may have such other offices, either
within or without the State of Florida as the Board of Directors may designate
or as the business of the corporation may require from time to time.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting.
The annual meeting of the shareholders shall be held on the 14th day in
the month of November in each year, beginning with the year 1996, at the hour
of 2:00 o'clock p.m., for the purpose of electing Directors and for the
transaction of such other business as may come before the meeting if the day
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fixed for the annual meeting shall be a legal holiday in the State of Nevada,
such meeting shall not be held on the day designated herein for any annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as conveniently may be.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the President or by the Board of Directors, and shall be called by
the President at the request of the holders of not less than 50 percent (50%)
of all the outstanding shares of the Corporation entitled to vote at the
meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Nevada, unless otherwise
prescribed by statute, as the place of meeting for any annual meeting or for any
special meeting. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or without the State of
Nevada, unless otherwise prescribed by statute, as the place for the holding of
such meeting. If no designation is made the place of meeting shall be the
principal office of the Corporation.
SECTION 4. NOTICE OF MEETING. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall unless otherwise prescribed by
statute, be delivered not less than (10) days not more than (60) days before
the date of the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States Mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, with postage thereon
prepaid.
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SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD. for the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period, but not exceed in any case fifty (50) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books
shall be closed for at least (30) thirty days immediately preceding such
meeting. In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than (50) fifty days and, in
case of a meeting of shareholders, not less than (15) fifteen days, prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice
of or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make a complete list
of the shareholders entitled to vote at each meeting of shareholders or any
adjournment thereof, arranged in alphabetical order, with the address of and
the number of shares held by each. Such list shall be produced and kept open at
the time and place of
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the meeting and shall be subject to the inspection of any shareholder during
the whole time of the meeting for the purposes thereof.
SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
SECTION 8. PROXIES. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. A meeting of the Board of
Directors may be had by means of a telephone conference or similar
communications equipment by which all persons participating in the meeting can
hear each other, and participation in the meeting under such circumstances shall
constitute presence at the meeting.
SECTION 9. VOTING OF SHARES. Each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation may be voted by such officer, agent or proxy as
the Bylaws of such corporation may prescribe or, in the absence of such
provision, as the Board of Directors of such corporation may determine.
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Shares held by an administrator, executor, guardian or conservator
may be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name, if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation shall not be
voted directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares at any given time.
SECTION 11. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise provided
by law, any action required to be taken at a meeting of the shareholders, or
any other action which may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to vote with respect
to the subject matter thereof.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the Corporation shall be fixed by the Board of Directors, but in no event
shall be less than (2) two. Each director shall hold office until the next
annual meeting of shareholders and until his successor shall have been elected
and qualified.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of shareholders. The Board
of Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without notice other than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the President or any two directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix the place for holding any special meetings of the Board of Directors
called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at
least one (1) day previous thereto by written notice delivered personally or
mailed to each director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited to the United States Mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting.
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The attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 6. QUORUM. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which quorum is present shall be the act of the Board
of Directors.
SECTION 8. ACTION WITHOUT A MEETING. Any action that may be taken by
the Board of Directors at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so to be taken, shall be signed before
such action by all of the directors.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of
an increase in the number of directors may be filled by election by the Board
of Directors for a term of office continuing only until the next election of
directors by the shareholders.
SECTION 10. COMPENSATION. By resolution of the Board of Directors,
each director may be paid his expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as director or a
fixed sum for attendance at each
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meeting of the Board of Directors or both. No such payment shall preclude any
director from servicing the Corporation in any other capacity and receiving
compensation therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors at which action or any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof, or shall
forward such dissent by registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the Corporation shall be a
President, Associate President, one or more Vice Presidents, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors, including a Chairman of the Board. In its
discretion, the Board of Directors may leave unfilled for any such period as it
may determine any office except those of President and Secretary. Any two or
more offices may be held by the same person, except for the offices of
President and Secretary which may not be held by the same person. Officers may
be directors or shareholders of the Corporation.
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SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have qualified, or until his death, or until he
shall resign or shall have been removed in the manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights, and such appointment shall
be terminable at will.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. PRESIDENT. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors, unless there is a Chairman of
the Board, in which case the Chairman shall preside. He may sign, with the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, contracts, or other instrument which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the
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office of President and such other duties as may be prescribed by the Board of
Directors from time to time.
SECTION 6. ASSOCIATE PRESIDENT. In the absence of the President or in
event of his death, inability or refusal to act, the Associate President shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The
Associate President shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors. If there is more
than one Vice President, each Vice President shall succeed to the duties of the
President in order of rank as determined by the Board of Directors. If no such
rank has been determined, then each Vice President shall succeed to the duties
of the President in order of date of election, the earliest date having the
first rank.
SECTION 7. SECRETARY. The Secretary shall: (a) keep the minutes of
the proceedings of the shareholders and of the Board of Directors in one or
more minute books provided for the purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the Corporation
and see that the seal of the Corporation is affixed to all documents, the
execution of which on behalf of the Corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) sign with
the President certificates for shares of the Corporation, the issuance of which
shall have been authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the Corporation; and (g) in
general perform all duties incident to the office of the Secretary and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
SECTION 8. TREASURER. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the
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<PAGE> 11
Corporation; (b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of Article VI of these Bylaws; and
(c) in general perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the President
or by the Board of Directors. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such sureties as the Board of Directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE V
INDEMNITY
The Corporation shall indemnify its directors, officers and employees
as follows:
(a) Every director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities,
including counsel fees, reasonably incurred by or imposed upon him in
connection with any proceeding to which he may be made a party, or in
which he may become involved, by reason of his being or having been a
director, officer, employee or agent of the Corporation or is or was
serving at the
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<PAGE> 12
request of the Corporation as a director, officer, employee or agent
of the Corporation, partnership, joint venture, trust or enterprise,
or any settlement thereof, whether or not he is a director, officer,
employee or agent at the time such expenses are incurred, except in
such cases wherein the director, officer, or employee is adjudged
guilty of willful misfeasance or malfeasance in the performance of his
duties; provided that in the event of a settlement the indemnification
herein shall apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of the
Corporation.
(b) The Corporation shall provide to any person who is or was a
director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of the corporation, partnership, joint venture, trust
or enterprise, the indemnity against expenses of suit, litigation or
other proceedings which is specifically permissible under applicable
law.
(c) The Board of Directors may, in its discretion, direct the
purchase of liability insurance by way of implementing the provisions
of this Article V.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
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<PAGE> 13
execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR
TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the Board of
Directors so to do, and sealed with the corporate seal. All certificates for
shares shall be
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<PAGE> 14
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed or mutilated certificate, a new one may be
issued therefor upon such terms and indemnity to the Corporation as the Board
of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be owner thereof for all purposes.
Provided, however, that upon any action undertaken by the shareholders to
elect S Corporation status pursuant to Section 1362 of the Internal Revenue
Code and upon any shareholders agreement thereto restricting the transfer of
said shares so as to disqualify said S Corporation status, said restriction on
transfer shall be made a part of the bylaws so long as said agreement is in
force and effect.
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<PAGE> 15
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the (1) first day of
January and end on the (31) thirty first day of December of each year.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and state of Incorporation and the word, "Corporate Seal".
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<PAGE> 16
ARTICLE XI
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to
be given to any shareholder or director of the Corporation under the provisions
of these Bylaws or under the provisions of the Articles of Incorporation or
under the provision of the applicable Business Corporation Act, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
The above Bylaws are certified to have been adopted by the Board of
Directors of the Corporation on the 29th day of April 1996.
/s/ Joy C. Kovar
--------------------------------
Secretary
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<PAGE> 1
EXHIBIT 10.1
CONTRACT FOR SALE AND PURCHASE OF INTERNET TECHNOLOGY DIVISION
This contract for sale and purchase, hereinafter referred to as
"Contract" or "Agreement", is executed effective the 1st day of February, 1999,
by and between BARAKA INTRACOM, INC., hereinafter referred to as "Seller", and
NET COMMAND TECH, INC., hereinafter referred to as "Buyer".
WITNESSETH:
WHEREAS, Seller is engaged in the business of developing intellectual
property and producing computer and internet applications, including software,
hardware and other products, using such intellectual property, by and through
its "Internet Technology Division", and is the owner of Seller's Assets, more
particularly described in Exhibit "A" attached hereto and made a part hereof,
hereinafter referred to as the "Assets"; and
WHEREAS, Net Command Tech, Inc., is a wholly owned subsidiary of
Corsaire, Inc., which desires to purchase certain Assets from Seller; and,
WHEREAS, Buyer desires to purchase Seller's "Internet Technology
Division" and all Assets used in or related to such Division, and Seller
desires to sell said Division and such Assets to Buyer; and,
WHEREAS, Buyer and Seller have considered that the Internet Technology
Division of Seller has only recently been able to produce and offer for sale
products and intellectual property which are presently unproven to be
commercially viable, and that the value of such Internet Technology Division
depends on the future efforts to perfect, modify, enhance, improve and market
such unproven products and intellectual properties; and,
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises hereinafter contained, the Seller agrees to sell and the Buyer agrees
to buy the "Assets" upon the following terms and conditions.
1. PURCHASE PRICE AND METHOD OF PAYMENT. Buyer shall pay and Seller
shall accept as full consideration and as the purchase price for the Assets in
the manner of payment therefor set forth in Exhibit "B" attached hereto and
made a part hereof, and the Buyer and Seller hereby agree to all provisions of
Exhibit "B", particularly those regarding the Escrow of such purchase price.
_______________________________________________________________________________
Contract For Internet Technology Division Page 1 of 20
<PAGE> 2
2. CLOSING. The closing of the transactions contemplated by this agreement,
hereinafter referred to as "The Closing", shall be held at 400 Crenshaw Blvd.,
Suite 200, Torrance, California 90503 on or before February 18, 1999, at 1:00
p.m. or at such other place, date and time as the Buyer may designate (such
date to be referred to in this agreement as the "Closing Date").
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer the correctness, truthfulness and accuracy of the matters shown on Exhibit
"C" attached hereto, all of which shall survive closing. In addition, Seller
represents and warrants to Buyer that the documents enumerated in Exhibit "D"
attached hereto and made a part hereof, are true, authentic and correct copies
of the original, or, if appropriate, the originals themselves, and no
alterations or modifications thereof have been made. Any other purported
representations or warranties in the text of this Agreement (if any there be)
shall be deemed to be opinions only based on the best information available at
Closing, Exhibits "C" and "D" being the only representations and warranties
given herein by Seller.
4. COVENANT NOT TO COMPETE. From the Closing Date, Seller, will not, directly
or indirectly, conduct any business or develop any intellectual property
relating to the "Internet Technology Division" or any of the Assets sold
hereunder, or employ any person or render services to, any other person,
partnership, association, or corporation engaged in the same or substantially
similar business covered by this Agreement in any area which can be reasonably
termed competitive to the Buyer; and during such term of five (5) years, the
Seller will not engage in such competitive business for its own account, or
become interested therein, directly or indirectly, as an individual, partner,
shareholder, director, consultant, independent contractor, officer, clerk,
principal, agent, employee, trustee, or in any relation or capacity whatsoever.
The Seller acknowledges that the territory shall be the World, and shall include
particularly the United States, the European, African and Asian continents,
because the nature of the intellectual property is that it can be used
world-wide.
5. TRANSACTIONS PRIOR TO CLOSING OR AT CLOSING. Seller hereby covenants the
following:
a. CONDUCT OF SELLER'S BUSINESS UNTIL CLOSING. Except as Buyer may
otherwise consent in writing prior to the Closing Date, Seller will not enter
into any transaction, take any action or fail to take any action which would
result in, or could reasonably be expected to result in or cause any of the
representations and warranties of Seller contained in this Agreement to be void,
invalid or false on the Closing Date.
b. EMPLOYEES. At Closing Buyer shall have the right to
_______________________________________________________________________________
Contract For Internet Technology Division Page 2 of 20
<PAGE> 3
employ such employees of Seller as it may designate, on such terms and
conditions as they agree, and Seller covenants that it shall not reemploy or
hire or engage as consultants such designated employees for a period of at
least Five (5) years from the Closing Date, without the prior written consent
of Buyer.
c. SATISFACTIONS. Seller shall deliver to Buyer on the Closing Date a
satisfaction of any Encumbrance or Lien on the Assets as set forth on Exhibit G
attached hereto, satisfactory in form and substance to the Buyer indicating that
the then outstanding unpaid principal balance of such debt, claim, obligation
or promissory note secured thereby has been paid in full prior to or
simultaneously with the Closing.
d. ADVICE OF CHANGES. Between the date hereof and the Closing Date,
Seller will promptly advise Buyer in writing of any change in fact which, if
existing or known at the date hereof, would have been required to be set forth
herein or disclosed pursuant to this Agreement.
e. DOCUMENTS. Seller shall deliver to Buyer at closing such documents
which are, in Buyer's reasonable discretion, necessary to fully satisfy the
objectives of this Agreement in content and form reasonably intended to do so.
6. EXPENSES. Each of the parties hereto shall pay its own expenses in
connection with this Agreement and the transactions contemplated hereby,
including the fees and expenses of its counsel and its certified public
accountants.
7. GENERAL.
a. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between Baraka Intracom, Inc. as Seller and Net Command Tech, Inc., as
Purchaser, relating to the subject matter hereof and all prior agreements
and/or letter(s) of intent (including any by and between Baraka Intracom, Inc.,
as Seller, and Corsaire, Inc., parent of Buyer) relative hereto which are not
contained herein are terminated, cancelled and superseded. THIS WRITTEN
AGREEMENT AND ALL DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR CONTEMPLATED
HEREBY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
b. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the parties to
this Agreement covenants and agrees that their respective representations,
warranties, covenants, statements, and agreements contained in this Agreement
shall survive the Closing Date and terminate on the second anniversary of such
date. Except as set forth in this Agreement, the exhibits hereto or in the
_______________________________________________________________________________
Contract For Internet Technology Division Page 3 of 20
<PAGE> 4
documents and papers delivered by Seller to Buyer in connection herewith, there
are no other agreements, representations, warranties, or covenants by or among
the parties hereto with respect to the subject matter hereof.
c. NOTICES. Any notices, requests, demands and other communications
which are required or may be given under this Agreement shall be sufficient if
in writing and delivered or sent by:
(i) Registered or Certified Mail to the principal office of the other
party, postage prepaid with return receipt requested deposited in a proper
receptacle of the United States Postal Service or its successors. Said notice
shall be addressed to the intended recipient. A written notice sent in
conformity with this provision shall be deemed delivered as of the date shown
"delivered" on the return receipt; or,
(ii) Transmitted by Prepaid Telegram or by Telephone Facsimile
Transmission if receipt is acknowledged by the addressee. Notice so transmitted
by telegram or facsimile transmission shall be effective only if receipt of
transmission is acknowledged by an appropriate machine or written confirmation,
and such notice shall be deemed effective on the next business day after
transmission; or,
(iii) Notice given in any other manner shall be effective only if and
when proven to have been received by the addressee.
For purposes of notice, the address of each party shall be the
following address:
To Seller: Baraka Intracom, Inc.
Attention: Mohammed Dagher, Manager
400 Crenshaw Blvd., Suite 200
Torrance, California 90503
with copy to: None As of Date of Closing
To Buyer: Net Command Tech, Inc.
Attention: William R. Dunavant, President
501 Brickell Key Drive, Suite 407
Miami, FL 33131-2624
with copy to: Martin R. Nathan, Attorney at Law
1980 Post Oak Blvd, Suite 1777
Houston, Texas 77056-3809
Provided, however, that each party shall have the right to change his
respective address for notices hereunder to another location(s) within the
continental United States by giving 30 days'
________________________________________________________________________________
Contract For Internet Technology Division Page 4 of 20
<PAGE> 5
written notice to the other party in the manner set forth hereinabove. The
Notice shall not be effective unless a copy is simultaneously sent to the
designated party.
d. SECTIONS AND OTHER HEADINGS AND CAPTIONS. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretations of this Agreement. The Captions of
this contract are for convenience and reference only and in no way define,
describe, extend, or limit the scope or intent of this contract, or the intent
of any provisions hereof.
e. GOVERNING LAW. This agreement, and all transactions contemplated
hereby, shall be governed by, construed and enforced in accordance with the
substantive laws of the United States and the State of California where not in
conflict.
f. COUNTERPART ORIGINALS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. In addition, this Agreement may contain
more than one counterpart of the Signature Page and this Agreement may be
executed by affixing the signatures of each of the parties to one of such
counterpart Signature Pages; all of such counterpart Signature Pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single Signature Page.
g. TYPEWRITTEN OR HANDWRITTEN PROVISIONS. Hand-written provisions
inserted in this contract and typewritten provisions initialed by both parties
shall control over the typewritten provisions in conflict therewith.
h. TIME OF THE ESSENCE. Time and timely performance are of the
essence of this contract and of the covenants and provisions hereunder.
i. SUCCESSORS AND ASSIGNS. Rights and obligations created by this
contract shall be binding upon and inure to the benefit of the parties hereto,
their successors and assigns. Whenever used, the singular number shall include
the plural, the plural the singular, and the use of any gender shall include
all genders. Except as otherwise expressly provided herein, the execution and
delivery of this Agreement shall not be deemed to confer any rights upon, nor
obligate any of the parties hereto, to any person or entity other than the
parties hereto.
j. ARBITRATION. As concluded by the parties hereto, any controversy
between the parties hereto involving any dispute or claim by, through or
under, or the construction or application of any terms, covenants, or
conditions of, this agreement, or any agreement or undertaking derived by,
through or under this
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Contract For Internet Technology Division Page 5 of 20
<PAGE> 6
Agreement or related Agreement, shall, on the written request of one party
served upon the other, be submitted to arbitration, and such arbitration shall
comply with and be governed by the provisions of the Federal Arbitration Act as
it may be amended; Provided, that Arbitration shall be conducted in Dade County,
Florida and be conducted by the American Arbitration Association ("AAA") with
three (3) non-interested Arbitrators to be designated by the AAA. The parties
hereto agree to arbitrate any dispute, breach, default, claim or liability
between themselves by Arbitration pursuant to the Federal Arbitration Act, with
Arbitrators using the Federal Rules of Evidence in Civil Cases. Any and all
disputes, claims, causes of action or disagreements by or between the parties
hereto shall be brought and heard in Dade County, Florida. The FAA rules shall
apply, and the AAA rules shall apply if not in conflict with the FAA rules. All
evidence shall be subject to the Federal Rules of Civil Evidence and the
substantive laws of the United States and the State of California. In the event
of a dispute or breach or default hereunder, which result in the commencement of
judicial litigation or commercial arbitration, the successful party shall be
entitled to receive from the unsuccessful party, any and all reasonable
attorneys fees, arbitration costs, court costs and expenses incurred in
determination of the dispute or breach or default. The losing party in any
Arbitration shall pay the winning party its reasonable legal fees and any
expenses or costs incurred in resolving the Arbitrated matter in such amount as
shall be determined by the Arbitrators. The Parties may seek any judicial writs
or actions as may be necessary or appropriate to protect or enforce the
jurisdiction and authority of the Arbitrators and to preserve the status quo
pending a final award or decision.
k. EXTRAORDINARY REMEDIES. To the extent cognizable at law, the
parties hereto, in the event of breach and in addition to any all other remedies
available thereto, may obtain injunctive relief, regardless of whether the
injured party can demonstrate that no adequate remedy exists at law.
1. AMENDMENTS OR ADDENDA. All amendments, addenda, changes or
modifications to this contract are shown on Exhibit "F", attached hereto and
made a part hereof.
m. INITIALS AND EXHIBITS. This contract shall not be valid and
enforceable unless it is properly executed by Buyer and Seller and their
initials affixed to each page of the exhibits attached hereto and made a part
hereof. All exhibits, schedules and documents attached hereto, if any, are
hereby incorporated in this Agreement and made a part hereof by reference.
n. SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any
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Contract For Internet Technology Division Page 6 of 20
<PAGE> 7
provision of this Agreement or the application thereof to any person or
circumstances shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to the other persons or circumstances shall not be effected thereby,
but rather shall be enforced to the greatest extent permitted by law.
o. WAIVERS. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein or therein and in any
documents delivered in connection herewith or therewith. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
p. EXECUTION OF ADDITIONAL DOCUMENTS. Each party hereto agrees to
negotiate in good faith and to execute, within ten days after notice, such
other documents, instruments or written evidence of conveyance or assignment as
shall be reasonably required or appropriate to effectuate this Agreement and to
perfect or evidence any conveyance or assignment of any asset or instrument
conveyed or assigned herein.
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto and signed by an officer thereunto duly authorized and attested
under the corporate seal of the Secretary of the Corporate party hereto, if
any, all on the date and year first above written.
Signed, sealed and delivered
in the presence of: SELLER:
(CORPORATE SEAL) BARAKA INTRACOMM, INC.
By: /s/ Mohammed Dagher
------------------------------
Witness Its Vice President
Attest:
-------------------
Its Secretary
Signed, sealed and delivered
in the presence of: BUYER:
(CORPORATE SEAL) NET COMMAND TECH, INC.
By: /s/ William R. Dunavant
------------------------------
Witness Its President
Attest:
-------------------
Its Secretary
________________________________________________________________________________
Contract For Internet Technology Division Page 7 of 20
<PAGE> 1
EXHIBIT 10.2
SATELLITE ACCESS SYSTEMS INC.
Ultra high-speed, global, Private Business Network for voice, video and data.
Dramatically reduces your communication costs.
TAX FREE ACQUISITION AGREEMENT
This Tax Free Acquisition ("Agreement") dated April 21, 1999, is the
executed purchase contract, that is legal and binding between Satellite Access
Systems, Inc., a Nevada corporation ("SAS"), Corsaire, Inc., a Delaware
corporation ("Corsaire") and the SAS shareholders to consummate the
stock-for-stock, tax-free acquisition of SAS by Corsaire for the purpose of
maximizing the profitability of vector-based data compression technology
(non-telephony) ("SAS Technology").
1. GENERAL UNDERSTANDINGS
The following paragraphs reflect the understandings between the parties
as to the basic terms and conditions for the tax-free acquisition of SAS by
Corsaire to be set forth in a definitive agreement ("Definitive Agreement"). The
Definitive Agreements and any ancillary documents must be in form and content
satisfactory to each party and its counsel in their sole discretion.
1. CONSIDERATION In exchange for Corsaire receiving 100% ownership of
SAS, Corsaire will deliver to SAS Thirty Million Dollars ($30,000,000.00) worth
of Corsaire's 144 restricted stock valued at twelve and three-quarters dollars
($12.75) per share.
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<PAGE> 2
Additionally, Corsaire will also assume the existing debts of SAS,
which the parties acknowledge to be approximately Four Million Dollars
($4,000,000.00) ("SAS Debt"). Included in the SAS Debt is back pay owed to
SAS's officers, executives, personnel, employees and contractors (collectively,
"Staff") for the 1998 and 1999 years ("Backpay"). The Staff may elect one of
three options in how they individually receive their respective Backpay. The
options are:
A. The entire amount owed to the individual Staff member in cash; or
B. The entire amount owed to the individual Staff member in Corsaire's
freely negotiable stock valued at twelve and three quarters dollars
($12.75) per share; or
C. A percentage of the amount owed to each Staff member, as determined
by that individual Staff member, in cash, and the corresponding
balance of the amount owed in Corsaire's negotiable stock valued at
fifteen dollars ($15.00) per share.
The parties agree that the negotiable shares of Corsaire stock
contributed as Backpay will be held in one master account by a broker
designated by SAS and that the maximum volume of Backpay shares to be sold
daily from the Master account will be two thousand, five hundred (2,500).
2. STOCK OPTIONS As further consideration, once Ten Million Dollars
($10,000,000.00) in sales of Corsaire's product and/or service has been met,
Corsaire will grant to SAS, effective 12-31-99, an option for Twenty Million
Dollars ($20,000,000.00) worth of Corsaire Stock valued at twelve and three
quarters dollars ($12.75) (the "Option"). Said Option will be valid for three
years.
3. SAS' PAYROLL Commencing as of April 16, 1999, Corsaire will assume
responsibility for the payment of SAS's Staff salary.
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<PAGE> 3
SAS's Staff will receive their first salary payment no later than
May 1, 1999.
4. ESCROW OF SAS TECHNOLOGY The SAS Technology will be held in escrow
by an agent designated by SAS until SAS receives the above described Thirty
Million Dollars ($30,000,000.00) in equitable stock from Corsaire, at which
time the SAS Technology will be released from escrow to Corsaire.
5. PUBLIC ANNOUNCEMENTS The parties agree that any and all public
announcements and/or press releases concerning the SAS Technology must be
pre-approved by SAS, and specifically by SAS's President and CEO, Glenn Kovar.
6. CONFIDENTIALITY The parties agree that except as may be required by
law, neither shall disclose or use, cause its officers, employees, or agents to
disclose or use, any Confidential Information (as defined below) with respect
to this Agreement. For purposes of this Agreement, "Confidential Information"
means any information identified as such in writing by either party, that is
not public record. If the transaction is not consummated, the parties shall
promptly return all documents, contracts, records or other property of the
other, to include all copies, extractions, or reproductions of same. This
paragraph shall survive termination of this Agreement.
The parties have caused this Agreement to be signed and executed by
their authorized representatives on this 21st day of April, 1999.
Corsaire, Inc. Satellite Access Systems, Inc.
By: /s/ William R. Dunavant By: /s/ Glenn A. Kovar
------------------------ -------------------
William R. Dunavant, Glenn A. Kovar,
President President
3
<PAGE> 1
EXHIBIT 10.3
OFFICE LEASE
BUILDING: PLAZA TOWER
LANDLORD: TRANSCONTINENTAL REALTY INVESTORS, INC.
TENANT: AAXICO SALES, INC.
AND SATELLITE ACCESS SYSTEMS, INC.
DBA: SAS
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
TABLE OF CONTENTS........................................... 2
1. CERTAIN LEASE PROVISIONS.................................... 4
2. PREMISES.................................................... 5
2.1 Definition.............................................. 5
2.2 Public Areas............................................ 5
3. TERM........................................................ 5
3.1 Term.................................................... 5
3.2 Delay in Commencement................................... 5
3.3 Early Possession........................................ 5
3.4 Delivery of Possession.................................. 5
3.5 Holding Over............................................ 5
4. RENT........................................................ 6
4.1 Base Rent............................................... 6
4.2 Additional Rent......................................... 6
4.3 Parking and Storage..................................... 6
4.4 Acceptance of Rental Payments........................... 6
5. ESCALATIONS OF RENT......................................... 6
5.1 Determination........................................... 6
5.2 Indexing................................................ 6
6. SHARED EXPENSES............................................. 7
6.1 Determination........................................... 7
6.2 Escalations............................................. 7
6.3 Statements.............................................. 8
7. SECURITY DEPOSIT............................................ 8
8. USE......................................................... 9
8.1 Use..................................................... 9
8.2 Compliance With Law..................................... 9
8.3 Waste and Nuisance...................................... 9
8.4 Conditions of Premises.................................. 9
8.5 Insurance Cancellation.................................. 9
8.6 Landlord's Rules and Regulations........................ 9
9. LANDLORD'S SERVICES......................................... 9
9.1 Basic Services.......................................... 9
9.2 Initial Construction.................................... 10
9.3 Interruption of Service................................. 10
10. MAINTENANCE, REPAIRS AND ALTERATIONS........................ 10
10.1 Landlord's Obligations................................. 10
10.2 Tenant's Obligations................................... 10
10.3 Surrender.............................................. 11
10.4 Alterations and Additions.............................. 11
11. TENANT'S USE OF PUBLIC AREAS................................ 12
12. TAXES AND TELEPHONE......................................... 12
12.1 Personal Property Taxes................................ 12
12.2 Evidence of Payment.................................... 12
12.3 Telephone.............................................. 12
13. INSURANCE AND INDEMNITY..................................... 12
13.1 Liability Insurance.................................... 12
13.2 Property Insurance..................................... 12
13.3 Insurance Policies..................................... 13
13.4 Waiver of Subrogation.................................. 13
13.5 Hold Harmless.......................................... 13
13.6 Exemption of Landlord from Liability................... 13
14. DAMAGE OR DESTRUCTION....................................... 13
14.1 Option to Terminate Lease.............................. 13
14.2 Obligation to Repair or Restore........................ 13
14.3 Fault of Tenant........................................ 14
</TABLE>
2
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TABLE OF CONTENTS (Continued)
<TABLE>
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PAGE
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<S> <C> <C>
14.4 Obligations of Tenant................................. 14
14.5 Termination by Tenant................................. 14
15. CONDEMNATION............................................... 14
16. ASSIGNMENT AND SUBLETTING.................................. 14
16.1 Landlord's Consent Required........................... 14
16.2 No Release of Tenant.................................. 15
16.3 Attorneys Fees and Administrative Fees................ 15
16.4 Right to Collect Rent................................. 15
17. DEFAULTS; REMEDIES......................................... 15
17.1 Defaults.............................................. 15
17.2 Remedies in Default................................... 16
17.3 Default by Landlord................................... 17
17.4 Late Charges.......................................... 17
18. RIGHTS OF MORTGAGEES....................................... 17
18.1 Subordination......................................... 17
18.2 Mortgagee's Consent to Amendments..................... 18
18.3 Mortgagee's Right to Cure............................. 18
19. NOTICES.................................................... 18
20. RELOCATION................................................. 18
21. QUIET POSSESSION........................................... 18
22. OPTIONS.................................................... 18
23. LANDLORD'S LIEN............................................ 18
24. HAZARDOUS MATERIALS........................................ 19
25. GENERAL PROVISIONS......................................... 19
25.1 Estoppel Certificate.................................. 19
25.2 Landlord's Interests.................................. 19
25.3 Severability.......................................... 19
25.4 Interest on Past Due Obligations; Certified Funds..... 20
25.5 Time of the Essence................................... 20
25.6 Captions.............................................. 20
25.7 Entire Agreement...................................... 20
25.8 Waivers............................................... 20
25.9 Recording............................................. 20
25.10 Determinations by Landlord........................... 20
25.11 Cumulative Remedies.................................. 20
25.12 Covenants and Conditions............................. 20
25.13 Binding Effect; Choice of Law........................ 20
25.14 Attorneys Fees....................................... 20
25.15 Landlord's Access.................................... 20
25.16 Auctions............................................. 21
25.17 Merger............................................... 21
25.18 Corporate Authority.................................. 21
25.19 Signs................................................ 21
25.20 Brokers.............................................. 21
25.21 Guarantor............................................ 21
25.22 Governing Law........................................ 21
25.23 Joint and Several Liability.......................... 21
25.24 No Joint Venture..................................... 21
25.25 Americans with Disabilities Act of 1990.............. 21
25.26 Hazardous Waste...................................... 21
</TABLE>
EXHIBITS
Exhibit A -- Legal Description
Exhibit B -- Premises Site Plan
Exhibit C -- Parking Addendum
Exhibit D -- Rules and Regulations
Exhibit E -- Guaranty
Exhibit F -- Work Letter Addendum
3
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OFFICE LEASE
This Lease, dated for reference purposes only July 1, 1996, is made by
and between TRANSCONTINENTAL REALTY INVESTORS, INC. (the "Landlord"), and AAXICO
SALES, INC. AND SATELLITE ACCESS SYSTEMS, INC. (the "Tenant").
1. CERTAIN LEASE PROVISIONS
The description and amounts set forth below are qualified by their
usage elsewhere in this Lease, including those Sections referred to in
parentheses following such descriptions:
<TABLE>
<S> <C>
1.1 Tenant's address and telephone number. (Section 19):
Tenant Name: Aaxico Sales, Inc. And Satellite Access Systems, Inc.
Doing Business As (DBA): SAS
Address: 111 Second Ave. N.E., St. Pete. 33701
Telephone: ( )
1.2 Premises. (Section 2.1):
Building Name: Plaza Tower Courtyard & Shops Suite No.: 1600
Address: 111 Second Ave., N.E., St. Petersburg, FL 33701
1.3 Leased Area. (Section 2.1): 11.146 rentable sq. ft.
1.4 Total Building Area. (Section 2.1): 147,533 rentable sq. ft.
1.5 Tenant's Pro-Rata Share of Building Area. (Section 2.1) 7.55%
1.6 Lease Term. (Section 3.1): four (4) years, no (0) months.
1.7 Commencement Date. (Section 3.1): July 1, 1996.
1.8 Expiration Date. (Section 3.1, 3.2): June 30, 2000.
1.9 Base Rent for Lease Term. (Section 4.1): Total $590,738.00
1.10 Base Rent, Monthly Installments. (Sections 4.1, 5.2): $11,610.42 Yr.1:
$12,074.83 Yr.2: $12,539.25 Yr.3: $13,003.67 Yr.4
1.11 (a) Address of Landlord for rent payments (Sections 4.1, 4.2):
Carmel Management, 111 Second Avenue, N.E., Suite 702
St. Petersburg, FL 33701 Attn: Property Manager
(b) Address of Landlord for notices. (Sections 6.3, 19): Address above
and c/o Basic Capital Management, Inc., 10670 No. Central Expressway,
Suite 300, Dallas, TX 75231
(c) Address of Tenant for notices (Sections 6.3, 19): 111 Second Ave.,
N.E., St. Petersburg, FL 33701
1.12 Geographic Area for CPI Calculation. (Section 5.2): N/A
1.13 Base Month for CPI Calculation. (Section 5.2): N/A
1.14 Landlord's Share of Operating Expenses. (Section 6.2): 1996 Base Year
1.15 Landlord's Share of Real Estate Taxes. (Section 6.2): 1996 Base Year
1.16 Security Deposit. (Section 7): $12,500.00
1.17 Use. (Section 8.1): Professional Office
1.18 Brokers. (Section 25.20): CB Commercial Real Estate Group, Inc. and
TamBay Realty, Inc.
1.19 Addendum(s). (Sections 3.2, 4.3, 9.2, 22): The following addendum(s)
are attached to this Lease: Page 23.
</TABLE>
This Lease consists of 25 articles on 22 pages, plus Exhibits A, B, C,
D, E, F, & G and 1 additional page(s) of Addendum(s).
4
<PAGE> 5
LANDLORD: TRANSCONTINENTAL REALTY TENANT: AAXICO SALES, INC.
INVESTORS, INC.
By: /s/ David W. Starowicz By: Illegible
----------------------------------- ----------------------------------
David W. Starowicz, Vice President TITLE: PRESIDENT
7/8/96 July 2, 1996
- -------------------------------------- -------------------------------------
Date Date
WITNESS: /s/ Michelle C. McDowell WITNESS: /s/ Melanie F. Wood
---------------------------- ----------------------------
WITNESS: /s/ Illegible WITNESS: /s/ Cristina Gonzalez
---------------------------- ----------------------------
TENANT: SATELLITE ACCESS SYSTEMS, INC.
By: /s/ Illegible
---------------------------------
C.E.O.
June 28, 1996
------------------------------------
Date
WITNESS: /s/ Mary Hogan
---------------------------
WITNESS: /s/ Illegible
---------------------------
2. PREMISES.
2.1 Definition. Landlord hereby leases to Tenant and Tenant leases
from Landlord for the term, at the rental, and upon all of the conditions set
forth herein, that certain real property known by suite number and address
specified in Section 1.2 hereof, consisting of the approximate amount of
rentable square feet specified in Section 1.3 hereof, and which is referred to
herein as the Premises. The Premises are located in an office building presently
consisting of the total number of rentable square feet specified in Section 1.4
hereof, which office building, the real property on which it is situated (the
legal description of which is attached hereto as Exhibit A), and any parking
facilities or structures appurtenant thereto are hereinafter collectively
referred to as the "Building". The Premises are depicted in Exhibit B attached
hereto and incorporated herein by this reference, but the depiction of possible
uses, tenants or locations on Exhibit B shall not be construed to be a warranty
or representation by Landlord that any such uses, tenants or locations presently
exist or will continue to exist. Tenant's share of the total amount of square
feet of the Building is equal to the pro-rata share specified in Section 1.5
hereof, and said percentage shall hereinafter be referred to as the Tenant's
"Pro-Rata Share".
2.2 Public Areas. As long as this Lease remains in effect and Tenant
is not in default hereunder, tenant shall have the nonexclusive right, in common
with the Landlord, other tenants, subtenants and invitees, to use the public
areas of the Building which consist of the entrance foyer and lobby of the
Building, the common corridors on the floor of the Building on which the
Premises are situated and other areas appurtenant to or servicing the elevators,
shipping and receiving areas and lavatories in the Building, provided that
Landlord shall have the right at any time and from time to time to exclude
therefrom such areas as Landlord may determine so long as access to the Premises
is not unreasonably denied.
3. TERM.
3.1 Term. The term of this Lease shall be the term specified in
Section 1.6 hereof, commencing on the Commencement Date specified in Section 1.7
hereof and ending on the Expiration Date specified in Section 1.8 hereof unless
sooner terminated pursuant to any provision of this Lease.
3.2 Delay in Commencement. Notwithstanding said Commencement Date,
if for any reason Landlord cannot deliver possession of the Premises to Tenant
on said date, Landlord shall not be subject to any liability therefor, nor shall
such failure affect the validity of this Lease or the obligations of Tenant
hereunder. However, in such case Tenant shall not be obligated to pay rent until
possession of the Premises is tendered to Tenant, which date shall be the new
Commencement Date, and the Expiration Date shall be adjusted to reflect the term
listed in 1.6. Upon Landlord's request, the parties agree to execute in writing
an Addendum to certify the Commencement Date and Expiration Date hereof, but
this Lease shall not be affected in any manner if either party fails or refuses
to execute such Addendum.
3.3 Early Possession. In the event that Landlord shall permit Tenant
to occupy the Premises prior to the Commencement Date, such occupancy shall be
subject to all of the provisions of this Lease and Tenant shall be obligated to
pay rental and all other charges incurred under this Lease. In addition to any
obligations which commence on the Commencement Date. Said early possession shall
not advance the Expiration Date of this Lease.
5
<PAGE> 6
3.4 Delivery of Possession. Tenant shall be deemed to have taken
possession of the Premises when the earliest of any of the following occur: (a)
five business days after Landlord or Landlord's agent, architect or contractor
notifies Tenant that the Premises are ready for occupancy; or (b) Tenant
commences to occupy or otherwise make use of the Premises. If Tenant is notified
pursuant to Section 3.4(a), Tenant agrees to occupy the Premises within twenty
business days thereafter. As used in this Lease, "business days" shall mean
Mondays through Fridays. Tenant agrees that, upon the request of Landlord,
Tenant will execute a document certifying the date on which Tenant took
possession of the premises.
3.5 Holding Over. If Tenant remains in possession of the Premises or
any part thereof after the expiration of the term hereof, such occupancy shall
be a tenancy from month to month at a monthly rental equal to 150% of the Base
Rent and Additional Rent payable hereunder. The foregoing provisions of this
Section 3.5 shall neither be construed to give the Tenant any right to remain in
possession of the Premises or any part thereof after the expiration of the term
hereof nor to waive any of the Landlord's rights under this Lease to collect any
damages to which it may be entitled, whether direct or consequential.
4. RENT.
4.1 Base Rent. The Base Rent for the Premises for the entire term of
this Lease shall be as specified in Section 1.9, subject to adjustment pursuant
to the application of Section 3.2 relative to postponement of the installments
specified in Section 1.10, in advance, on the first day of each month of the
term hereof. Tenant shall pay Landlord upon the execution of this Lease the sum
specified in Section 1.10 as the installment of Base Rent for the first full
calendar month of the term of the Lease. Provided, however, that if the
Commencement Date does not occur on the first day of a month, the aforesaid
payment shall be for the initial thirty days of the Lease and the next monthly
installment of Base Rent shall be due on the first day of the first full
calendar month of the term but shall be prorated to cover only those days of
said calendar month not previously paid by the Tenant by its initial payment.
Base Rent for any period during the term hereof which is less than one calendar
month shall be a pro rata portion of the monthly installment based upon the
actual number of days the Lease is in effect during said calendar month. All
rents shall be payable in lawful money of the United States of America without
notice or demand and without any deduction, offset or abatement, and shall be
payable to Landlord at the address stated in Section 1.11(a) or to such other
persons or at such other places as Landlord may designate in writing. The
payment of Base Rent hereunder shall be an independent covenant.
4.2 Additional Rent. Both Tenant and Landlord expressly understand and
agree that all other sums, excepting Base Rent as described in Sections 4.1 and
5, which may from time to time become due under this Lease shall be deemed
Additional Rent. Additional Rent shall include, but not be limited to, late
charges, interest, Shared Expenses as described in Section 6, attorneys' fees,
security deposits and any cash bonds which may by circumstance be required to be
posted hereunder. Both Tenant and Landlord expressly understand and agree that
all monies paid by Tenant hereunder shall be first credited to Additional Rent
(and allocated among different items of Additional Rent as Landlord may
determine), and only then to Base Rent. All payments of Additional Rent shall be
in lawful money of the United States of America, shall be paid without any
deduction, offset or abatement, and shall be payable to Landlord at the address
stated in Section 1.11(a) or to such other persons or at such other places as
Landlord may designate in writing. The obligation to make payments of Additional
Rent hereunder shall be an independent covenant.
4.3 Parking and Storage. Tenant agrees to pay to Landlord the amount
of Additional Rent for parking as set forth in any Parking Addendum incorporated
in this Lease, and the amount of Additional Rent for storage as set forth in any
Storage Space Addendum incorporated in this Lease, in advance for each month on
the first day of each month of the term hereof. Unless Tenant executes a Parking
Addendum or Storage Space Addendum, Tenant shall have no right to use any
parking facilities or storage facilities of the Building, respectively.
4.4 Acceptance of Rental Payments. No acceptance by Landlord of a
lesser sum than the Base Rent and/or Additional Rent then due shall be deemed to
be other than on account of the earliest amount of such rental due (unless
Landlord elects otherwise), 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 or compromise and settlement, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
payments due or to pursue any other remedy as provided in this Lease.
5. ESCALATIONS OF RENT.
5.1 Determination. The monthly obligations for rental payments
described in Sections 4.1 and 4.3 shall be increased annually in accordance with
the provisions of Section 1.10.
6. SHARED EXPENSES.
6.1 Determination. The monthly obligations for Additional Rent as
described in Section 4.2 shall be annually adjusted in accordance with the
provisions of Section 6.2 below.
6.2 Escalations. (a) Landlord agrees to expend as its share of
Operating Expenses paid for and sustained by the Landlord during any calendar
year an amount not greater than that specified in Section 1.14. Said sum shall
constitute the maximum payable by Landlord as its contribution toward Operating
Expenses. The term "Operating Expense" means the total amounts paid or payable,
whether by the Landlord or otherwise on behalf of the Landlord, in
6
<PAGE> 7
connection with the ownership, leasing, management, maintenance, repair and
operation of the Building, other than those expenses described in Section
6.2(b). Operating Expense shall include, without limiting the generality of the
foregoing, the aggregate of the amount paid for heating, air conditioning, and
providing electricity and water and sewer charges to the Building, other than
that paid by individual tenants, the amount paid to any persons or entities for
all labor and/or wages (including the cost to Landlord of workmen's
compensation and disability insurance, payroll taxes, welfare and fringe
benefits), for services rendered, and materials provided to the Building;
administrative expenses related to the Building; any costs incurred for any
capital improvements or structural repairs to the Building to effect labor
savings or otherwise reduce Operating Expenses, or required by law or by any
governmental or quasi-governmental authority having jurisdiction over the
Building, which costs shall be amortized over the useful life of the applicable
capital improvements or structural repairs; the cost of accounting services
necessary to compute the rent and charges payable by tenants of the Building;
fees for management, legal, accounting, inspection and consulting services
pertaining to the Building; the cost of guards and other protection services;
and the amount paid for premiums for all insurance procured by Landlord to
insure the Building as may be required or permitted under this Lease
(including, without limitation, business interruption insurance, and if there
is a mortgage or deed of trust on the Building, such insurance as may be
required by the holder of such mortgage or deed of trust). Notwithstanding the
foregoing, Operating Expenses shall not include the costs of special services
rendered to tenants (including Tenant) for which a special or separate charge
is made, any costs of preparation of space for new tenants in the Building, any
costs borne directly by Tenant under this Lease, leasing commissions,
depreciation or interest payments, or debt service payments made to a mortgagee.
(b) Landlord agrees to expend as its share of Real Estate Taxes paid
for and sustained by the Landlord during any calendar year an amount not greater
than that specified in Section 1.15. Said sum shall constitute the maximum
payable by Landlord as its contribution toward Real Estate Taxes. Real Estate
Taxes shall include general and special taxes, assessments, duties and levies,
charged and levied upon or assessed against the Building and/or any improvement
situated on the real property on which the Building stands, any leasehold
improvement, fixtures, installations, additions and equipment used in the
maintenance or operation of the Building, whether owned by Landlord or Tenant,
not paid directly by the Tenant. Further, if at any time during the term of this
Lease, the method of taxation of real estate prevailing at the time of execution
hereof shall be or has been altered so as to cause the whole or any part of the
taxes now or hereafter levied, assessed or imposed on real estate to be levied,
assessed or imposed upon Landlord, wholly or partially, as a capital levy or
otherwise, or on, or measured by the rents received from the Building, then such
new or altered taxes attributable to the Premises shall be deemed to be included
within the term "Real Estate Taxes" for purposes of this paragraph. The
reference to "Building" in this subparagraph shall include, as allocated by the
Landlord, improvements or facilities utilized in common by the Building and
other buildings upon or adjacent to the real property on which the Building
stands.
(c) Commencing on the first day of the first January after the
Commencement Date, and continuing thereafter during the term of this Lease,
Tenant shall pay to Landlord monthly in advance on the first day of each month,
without notice or demand and without any deduction, offset or abatement, in
lawful money of the United Sates of America, 1/12 of the amount of the Tenant's
Pro-Rata Share of the Shared Expenses as estimated by Landlord to be incurred
for the calendar year in which the monthly payments are to be made. If the
Expiration Date is not December 31, the monthly payments owing hereunder during
the last partial calendar year of the Lease shall be appropriately adjusted. For
the period from the Commencement Date to December 31 in the same calendar year,
Tenant shall not pay estimated Shared Expenses but shall be obligated for its
actual Pro-Rata Share of Shared Expenses for said period upon receipt of
Landlord's Statement described below. The term "Shared Expenses" shall mean the
amount by which Operating Expenses and Real Estate Taxes incurred in any period
exceed the amount of Landlord's obligation for the same as specified in Section
1.14 and 1.15.
(d) In each calendar year after the year in which the Commencement Date
occurs, Landlord shall send to Tenant a Landlord's Statement which shall set
forth the actual amount of Shared Expenses, with the exception of those States
in which real estate taxes are billed on other than a calendar year basis, in
that event Landlord's statement of Real Estate Taxes will be based on the Real
Estate Tax Fiscal Year and sent within a reasonable time after receipt of Real
Estate Tax Statements, and Tenant's Pro-Rata Share thereof for the preceding
calendar year or portion thereof and the estimated amount of Shared Expenses and
Tenant's Pro- Rata Share thereof for the calendar year in which the Landlord's
Statement is given. Landlord's failure to render a Landlord's Statement with
respect to any period shall not eliminate or reduce Tenant's obligation to pay
Shared Expenses and shall not prejudice Landlord's right to render a Landlord's
Statement with respect to any subsequent period. The obligations of Tenant under
the provisions of this paragraph with respect to any increase in rent shall
survive the expiration or any sooner termination of the term of the Lease.
Within 15 days next following the notification by Landlord of the contents of
its Landlord's Statement, Tenant shall pay to Landlord the entire amount of
Tenant's Pro-Rata Share of actual Shared Expenses for the prior period covered
by the Landlord's Statement less the amount of Shared Expenses actually paid by
Tenant for said period, plus Tenant shall also then pay to Landlord such amount
as is necessary to assure than, through the calendar month in which the
Landlord's Statement is given, the Tenant has paid to Landlord the full amount
of estimated Shared Expenses for the calendar year in which Landlord's Statement
is given, as if the Landlord's Statement were given on January 1 of said
calendar year. For each month following for the remainder of said calendar year,
Tenant shall pay the monthly estimated Shared Expenses set forth in the
Landlord's Statement. In the event that the estimated payments made by the
Tenant in the calendar year preceding the date on which the Tenant is given
notice of the Landlord's Statement exceed the Tenant's Pro-Rata Share of actual
Shared Expenses for such calendar year, then should the Tenant not be otherwise
in default hereunder, the amount of such excess shall be applied by the Landlord
to the next succeeding installments of monthly estimated payments of Shared
Expenses.
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6.3 Statements. Nothing in this Lease shall be construed to require
Landlord to render the statements described in Sections 5.2 and 6.2
simultaneously or in any particular order. All reasonable determinations by
Landlord pursuant to Section 6 shall be presumed to be correct. Until Tenant is
advised of the adjustment in its obligation to pay Shared Expenses, if any,
pursuant to the provisions of Section 6.2, Tenant's monthly rental shall
continue to be paid at the then current rent (including all prior adjustments
thereto pursuant to this Lease). Upon written notice to Landlord of not less
than fifteen business days, Tenant shall have the right to review the
documentation relied upon by Landlord relating to the computation of Shared
Expenses, which review shall occur at the location specified in Section
1.11(b). All Shared Expenses shall be computed on the actual basis. In
computing Shared Expenses, no cost or expense may be accounted more than once,
any expenses which are paid by the proceeds of insurance shall be excluded, and
any expenses which are separately metered or billed directly to and separately
paid by any other tenant shall be excluded. Tenant shall have the right to
cause an audit to be made of Landlord's computation of Shared Expenses, at the
location of the Corporate Office in Dallas, Texas, at Tenant's sole expense,
not more frequently than once per calendar year. Tenant shall not be entitled
to withhold or deduct any portion of Base Rent or Additional Rent during the
pendency of any such audit. Any errors disclosed by such audit shall be
promptly corrected, provided that Landlord shall have the right to cause
another independent audit to be made of such computations at Landlord's sole
expense, and in the event of a disagreement between the auditors, the audit
disclosing the least amount of deviation from Landlord's original computations
shall be conclusively deemed to be correct.
7. SECURITY DEPOSIT.
Tenant shall deposit with Landlord upon execution hereof the sum
specified in Section 1.16 as security for Tenant's faithful performance of
Tenant's obligations hereunder. If Tenant fails to pay rent or other charges
due hereunder, or otherwise defaults with respect to any provisions of this
Lease, Landlord may without notice to Tenant use, apply or retain all or any
portion of said deposit for the payment of any rent or other charge in default
or for the payment of any other sum to which Landlord may become obligated by
reason of Tenant's default or to compensate Landlord for any loss or damage
which Landlord may suffer thereby. If Landlord so uses or applies all or any
portion of said deposit, Tenant shall within five (5) days after written demand
therefor deposit cash with Landlord in an amount sufficient to restore said
deposit to the full amount hereinabove stated. Landlord shall not be required
to keep said deposit separate from its general accounts and Tenant shall not be
entitled to interest on such deposit. If Tenant performs all of Tenant's
obligations hereunder, said deposit or so much thereof as had not theretofore
been applied by Landlord, shall be returned, without payment of interest or
other increment for its use, to Tenant (or, at Landlord's option, to the last
assignee, if any, of the Tenant's interest hereunder) within sixty (60) days
after either the expiration of the term hereof or after Tenant has vacated the
Premises, whichever is later. Landlord shall deliver the funds deposited herein
by Tenant to the purchaser of the Building in the event the Building is sold
(or give such purchaser a credit against the purchase price in the amount of
such deposit), and thereupon Landlord shall be discharged from all further
liability with respect to such deposit. If Tenant shall default under this
Lease more than two (2) times in any twelve (12) month period, irrespective of
whether or not such default is cured, then the security deposit shall, within
ten (10) days after demand by Landlord, be increased by Tenant to an amount
equal to the greater of: (i) three (3) times the amount specified in Article
1.16; (ii) three (3) months' fixed rent; or (iii) as may be otherwise required
by Landlord.
8. USE.
8.1 Use. The Premises shall be used and occupied only for the uses
specified in Section 1.17 hereof, provided that the foregoing shall not be
construed as a representation or guarantee by the Landlord that such business
may lawfully be conducted on the Premises.
8.2 Compliance With Law. In the event it is determined by the
applicable governmental unit that the Premises violates any building code,
regulation or ordinance, then it shall be the obligation of the Landlord, after
written notice from Tenant which includes a copy of the governmental unit's
determination, to promptly, at Landlord's sole cost and expense, rectify any
such violation. In the event Tenant does not give to Landlord written notice of
any such violation within thirty (30) days from the date on which Tenant takes
possession of the Premises, it shall be conclusively deemed that such
violation, whether the same is patent or latent, did not exist and the
correction of the same shall be the obligation and expense of the Tenant at the
direction of the Landlord, provided, however, that nothing in this Section
shall be construed to require or permit the Tenant to make any structural
changes to the Building not caused by Tenant's improvements or the nature of
Tenant's occupancy of the Premises.
8.3 Waste and Nuisance. Tenant shall not commit, suffer or permit any
waste, damage, disfiguration or injury to the Premises, the common areas in the
Building, or the fixtures and equipment located therein or thereon. Tenant
shall not permit or suffer any overloading of the floors thereof, and shall not
place therein any heavy business machinery, safes, computers, data processing
machines, or other items heavier than customarily used for general office
purposes without first obtaining the written consent of Landlord. Tenant shall
not use or permit to be used any part of the Building for any dangerous,
noxious or offensive trade or business, and shall not cause or permit any
nuisance, noise, action, or disturbance of other tenants, in, at or on the
Premises.
8.4 Conditions of Premises. Except as provided in Section 8.2, Tenant
hereby accepts the Premises in their condition existing as of the date of the
commencement hereof, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use of the
Premises, and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. In addition, except as provided in
Section 8.2, Tenant shall at Tenant's expense, comply promptly with all
applicable laws, statutes, ordinances, rules, regulations, orders,
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restrictions of record, and requirements in effect during the term or any part
of the term hereof regulating the use by Tenant of the Premises.
8.5 INSURANCE CANCELLATION. Notwithstanding the provisions of
Section 8.2 hereinabove, no use shall be made or permitted to be made of the
Premises, nor acts done which will cause the cancellation of any insurance
policy covering said Premises or the Building, and if Tenant's use of the
Premises causes an increase in said insurance rates, Tenant shall pay any such
increase as Additional Rent, which, together with interest on any amount paid
therefor by Landlord, shall be payable by Tenant on the next succeeding date on
which a Base Rental payment is due.
8.6 LANDLORD'S RULES AND REGULATIONS. Tenant shall faithfully
observe and comply with the reasonable rules and regulations that Landlord
shall from time to time promulgate, including without limitation any rules and
regulations attached to this Lease, which are hereby incorporated wherein by
this reference. Landlord reserves the right from time to time to make all
reasonable modifications to said rules and regulations. The additions and
modification to those rules and regulations shall be binding upon Tenant upon
Landlord giving notice of them to Tenant. Landlord shall not be responsible to
Tenant for the nonperformance of any of said rules and regulations by any other
tenants or occupants.
9. LANDLORD'S SERVICES.
9.1 BASIC SERVICES. Subject to any law, rule or governmental order
or regulation, and further subject to any circumstance beyond the control of
the Landlord, Landlord shall furnish the following services:
(a) Air conditioning and heat, whichever be required, from 8 a.m.
to 6 p.m., Monday through Friday and 8 a.m. through 1 p.m. on Saturday,
excluding legal holidays.
(b) Hot and cold water for lavatory purposes and electric current
for lighting the Premises and for ordinary office appliances and office
machines only, provided that Tenant shall not use any electrical equipment
which in Landlord's opinion will overload the wiring insulations or interfere
with the use thereof by Landlord or any other tenant in the Building. If a
further supply of water is required by Tenant, then at Tenant's expense,
Landlord shall have the option to install and maintain a water meter to
register such consumption, and Tenant shall pay as Additional Rent for water
consumed, at the cost to Landlord, and for sewer rents and all other rents and
charges based upon such consumption of water;
(c) General day-to-day janitorial service (excluding carpet
shampooing and hard surface floor waxing) five days a week, and elevator
service during the same hours for which air conditioning and heat services are
provided as set forth above, provided, however, that in the event Tenant is
delinquent in making any installment payment of rent under this Lease for a
period of 15 days or more after it shall become due, Landlord may discontinue
furnishing any or all of the services described in this Section 9 until all
arrears of rental payments, plus interest and late charges and any other sums
due under this Lease, shall have been paid in full. Whenever heat generating
machines or equipment are used by Tenant in the Premises which affect the
temperature otherwise maintained by the air conditioning system, as determined
by Landlord, Landlord reserves the right to install supplementary air
conditioning units in the Premises, and the costs therefor, including the cost
of installation, operation and maintenance thereof, shall be paid by Tenant to
Landlord upon demand by Landlord. If Tenant, as determined by Landlord,
requires electric current in excess of that usually furnished or supplied to
the Premises, Landlord may, at its election, either cause an electric current
meter to be installed in the Premises so as to measure the electric current
consumed for such excess use or determine the value of such excess use by
causing an independent electrical engineer or consulting firm, selected by
Landlord, to conduct a survey of Tenant's use of electric current and to
certify such determination in writing to Landlord and Tenant. The cost of such
survey or the installation and maintenance of such meter shall be borne by
Tenant if the survey or meter indicates excess use by Tenant. Additionally,
Tenant agrees to pay to Landlord, as Additional Rent, promptly upon demand
therefor by Landlord, the amount determined to be due for the electric current
consumed by Tenant, as shown by said meter or as indicated in said survey, as
the case may be, at the rate charged for such service by the local public
authority or the local public utility, as the case may be, furnishing the same,
plus any additional expenses incurred by Landlord in keeping account of the
electric current consumed.
(d) Notwithstanding anything in this Lease to the contrary, Tenant
will not without the prior written consent of Landlord use any apparatus or
device in the Premises which will in any way increase the amount of electricity
or water usually furnished or supplied for use of the Premises as general
office space. Tenant shall not connect with any electric current except through
existing electrical outlets in the Premises, or to any water pipes, any
apparatus or device for the purposes of using electric current or water. If
Tenant shall require water or electric current in excess of that usually
furnished or supplied for use of the Premises, Tenant must first procure the
written consent of Landlord to the use thereof. With the prior written consent
of Landlord, Tenant may maintain and operate data processing equipment on the
Premises, but all additional costs in connection therewith (including, but not
limited to, additional support flooring, insulation, electrical outlets and
temperature maintenance facilities) shall be borne solely by Tenant and the
utility services utilized by or for such equipment shall be separately metered
and the cost of such utility services with metering shall be borne solely by
Tenant. At Tenant's request and with Landlord's prior approval, Landlord shall
furnish the services described in this Section at times other than specified in
Section 9.1 (a), provided that Tenant shall pay the entire cost thereof as
reasonably determined by Landlord as Additional Rent, notwithstanding the fact
that such services may also benefit portions of the Building other than the
Premises (in which event Landlord shall not receive collectively from all
tenants paying for any portion of such additional services more than the actual
cost to Landlord of providing the same).
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(e) Additional air conditioning unit(s) to be installed,
at Tenant's cost and where designated by Tenant, which shall be metered by
Florida Power and paid by Tenant directly to Florida Power.
9.2 Initial Construction. Landlord agrees to perform the work
and make such installations in the Premises as set forth in the Work Letter
Addendum which, if attached hereto as indicated in Section 1.19, constitutes
additional provisions of this Lease which are hereby incorporated by reference.
Tenant acknowledges that it will examine the Premises before taking possession
hereunder and agrees that unless Tenant furnishes Landlord with a notice in
writing specifying any apparent defect in the construction within twenty
business days after such taking of possession pursuant to Section 3.4, it shall
be conclusively deemed that Tenant has examined the Premises and that the same
were in good order and that Landlord had satisfactorily completed the work it
agreed to perform. Tenant agrees that there is no promise, representation, or
undertaking by or binding upon Landlord with respect to any construction,
alteration, remodeling or redecorating in or to the Premises except as
expressly set forth in the Work Letter Addendum.
9.3 Interruption of Services. Landlord reserves the right from
time to time to install, use, maintain, repair, replace and relocate service to
the Premises and other parts of the Building, and to alter or relocate any
other facility in the Building. Interruption or curtailment of any service
maintained in the Building, if caused by strikes, mechanical difficulties,
actions of the Landlord under the first sentence of this Section 9.3, or for
any other reason beyond Landlord's control, shall not entitle Tenant to any
claim against Landlord or to any abatement in rent, nor shall the same
constitute constructive or partial eviction. Unless due to the gross negligence
of Landlord, Landlord shall not be liable to Tenant for any injury or damage
resulting from defects in the plumbing, heating, or electrical systems in the
Building or for any damage resulting from water seepage into the Building or
for any act or failure to act by any other Tenants at the Building or for any
damage resulting from wind storm, hurricane or rain storm.
10. MAINTENANCE, REPAIRS AND ALTERATIONS.
10.1 Landlord's Obligations. Subject to the provisions of Section
8.2 and 14, and except for damage caused by any negligent or intentional act or
omission of Tenant, Tenant's agents, employees, representatives, customers or
invitees, in which event Tenant shall repair the damage, at its sole expense,
Landlord shall keep in good order, condition and repair the structural
portions of the Building and those portions of the Building which are not
occupied or leased by any tenant, and all costs incurred by Landlord in making
any such repairs or performing such maintenance shall be Operating Expenses as
defined in Section 6.2, provided that Landlord shall have no obligation to
perform any act which is obligation of Tenant or any other tenant in the
Building. Tenant expressly waives the benefits of any statute now or hereafter
in effect which would otherwise afford Tenant the right to make repairs at
Landlord's expense or to terminate this Lease because of Landlord's failure to
keep the Premises in good order, condition and repair. Other than as
specifically provided in this Section 10.1, Landlord shall not be obligated to
make any repairs or improvements of any kind, in, upon, about, or to the
Premises or the Building.
10.2 Tenant's Obligations. Subject to the provisions of Section
8.2 and 14, Tenant, at Tenant's expense, shall keep in good order, condition
and repair the Premises and every part thereof including, without limiting the
generality of the foregoing, all plumbing, electrical and lighting facilities
and equipment within the Premises, provided that such plumbing, electrical and
lighting facilities and equipment are in proper working condition at the
commencement of this lease, fixtures, interior walls and interior surfaces of
exterior walls, ceilings, interior windows, doors, plate glass and skylights
located within the Premises. All repairs made by the Tenant shall be at least
of the same quality, design and class as that of the original work. Tenant
agrees that it will abide by, keep and observe all reasonable rules and
regulations which Landlord may make from time to time for the management,
safety, care and cleanliness of the Building and grounds, the parking of
vehicles and the preservation of good order therein as well as for the
convenience of other occupants and tenants of the Building. All damage or
injury to the Building or to the Premises, fixtures, appurtenances and/or
equipment caused by the Tenant moving property in or out of the Building or the
Premises by Tenant's installation or removal of furniture, fixtures, or
other property, or from any other cause of any kind or nature whatsoever due to
carelessness, omission, neglect, improper conduct, or other cause of the
Tenant, its agents, employees, invitees, contractors or subcontractors shall be
repaired, restored, or replaced promptly by the Tenant at its sole cost and
expense to the satisfaction of the Landlord. In the event that the Tenant fails
to keep the Premises in good order, condition and repair while this Lease
remains in effect, then as soon as possible after written demand (which written
demand shall not be required in the case of an emergency), Landlord may restore
the Premises to such good order and condition and make such repairs without
liability to Tenant for any loss or damage that may accrue to Tenant's property
or business by reason thereof, and upon completion thereof Tenant shall pay to
Landlord upon demand and as Additional Rent the cost of restoring the Premises
to such good order and condition, together with interest thereon from the date
paid.
10.3 Surrender. On the last day of the term hereof or on any sooner
termination or date on which Tenant ceases to possess the Premises, Tenant shall
surrender the Premises to Landlord in good clean condition, ordinary wear and
tear expected. Prior to such surrender Tenant shall repair any damage to the
Premises occasioned by its removal of trade fixtures, furnishings and equipment,
which repair shall include the patching and filling of holes and repair of
structural damage. Tenant agrees to indemnify Landlord and hold Landlord
harmless from and against any liability (including reasonable attorneys' fees)
of Landlord to third parties resulting from Tenant's failure to timely comply
with the provisions of this Section 10.3.
10.4 Alterations and Additions. (a) Tenant shall not, without
Landlord's prior written consent, make any alterations, improvements or
additions (referred to collectively herein as "Alterations") in, on or about the
Premises. Landlord may require that Tenant remove any or all of said Alterations
at the expiration of the term or such other time
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at which Tenant ceases to possess the Premises, and restore the Premises to
their prior condition. Should Tenant make any Alterations without the prior
approval of the Landlord, Landlord may require that Tenant immediately remove
any or all of such items and/or Landlord may declare a default by Tenant under
this Lease. Except in connection with normal interior decorating of the
Premises, Tenant shall not place any holes in any part of the Premises, and in
no event shall Tenant place any exterior or interior signs or interior drapes,
blinds, or similar items visible from the outside of the Premises without the
prior written approval of Landlord.
(b) Any Alterations in, on or about the Premises that Tenant
shall desire to make shall be presented to Landlord in written form with
proposed detailed plans. If Landlord shall give its consent, the consent shall
be deemed conditioned upon Tenant acquiring a permit to do the work from
appropriate governmental agencies, the furnishing of a copy thereof to Landlord
prior to the commencement of the work and the compliance by Tenant with all
conditions of said permit and with all specifications in the plans in a prompt
and expeditious manner. Tenant shall not permit any of the work to be performed
by persons not currently licensed under any applicable licensing laws or
regulations pertaining to the types of work to be performed. Landlord shall not
be deemed unreasonable in the exercise of its discretion for withholding
approval of any Alterations which involve or might affect any structural or
exterior element of the Building, any area or element outside of the Premises,
or any facility serving any area of the Building outside of the Premises, or
which will require unusual expense to re-adapt the Premises to normal office use
on the termination or expiration of the Lease, unless in the latter case Tenant
either desires to or is required to make repairs or Alterations in accordance
with this Lease, Landlord may require Tenant, at Tenant's sole cost and
expense, to obtain and provide to Landlord a lien and completion bond (or such
other applicable bond as determined by Landlord) in an amount equal to one and
one-half (1-1/2) times the estimated cost of such improvements, to insure
Landlord against liability including but not limited to liability for
mechanic's and materialmen's liens and to insure completion of the work.
(c) Tenant shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Tenant at or for
use in the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or the Building. Tenant shall give
Landlord not less than ten (10) days notice prior to the commencement of any
work in, on or about the Premises, and Landlord shall have the right to post
notices of non-responsibility in, on or about the Premises as provided by law.
Tenant shall have no power or authority to do any act or make any contract which
may create or be the basis for any lien upon the interest of the Landlord, the
Premises or the Building, or any portion thereof. If any mechanics or other lien
or any notice of intention to file a lien shall be filed or delivered with
respect to the Premises or the Building, based upon any act of the Tenant or of
anyone claiming through the Tenant, or based upon work performed or materials
supplied allegedly for the Tenant, Tenant shall cause the same to be canceled
and discharged of record within fifteen (15) days after the filing or delivery
thereof. If Tenant has not so canceled the lien within fifteen (15) days as
required herein, Landlord may pay such amount, and the amount so paid together
with interest thereon from the date of payment and all legal costs and charges,
including attorneys fees, incurred by Landlord in connection with said payment
and cancellation of the lien or notice of intent shall be Additional Rent and
shall be payable on the next succeeding date on which a Base Rental installment
is due. Landlord may, at its option and without waiving any of its rights set
forth in the immediately preceding sentence, permit Tenant to contest the
validity of any such lien or claim, provided that in such circumstances the
Tenant shall at its expense defend itself and Landlord against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof against the Landlord, the Premises or the
Building, provided further that Landlord may at any time require the Tenant to
deposit with the court exercising jurisdiction over such claim, such amount as
may be necessary under applicable statutes to cause the release and discharge of
the lien, and if Tenant shall not immediately make such payment upon the request
of Landlord, Landlord may make said payment and the amount so paid, together
with interest thereon from the date of payment and all legal costs and charges,
including attorneys fees, incurred by Landlord in connection with said payment
shall be deemed Additional Rent and shall be payable on the next succeeding date
on which a Base Rental installment is due. In addition, Landlord may require
Tenant to pay Landlord's attorney fees and costs in participating in such action
if Landlord shall decide it is in its best interest to do so. Nothing herein
contained shall be construed as a consent on the part of Landlord to subject the
interest and estate of Landlord to liability under any lien law of the state in
which the Premises are situated, for any reason or purpose whatsoever, it being
expressly understood that Landlord's interest and estate shall not be subject to
such liability and that no person shall have any right to assert any such lien.
(d) Unless Landlord requires their removal, as set forth in
Section 10.4(a), all Alterations which may be made on the Premises shall, at the
expiration of the term or such other time at which Tenant ceases to possess the
Premises, become the property of Landlord and remain upon and be surrendered
with the Premises. Notwithstanding the provisions of this Section 10.4(d),
Tenant's machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to the Premises,
shall remain the property of Tenant and may be removed by Tenant subject to the
provisions of Section 10.3 hereof and provided further that Tenant is not in
default under this Lease at the time Tenant ceases to possess the Premises.
11. TENANT'S USE OF PUBLIC AREAS.
Tenant's non-exclusive use of the public areas described in Section
2.2 shall be subject to such Reasonable Rules and Regulations promulgated by
Landlord pursuant to Section 8.6. Tenant agrees to repair at its cost all
deteriorations or damages to the public areas occasioned by its negligence or
intentional misconduct or that of its officers, agents, representatives,
customers, employees or invitees.
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12. TAXES AND TELEPHONE.
12.1 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency
all taxes assessed against and levied upon leasehold improvements, fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Premises or elsewhere. If Tenant shall cause said leasehold improvements,
trade fixtures, furnishings, equipment and all other personal property to be
assessed with Landlord's real property, Tenant shall pay Landlord the taxes
attributable to Tenant within (10) days after receipt of a written notice from
Landlord setting forth the taxes applicable to Tenant's property, and if Tenant
fails to do so, Landlord may make such payment and the amount so paid, together
with interest thereon from the date paid, shall be Additional Rent and shall be
due and payable to Landlord on the next succeeding date on which a Base Rental
installment is due.
12.2 EVIDENCE OF PAYMENT. Tenant shall promptly deliver to Landlord,
upon Landlord's written request, receipts for payments of all taxes, charges,
rates, dues, assessments and licenses in respect of all improvements, equipment
and facilities of the Tenant on or in the Premises which were due and payable
within a period up to one year prior to Landlord's making such request.
12.3 TELEPHONE. Tenant shall separately arrange and pay for the
furnishing of and use of all telephone services as Tenant may deem necessary
for its use of the Premises, and Landlord shall have no liability in connection
therewith.
13. INSURANCE AND INDEMNITY.
13.1 LIABILITY INSURANCE. Tenant shall, at Tenant's expense, obtain
and keep in force during the term of this Lease a policy of bodily injury and
property damage insurance, insuring Landlord and Tenant against any liability
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be in an amount not less
than $1,000,000 bodily injury and property damage combined single limit general
liability hereunder. If in the opinion of Landlord the amount of liability
insurance required hereunder is not adequate, then not more frequently than
once during each option, extension or renewal term of this Lease, if any,
Tenant shall increase said insurance coverage as required by Landlord.
Provided, however, that in no event shall the amount of the liability insurance
increase by more than fifty percent of the amount of the insurance during the
preceding term of this Lease. However, the failure of Landlord to require any
additional insurance coverage shall not be deemed to relieve Tenant from any
obligations under this Lease.
13.2 PROPERTY INSURANCE. Landlord shall obtain and keep in force
during the term of this Lease "All Risk" coverage on the Building (including
Building standard leasehold improvements). Landlord may also, but shall not be
required to, procure any other insurance policies respecting the Premises or
Building which Landlord deems necessary. Tenant shall also obtain and keep in
force during the term of this Lease, at Tenant's expense, "all risk" or "special
coverage form" insurance upon the property of every description and kind owned
by the Tenant and located in the Building or for which Tenant is legally liable
or installed by or on behalf of the Tenant, including without limitation,
furniture, fittings, installations, alternations, additions, partitions,
fixtures and anything in the nature of leasehold improvements in an amount not
less than 90% of the full replacement cost thereof. Such insurance shall insure
the Tenant and Landlord, and in the event that there shall be a dispute as to
the amount which comprises the full replacement cost, the decision of the
Landlord shall be conclusive. If Tenant shall fail to procure and maintain the
insurance required hereunder, Landlord may but shall not be required to procure
and maintain the same, and any amount so paid by Landlord for such insurance
shall be Additional Rent which, together with interest thereon from the date
paid, shall be due and payable by Tenant on the next succeeding date on which a
Base Rental installment is due.
13.3 INSURANCE POLICIES. Insurance required by Tenant hereunder
shall be in companies rated A-VII or better in "Best's Insurance Guide". Tenant
shall deliver to Landlord prior to taking possession of the Premises copies of
policies of such insurance or certificates evidencing the existence and amounts
of such insurance with loss payable and additional insured clauses reasonably
satisfactory to Landlord. No such policy shall be cancelable or subject to
reduction of coverage or other modification except after ten (10) days' prior
written notice to Landlord. Tenant shall, within ten (10) days prior to the
expiration of such policies, furnish Landlord with renewals thereof, or
Landlord may order such insurance and charge the cost thereof of Tenant, which
amount, together with interest thereon, shall be Additional Rent and shall be
payable by Tenant on the next succeeding date on which a Base Rental payment is
due. Tenant shall not do or permit to be done anything which shall invalidate
the insurance policies referred to in Section 13.1. Tenant shall forthwith, upon
Landlord's demand, reimburse Landlord for any additional premiums attributable
to any act or omission or operation of Tenant causing an increase in the cost
of insurance.
13.4. WAIVER OF SUBROGATION As long as their respective insurers so
permit, Tenant and Landlord each waives any and all rights of recovery against
the other, or against the officers, employees, agents and representatives of
the other for loss or damage to such waiving party or its property or the
property of others under its control, where such loss or damage is insured
against under any insurance policy in force at the time of such loss or damage.
Tenant and Landlord shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carriers that the foregoing mutual
waiver of subrogation is contained in this Lease and obtain policies of
insurance, if obtainable, which shall include a waiver by the insurer of all
right of subrogation against Landlord or Tenant in connection with any loss or
damage thereby insured against.
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13.5 Hold Harmless. Tenant shall indemnify, defend and hold
Landlord harmless from any and all claims, liabilities, damages and costs,
including attorneys fees, incurred by Landlord which arise from Tenant's use of
the Premises or the Building or from the conduct of its business or from any
activity, work or things which may be permitted or suffered by Tenant in, on or
about the Premises or the Building, and shall further indemnify, defend and
hold Landlord harmless from and against any and all claims, liabilities, damages
and costs, including attorneys fees, incurred by Landlord which arise from any
breach or default in the performance of any obligation on Tenant's part to be
performed under any provision of this Lease or which arise from any negligence
of Tenant or any of its agents, representatives, customers, employees or
invitees.
13.6 Exemption of Landlord from Liability. Tenant hereby agrees
that Landlord shall not be liable for injury to Tenant's business or any loss
of income therefrom, including without limitation from any relocation by
Landlord of Tenant within the Building (except as expressly provided otherwise
in Section 20), or for damage to the goods wares, merchandise or other property
of Tenant, Tenant's employees, representatives, agents, invitees, customers or
any other person in, on or about the Premises or Building, nor shall Landlord be
liable for injury to the person of Tenant, Tenant's employees, representatives,
agents, customers, or invitees, whether any such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, and whether the said damage or injury results from conditions arising
upon the Premises or any other cause, and whether the said damage or injury is
caused by or results from wires, appliances, plumbing air conditioning or
lighting fixtures, or from any other said damage or injury results from
conditions arising upon the Premises or Building, or from other sources or
places, and regardless of whether the cause of such injury or the means of
repairing the same is inaccessible to Landlord or Tenant, unless such injury,
loss of income or damage is caused by the Landlord's gross negligence. Landlord
shall not be liable for any damages arising from any act or neglect of any
other tenant, if any, of the Building. Tenant hereby assumes all risk of damage
to property or injury to persons in, on or about the Premises or the Building
from any cause and Tenant hereby wives all claims in respect thereof against
Landlord, excepting where said damage arises out of the gross negligence of
Landlord.
14. DAMAGE OR DESTRUCTION
14.1 Option to Terminate Lease. If the Premises or any part
thereof shall be damaged or destroyed by fire or other casualty, the Landlord
may, at its option and subject to Section 14.2 herein below, elect to terminate
this Lease by giving notice to the Tenant within ninety (90) days after
Landlord receives actual notice of the fire or other casualty, and thereupon
the term of this Lease shall expire by lapse of time upon the tenth day after
such notice is given. Instead of exercising said option, Landlord may elect to
repair or restore the Premises to the same condition as existed before such
damage or destruction. Upon electing to repair or restore, Landlord may proceed
with reasonable dispatch to perform the necessary work, and the Base Rent to be
paid until such work is completed shall be abated in proportion of the Premises
being unusable for a period equal to one day or less, but Landlord shall not be
liable to Tenant for any delay which arises by reason of labor strikes,
adjustments of insurance or any other cause beyond Landlord's control, and in
no event shall Landlord be liable for any loss of profits or income.
Notwithstanding the foregoing, there shall be no abatement, apportionment or
reduction in the rental obligations of Tenant if the damage or destruction is
caused by the Tenant or Tenant's agents, representatives, employees, customers
or invitees.
14.2 Obligation to Repair or Restore. If and only if all of the
following circumstances exist with respect to damage or destruction to the
Premises, Landlord may not elect to terminate the Lease as provided in Section
14.1 hereof but rather must elect to repair or restore the Premises:
(a) There is no fault or neglect on the part of the Tenant, Tenant's
agents, representatives, employees, customers or invitees which contributed to
the damage or destruction;
(b) The damage or destruction to the Premises is less that fifty
percent (50%) of the replacement cost thereof as determined by Landlord;
(c) The Landlord is fully insured for the casualty which causes the
damage or destruction and the insurance proceeds have been made available
therefor by the holder or holders of any mortgages or deeds of trust covering
the Premises;
(d) The date of the damage or destruction is greater than one year
prior to the Expiration Date of this Lease or any renewal, modification or
extension thereof; and
(e) Less than sixty percent (60%) of the rentable square feet of the
Building is so damaged or destroyed, as determined by Landlord, regardless of
the percentage of rentable square feet of the Premises which may be damaged
or destroyed.
14.3 Fault of Tenant. Landlord may exercise its option to repair
or restore as described in Section 14.1 even if such damage or destruction is
due to the fault or neglect of Tenant, Tenant's agents, representatives,
employees, customers or invitees, but in such event Landlord's election to
repair or restore shall be without prejudice to any other rights and remedies
of Landlord under this Lease, and there shall be no appointment or abatement of
any rent of any kind and Landlord shall not be liable for any other loss to
Tenant of any nature whatsoever.
14.4 Obligations of Tenant. Except as provided in this Section
14, none of Tenant's obligations under this Lease shall be affected by any
damage or destruction of the Premises by any cause whatsoever. Tenant hereby
expressly
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waives any and all rights it might otherwise have under any law, regulation or
statute which would act to modify the provisions of the immediately preceding
sentence.
14.5 Termination by Tenant. In the event that more than
sixty percent (60%) of rentable square feet of the Premises shall be damaged or
destroyed by fire or other casualty not caused by the Tenant or Tenant's agents,
representatives, employees, customers or invitees, either party may terminate
this Lease by giving notice to the other within thirty (30) business days after
the date of the fire or other casualty, and upon such termination the rental
obligations of the Tenant shall be duly apportioned as of the date of such fire
or other casualty, provided, however, that Tenant shall have no right to
terminate the Lease under this Section 14.5 if Tenant is in default of any of
its obligations under the Lease as of the date of the fire or other casualty.
15. CONDEMNATION.
If the Premises are taken under any public or private power of eminent
domain, or sold by Landlord under the threat of the exercise of said power (all
of which is herein referred to as "condemnation"), or if any portion of the
Building is so condemned so that it would not be practical, in Landlord's
judgment, to continue to maintain the Building, this Lease shall terminate as of
the date of the condemning authority takes title or possession, whichever occurs
first. If only a square feet of the Premises are so condemned, to terminate this
Lease as of the date the condemning authority takes title or possession,
whichever occurs first, by Landlord's giving written notice of such termination
to Tenant not later than thirty (30) days after said date, but should Landlord
elect not to so terminate this Lease, the Lease shall remain in full force and
effect as to the portion of the Premises not so taken, and Tenant's rental
obligations shall be reduced proportionately to reflect the number of rentable
square feet remaining in the Premises, and such rental reduction, if any, shall
take effect as of the date which is thirty (30) days after the date of which the
condemning authority takes title or possession, whichever first occurs. If
repairs or restorations to that portion of the Premises not so taken are deemed
necessary by Landlord to render such portion reasonably suitable for the
purposes for which is was leased, as determined by Landlord, Landlord shall
perform such work at its own cost and expense but in no event shall Landlord be
required to expend any amount greater than the amount received by Landlord as
compensation for the portion of the Premises taken by the condemnator. All
awards for the taking of any part of the Premises or any payment made under the
threat of the exercise of power of eminent domain shall be the property of
Landlord, whether made as compensation for diminution of value of the leasehold
or for the taking of the fee or as severance damages. No award for any partial
or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any
award which may be made in such taking or condemnation, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part
thereof, except that any award or other compensation made for any taking is
subject to the rights of the first mortgagee up to the amount of its lien and of
any junior mortgagee, as may be permitted by the first mortgagee, up to the full
amount of such junior lien; provided, however, that Tenant shall be entitled to
any award for loss of or damage to Tenant's trade fixtures and removable
personal property and/or for the interruption of or damage to Tenant's business.
16. ASSIGNMENT AND SUBLETTING.
16.1 Landlord's Consent Required. Tenant shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet or otherwise transfer or
encumber all or any part of Tenant's interest in this Lease or in the Premises
without Landlord's prior written consent. Any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be void and shall
constitute a breach of the Lease. Any transfer of Tenant's interest in this
Lease or in the Premises from Tenant by merger, consolidation or liquidation, or
by any subsequent change in the ownership of fifty percent (50%) or more of the
capital stock of Tenant shall be deemed a prohibited assignment within the
meaning of this Section 16. As a condition of obtaining Landlord's consent,
Tenant shall submit to Landlord together with its request for consent the name
of the proposed assignee or subtenant, the terms and provisions of the proposed
transaction, and such information as to the nature of the proposed assignee's or
subtenant's business and its financial responsibility and standing as Landlord
may reasonably require, together with the effective date of the proposed
transfer which shall be at least sixty (60) days after the date of submission of
such information to Landlord. Landlord's failure to consent to any proposed
transfer under this Section shall not be deemed unreasonably withheld if (a) the
occupancy resulting from such transfer will not be consistent with the general
character of the business carried on by the tenants of the Building or violates
any rights or options held by any other tenant of the building; or (b) the
proposed occupant pursuant to the transfer does not have the financial strength
and stability to perform its rental obligations or Landlord is unable to obtain
guaranties from one or more affiliates of the proposed occupant in order to
secure such financial obligations; or (c) any proposed sublease does not
incorporate this Lease in its entirety so as to be subject to this Lease's
terms, or any such sublease does not require the sublessee to attorn to Landlord
at Landlord's option in the event of a default by Tenant under this Lease; or
(d) if Tenant does not execute an agreement with Landlord requiring Tenant to
pay to Landlord, as Additional Rent, one hundred percent (100%) of all moneys or
other consideration received by Tenant from its transferee (whether paid to
Tenant as consideration for Tenant's transfer of property or other assets to the
transferee or as consideration for the transferee's occupancy of the Premises)
in excess of the amounts owed by Tenant to Landlord under this Lease, which
Additional Rent shall be paid to Landlord as and when received by Tenant.
16.2 No Release of Tenant. Regardless of Landlord's consent, no
subletting or assignment or other transfer described in Section 16.1 shall
release Tenant of Tenant's obligation or alter the primary liability of Tenant
to pay the rent and to perform all other obligations to be performed by Tenant
hereunder. Consent to one assignment, subletting or other transfer shall not be
deemed consent to any subsequent act. In the event of default by any assignee
of Tenant or any successor of Tenant in the performance of any of the terms
hereof, Landlord may proceed directly against Tenant without
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the necessity of exhausting remedies against said assignee or successor.
Landlord may consent to subsequent assignments, subletting, or transfers of this
Lease or amendments or modifications to this Lease with assignees or successors
of Tenant without notifying Tenant and without obtaining its consent thereto and
such action shall not relieve Tenant of liability under this Lease. In the event
Landlord allows assignment or subletting hereunder, neither Tenant, the assignee
of Tenant, or the sublessee of Tenant shall have any option to extend the term
of this Lease even if such option is otherwise granted to Tenant herein and
notwithstanding the provisions of any such option granted to Tenant herein, and
all rights and options to extend this Lease otherwise granted to Tenant shall be
deemed terminated and canceled as of the date of such assignment, subletting or
other transfer. Notwithstanding anything in this Lease to the contrary, Landlord
shall have no obligation to grant consent to any transfer as defined in Section
16.1 if Tenant is in default under this Lease at the time the request for
consent is made or at any time thereafter through the effective date of the
transfer. In addition, Tenant acknowledges that its intent in executing this
Lease is to occupy the Premises and not to make speculative usage of the
Premises, and therefore Landlord shall have no obligation whatsoever to consent
to any proposed transfer if the rentals payable by the proposed occupant to the
Tenant are less than the rentals sought to be received by the Landlord for
vacant space in the Building as of the date on which the Tenant is requesting
the Landlord's consent to the transfer. In the event that Tenant proposes to
assign this Lease or to sublet all of the Premises, Landlord shall have the
right, exercisable by notice in writing after receipt of the request by Tenant,
to terminate this Lease upon execution of an agreement between Landlord and the
proposed assignee or subtenant, provided that Landlord shall not have any such
termination right if Tenant withdraws such request within ten (10) days of being
notified by Landlord that it has elected to exercise said termination right.
16.3 Attorneys Fees and Administrative Fees. In the event Tenant
shall request the consent of Landlord to any assignment, subletting or transfer
or if Tenant shall request the consent of Landlord for any other act which
Tenant proposes to do under any other provision of this Lease, then Tenant shall
pay Landlord's attorneys fees incurred in connection with the consideration or
evaluation of such request. In addition thereto, in the event that Landlord
shall consent to a sublease, assignment or transfer under Section 16.1, Tenant
shall pay Landlord administrative fees of Two Hundred Dollars ($200) incurred in
connection with giving such consent.
16.4 Right to Collect Rent. The acceptance of rent by Landlord from
any person other than Tenant shall not be deemed to be a waiver by Landlord of
any provision of this Lease. If the Premises are sublet or occupied by anyone
other than Tenant and Tenant is in default hereunder, or this Lease is assigned
by Tenant, then, in any such event, Landlord may collect rent from the assignee,
subtenant or occupant and apply the net amount collected to the rent reserved in
this Lease, but not such collection shall be deemed a waiver of the covenant in
this Lease against assignment and subletting or the acceptance of such assignee,
subtenant or occupant as tenant, or a release of Tenant from further performance
of the covenants contained in this Lease.
17. DEFAULTS; REMEDIES
17.1 Defaults. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
(a) The vacating or abandonment of the Premises by Tenant;
or
(b) The failure by Tenant to make any payment of Base Rent,
Additional Rent or any other payment required to be made by Tenant hereunder, as
and when due, where such failure shall continue for a period of three (3) days;
or
(c) The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Tenant, other than described in paragraph (b) above, where such failure shall
continue for a period of five (5) business days after written notice thereof
from Landlord to Tenant; provided, however, that if the nature of Tenant's
default as determined by Landlord is such that more than five (5) business days
are reasonably required for its cure, then tenant shall not be deemed to be in
default if Tenant commences such cure as soon as possible within said five (5)
business day period and thereafter diligently prosecutes such cure to
completion, an in any case completes said cure within twenty (20) business days
after the aforesaid written notice; or
(d) (i) The insolvency of the Tenant or the execution by the
Tenant of an assignment for the benefit of creditors, or the convening by Tenant
of a meeting of its creditors, or any class thereof, for the purposes of
effecting a moratorium upon or extension or composition of its debts; or the
failure of the Tenant to generally pay its debts as they mature; or (ii) the
filing by or for reorganization or arrangement under any law relating to
bankruptcy (unless in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days); or (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where such seizure is not
discharged within thirty (30) days.
17.2 Remedies in Default. (a) In the event of any such default or
breach by Tenant, Landlord shall have the right at any time thereafter, with or
without notice or demand and without limiting Landlord in the exercise of any
right or remedy which Landlord may otherwise have by reason or such default or
breach, to terminate this Lease at its option or to re-enter and at its option
to attempt to re-let without terminating this Lease and remove all persons and
property from the Premises, using any force as may reasonably be necessary to
accomplish said purposes, all without service of notice
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or resort to legal process and without being deemed guilty of trespass or
forcible entry or becoming liable for any loss or damage which may be
occasioned thereby.
(b) If Tenant shall fail to remove any effects which it is
entitled to remove from the Premises upon the termination of this Lease, or any
extension or renewal hereof, or upon a re-entry by Landlord for any cause
whatsoever, or upon Tenant's ceasing to possess the Premises for any reason, the
Landlord, at its option, may remove the same and store or dispose of the said
effects without liability for loss or damage thereto, and Tenant agrees to pay
to Landlord on demand any and all expenses incurred in such removal, including
Court costs, attorneys fees, storage and insurance charges on such effects for
any length of time the same shall be in Landlord's possession; or the Landlord,
at its option, without notice, may sell such effects, or any of them, at private
or public sale and without legal process, for such price or consideration as the
Landlord may obtain, and apply the proceeds of such sale upon any amounts due
under this Lease from the Tenant to the Landlord, and upon the expenses
incidental to the removing, cleaning the Premises, selling said effects, and
any other expense, rendering the surplus, if any, to the Tenant; provided,
however, in the event the proceeds of such sale or sales are insufficient to
reimburse the Landlord, Tenant shall pay such deficiency upon demand. Tenant
acknowledges and agrees that any such disposition of Tenant's property in the
above-described manner by the Landlord shall be deemed to be commercially
reasonable and that no bailment shall be created by Landlord's exercise of any
of its rights under this subparagraph (b).
(c) Should Landlord elect to re-enter, as herein provided,
or should it take possession pursuant to legal proceedings, or pursuant to any
notice provided for by the law, it may make such alterations, additions,
improvements and repairs as may be necessary in order to re-let the Premises,
and may but need not re-let the Premises or any part thereof for such term or
terms (which may be for a term extending beyond the term of this Lease) and at
such rental or rentals and upon such other terms and conditions as Landlord may
determine to be advisable; upon each such re-letting all rentals received by the
Landlord; shall be applied i) first to the payment of any costs and expenses of
such re-letting, including brokerage fees and attorney's fees and the cost of
such alterations, additions, improvements and repairs; ii) second, to the
payment of Base Rent due and unpaid hereunder, and the residue, if any, shall be
held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder provided that Tenant shall have no right to claim any
interest in all or any portion of said residue and if the rent and other charges
paid or to be paid to Landlord by any new tenant pursuant to any re-letting
exceed the monetary obligations of Tenant, Tenant shall have no right to claim
any interest in all or any portion of said excess. If such rental received from
such re-letting during any month be less than that to be paid during the month
by Tenant hereunder, Tenant shall pay any such deficiency to Landlord, and such
deficiency shall be calculated and paid monthly on the date on which the rent
would have been payable hereunder if possession had not been retaken. If, during
the existing term of this Lease, the premises covered thereby include other
premises not part of the Premises, a fair apportionment of the rent received
from such re-letting and the expenses incurred in connection therewith as
provided aforesaid will be made in determining the net proceeds from such
re-letting and the expenses incurred in connection therewith as provided
aforesaid will be made in determining the net proceeds from such re-letting, and
any rent concessions will be equally apportioned over the term of the new lease.
Landlord shall in no event be liable in any way whatsoever for failure to re-let
the Premises for any reason, or in the event the Premises are re-let, for
failure to collect the rent thereof under such re-letting. No such reentry or
taking possession of the Premises by Landlord, nor any acts pursuant thereto,
shall be construed as an election on its part to terminate this Lease unless a
written notice of such termination be given to Tenant by Landlord. No notice
from Landlord under this Lease or under any applicable forcible entry and
detainer or eviction statue or similar law shall constitute an election by
Landlord to terminate this Lease unless such notice specifically so states.
Notwithstanding any such re-letting without termination, Landlord may at any
time thereafter elect to terminate this Lease for such previous breach.
(d) Should Landlord at any time terminate this Lease for any
default or breach, in addition to any other remedies it may have, it may recover
from Tenant all damages it may incur by reason of such default or breach,
including the cost of recovering the Premises, reasonable attorneys fees, and
including the worth at the time of such termination of the excess, if any, of
the amount of rent and such other charges as are required to be paid by Tenant
under the terms of this Lease for the remainder of the stated term over the then
reasonable rental value of the Premises for the remainder of the stated term,
all of which amounts shall be immediately due and payable from Tenant to
Landlord; provided, however, that if the then reasonable rental value of the
Premises exceeds the value of the rent and other charges required to be paid by
Tenant under this Lease as aforesaid, Tenant shall have no right to claim any
interest in all or any portion of such excess. In determining the rent which
would be payable by Tenant hereunder, subsequent to default, the annual rent for
each year of the unexpired term shall be equal to the average annual Base Rent
and Additional Rent paid or payable by Tenant from the Commencement Date of this
Lease to the time of default, or during the preceding three (3) full calendar
years, whichever is shorter; and
(e) Each of the remedies set forth hereinabove in this
Section 17 shall not be exclusive, but rather shall be considered cumulative
with any other legal or equitable remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Premises are
located. To the extent such waiver is permitted by law, the parties waive trial
by jury in any action or proceeding brought in connection with this Lease. Suit
or suits for the recovery of the amount of damages set forth hereinabove may be
brought by Landlord, from time to time, at Landlord's election, and nothing
herein shall be deemed to require Landlord to await the date whereon this Lease
or the term hereof would have expired had there been no event of default.
Nothing contained in this Lease shall limit or prejudice the right of Landlord
to prove and obtain as liquidated damages in any bankruptcy, insolvency,
receivership, reorganization or dissolution proceeding an amount equal to the
maximum allowed by any statute or rule of law governing such proceeding and in
effect at the time when such damages are to be proved, whether or not such
amount be greater, equal to or less than the amounts recoverable, either as
damages or rent, referred to in any of the preceding provisions of this Section.
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or to such other address as may be given by a party to the other by proper
notice hereunder, or, in the case of notices to the Tenant, to the Premises. The
date of personal delivery (as evidenced by such evidence of service as provided
for in said rules) or the date on which the certified mail is deposited with
the United States Postal Service shall be the date on which any proper notice
hereunder shall be deemed given.
20. RELOCATION.
Tenant agrees that Landlord may relocate Tenant to other space in the
Building containing substantially the same amount of rentable square feet as is
contained in the Premises, provided that the actual cost of physically
relocating Tenant (excluding any and all consequential or other costs to Tenant)
and the cost of altering the new space to make it comparable to the Premises is
borne by the Landlord; provided, however, that Landlord may not exercise said
right to relocate Tenant if the Premises consist of more than ten percent (10%)
of the rentable square feet in the Building. In addition, Landlord shall pay
costs incurred by Tenant as a result of the relocation, including without
limitation costs incurred in changing addresses on stationery, business cards,
directories, advertising and other such items, but in no event shall Landlord's
obligation to pay cost imposed in this sentence exceed the sum of $500. In the
event that the new Premises in which the Tenant is relocated does not consist of
the identical number of rentable square feet as specified in Section, the
parties shall execute an instrument specifying the new number of square feet in
the Premises and the change in the number of square feet contained in the
Premises shall be deemed effective as of the date on which the Tenant occupies
the new premises in which it is relocated.
21. QUIET POSSESSION.
Upon Tenant paying the sums due hereunder and observing and performing
all of the covenants, conditions and provisions on Tenant's part to be observed
and performed hereunder, Tenant shall have quiet possession of the Premises for
the entire term hereof subject to all of the provisions of this Lease.
22. OPTIONS.
In the event that the Tenant, by addendum attached to this Lease, is
expressly given an option to renew or extend the term of this Lease, or any
option to purchase the Premises or Building or any right of first refusal to
purchase the Premises or other property of Landlord, then each of such options
and rights are personal to Tenant and may not be exercised by or assigned,
voluntarily or involuntarily, by or to anyone other than Tenant. No such option
described hereinabove may be exercised by the Tenant except in strict accordance
with the terms and provisions of the option and provided that Tenant is not in
default under this Lease either at the time Tenant gives notice of its intent to
exercise the option or at the time at which the option is to be exercised.
Notwithstanding the provisions of Section 19, notice of exercise of any option
shall be deemed given only when actually received by Landlord.
23. LANDLORD'S LIEN.
Tenant hereby grants to Landlord a lien upon and security interest in
all furniture, fixtures, equipment, inventory, merchandise and other personal
property belonging to the Tenant and located in, on or about the Premises or
Building at any time while this Lease is in effect, whether such items are
presently owned by Tenant or are after acquired, to secure the payment of all
Base Rent, Additional Rent and other charges due and to become due under this
Lease and to further secure the faithful performance of all of the other
obligations of this Lease required to be performed by Tenant, said lien to be
prior to any other lien on such property except a lien in favor of the seller or
lessor of such property to secure the unpaid purchase price or lease payments
thereof. All exemption laws are hereby expressly waived by Tenant. This lien and
security interest may be foreclosed in the same manner as a Financing Statement
under the version of the Uniform Commercial Code enacted in the state in which
the Premises are situated, or pursuant to any similar law so enacted if a
version of the Uniform Commercial Code is not in effect, and the filing of this
Lease in accordance with said law shall constitute full lawful notice of this
lien. In lieu of filing this Lease or in addition thereto, Landlord may require
Tenant at any time to execute a Financing Statement, Security Agreement or any
other similar documents required by the laws of the state in which the Premises
are situated to perfect this lien and security interest, and Tenant shall
immediately execute the same upon the demand of Landlord. In the event Tenant
fails or refuses to do so within ten (10) days after written demand, Tenant does
hereby make, constitute and irrevocably appoint Landlord as Tenant's
attorney-in-fact in Tenant's name, place and stead, to do so, and/or Landlord
may declare this Lease to be in default.
24. HAZARDOUS MATERIALS.
Tenant covenants not to introduce any hazardous or toxic materials onto
the Building, the Premises, or the grounds surrounding the Building, without (a)
first obtaining Landlord's written consent and (b) complying with all applicable
federal, state and local laws or ordinances pertaining to the transportation,
storage, use or disposal of such materials, including but not limited to
obtaining proper permits.
If Tenant's transportation, storage, use or disposal of hazardous or
toxic materials on the Building, the Premises, or the grounds surrounding the
Building results in (1) contamination of the soil or the surface or ground water
or (2) loss or damage to person(s) or property, then Tenant agrees to respond in
accordance with the following paragraph:
Tenant agrees (i) to notify Landlord immediately of any contamination, claim of
contamination, loss or damage, (ii) after consultation and approval by
Landlord, to clean up and (iii) to indemnify, defend and hold Landlord harmless
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from and against any claims, suits, causes of action, costs and fees, including
attorney's fees, arising from or connected with any such contamination, claim of
contamination, loss or damage. This provision shall survive the termination of
this Lease.
25. GENERAL PROVISIONS.
25.1 Estoppel Certificate. (a) Tenant shall at any time upon not less
than ten (10) days prior written notice from Landlord, execute, acknowledge and
deliver to Landlord a statement in writing: (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification, identifying the instruments of modification and certifying
that this Lease, as so modified, is in full force and effect), and the date to
which the Base Rent, security deposit, Additional Rent and other charges are
paid in advance, if any, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults, if any, which are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser, encumbrancer or other transferee of
the Premises.
(b) Tenant's failure to deliver such statement within such
time shall be conclusive upon Tenant: (i) that this Lease is in full force and
effect, without modification except as may be reasonably by Landlord, (ii) that
there are no uncured defaults in Landlord's performance, and (iii) that no rent
has been paid in advance; and
(c) If Landlord desires to finance or refinance the Premises
or the Building, or any part thereof, Tenant hereby agrees to deliver to
Landlord and/or to any lender designated by Landlord such financial records of
Tenant as may be reasonably required by such lender. Such statements may include
but not be limited to the past three (3) years' financial statements of Tenant.
All such financial statements shall be received by Landlord in confidence and
shall be used only for the purposes herein set forth.
25.2 Landlord's Interest and Liability. The term "Landlord" as used
herein shall mean only the owner or owners at the time in question of the fee
title or a tenant's interest in a ground lease of the real property on which the
improvements comprising the Building are situated. In the event of any transfer
of such title or interest, Landlord herein named (and in case of any subsequent
transfers the then grantor), shall be relieved from and after the date of such
transfer of all liability as respects Landlord's obligations thereafter to be
performed, provided that any funds in the hands of Landlord or the then grantor
at the time of such transfer in which Tenant has an interest shall be delivered
to the grantee. The obligations contained in this Lease to be performed by
Landlord shall, except as aforesaid, be binding on Landlord's successors and
assigns only during their respective periods of ownership. Anything to the
contrary elsewhere in this Lease notwithstanding, Tenant shall look solely to
the estate and property of the Landlord in the Building for the satisfaction of
the Tenant's remedies for the collection of a judgment (or other judicial
process) requiring the payment of money by the Landlord in the event of any
default or breach by the Landlord with respect to any of the terms, covenants
and conditions of the Lease to be observed and/or performed by the Landlord, and
no other property or assets of the Landlord shall be subject to levy, execution
or other enforcement procedure for the satisfaction of the Tenant's remedies.
25.3 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
25.4 Interest on Past Due Obligations; Certified Funds. Except as may
expressly be provided in this Lease to the contrary, any amount due to Landlord
not paid when due shall bear interest at the rate of four percent (4%) per annum
greater than the prime rate of City Bank of New York, as the same may fluctuate
from and after the date on which the payment was first due through the date on
which the payment is paid in full, provided, however, that the payment of such
interest shall in no event exceed the highest rate allowed under applicable law.
Payment of such interest shall not excuse or cure any default by Tenant under
this Lease. In the event that either Tenant is more than ten (10) days late in
making any payment due under the Lease, or any payment from Tenant to Landlord
does not clear the bank or is returned for insufficient funds, and either such
condition occurs on two or more occasions, or each occurs once, Landlord shall
have the right at any time thereafter to require that all succeeding monthly
installments of Base Rent and all succeeding payments of Additional Rent be paid
to the Landlord in certified funds drawn on a bank located in the metropolitan
area in which the Premises are located. Said right may be exercised by Landlord
by giving notice of such requirements to Tenant, but the giving of such notice
and the exercise of this right by Landlord shall not be construed to be a waiver
of any default by Tenant or any other right which Landlord may exercise under
this Lease.
25.5 Time of The Essence. Time is of the essence in the performance by
Tenant of its obligations hereunder.
25.6 Captions. Any captions contained in this Lease are not a part
hereof, are for convenience only, and are not to be given any substantive
meaning in construing this Lease.
25.7 Entire Agreement. This Lease contains the entire agreement and
understanding between the paries hereto. There are no oral understandings,
terms, or conditions, and neither party has relied upon any representations,
express or implied, not contained in this Lease. All prior understandings,
terms, or conditions are deemed merged in this Lease. No modification of this
Lease shall be binding unless such modification shall be in writing and signed
by the paries hereto. Tenant acknowledges that it has not been induced to enter
into this Lease by any promises or representations not expressly set forth in
this Lease, and if any such representations were made prior to the execution of
this Lease, Tenant acknowledges that it has not relied on the same, and that
Landlord shall have no liability with respect to any such representations.
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25.8 Waiver. No failure by either party to insist upon the strict
performance of any agreement, term, covenant or condition hereof or to exercise
any right or remedy consequent upon a breach thereof, and no acceptance of full
or partial rent or the continuance of any such breach, shall constitute a waiver
of any such breach of such agreement, term, covenant or condition or a
relinquishment of the right to exercise such right or remedy. No agreement,
term, covenant or condition hereof to be performed or complied with by either
party, and no breach thereof, shall be waived, altered or modified except by a
written instrument executed by the other party. No waiver of any breach shall
affect or alter this Lease, but each and every agreement, term, covenant or
condition hereof shall continue in full force and effect with respect to any
other than existing or subsequent breach thereof. Notwithstanding any
termination of this Lease, the same shall continue in force and effect as to any
provisions of the Lease, including remedies, which require or permit observance
or performance of Landlord or Tenant subsequent to termination.
25.9 Recording. Tenant shall not record this Lease. Any such
recordation by Tenant shall be a breach of this Lease.
25.10 Determinations by Landlord. Whenever in this Lease the Landlord
is to make any determination or decision, the Landlord shall make its
determination or decision in the exercise of its reasonable discretion and
judgment; however, any such determination or decision shall not bind the
Landlord if it has not been confirmed in writing.
25.11 Cumulative Remedies. No remedy or election by Landlord hereunder
shall be deemed exclusive, but shall wherever possible be cumulative with all
other remedies at law or in equity to which Landlord may be entitled.
25.12 Covenants and Conditions. Each provision of this Lease
performable by Tenant or Landlord shall be deemed both a covenant and a
condition.
25.13 Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment, subletting or transfer buy Tenant and subject to the
provisions of Section 25.2, this Lease shall bind the parties, their personal
representatives, heirs, successors and assigns. This Lease shall be governed by
the laws of the state where the Premises are located.
25.14 Attorneys Fees. In the event of litigation relating to this
Lease, the prevailing party shall be entitled to recover from the losing party
any costs or reasonable attorneys fees incurred by the prevailing party in
connection with such litigation. If Landlord utilizes the services of an
attorney to enforce any of its rights hereunder but which does not result in the
bringing of an action, Tenant shall immediately pay to Landlord upon demand
therefor the amount of such attorneys fees incurred.
25.15 Landlord's Access. Landlord and Landlord's agents,
representatives and designees shall have the right to enter the Premises as
reasonably necessary or desirable to Landlord for the purpose of inspecting the
same, showing the same to prospective purchasers, tenants, lenders or other
transferees, making such alterations, repairs, improvements or additions to the
Premises or to the Building as Landlord may deem necessary or desirable, or for
any other reasonable purpose as Landlord may determine. Landlord may at any time
place in, on or about the Premises any "For Sale", or "For Lease" or similar
signs, all without rebate of rent or liability to Tenant.
25.16 Auctions. Tenant shall not conduct any auction, liquidation
sale, or going out of business sale in, on or about the Premises.
25.17 Merger. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of the Landlord, terminate all or any existing subtenancies or may,
at the option of Landlord, operate as an assignment to Landlord of any or all of
such subtenancies.
25.18 Authority. If Tenant is a corporation, each individual executing
this Agreement on behalf of said corporation represents and warrants that he is
duly authorized to execute and deliver this Lease on behalf of said corporation
in accordance with a duly adopted resolution of the Board of Directors of said
corporation or in accordance with the Bylaws of said corporation, and that this
Lease is binding upon said corporation in accordance with its terms.
If Tenant is a division or subsidiary of a corporation, each individual
executing this Agreement on behalf of the division or subsidiary represents and
warrants that he or she is duly authorized to execute and deliver this Agreement
on behalf of the division or subsidiary, in accordance with a duly adopted
resolution of the Board of Directors of the parent corporation, that this
Agreement is binding upon the parent corporation (as well as the division or
subsidiary) in accordance with its terms, and that said division or subsidiary
shall, within (30) days after request by Landlord, deliver to Landlord a
certified copy of a resolution ratifying the execution of this Agreement.
If Tenant is a partnership, each individual executing this Agreement on
behalf of said partnership represents and warrants that he or she is duly
authorized to sign and deliver this Agreement on behalf of said partnership and
that this Agreement is binding upon said partnership in accordance with its
terms.
25.19 Signs. Landlord may prescribe a uniform pattern of
identification signs for tenants to be placed on the outside of the doors
leading into their respective premises, and other than such identification
signs, Tenant shall not install, paint, display, inscribe, place or affix,
or otherwise attach, any sign, fixture, advertisement, notice, lettering or
direction
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on any part of the outside of the building or in the interior or other portion
of the Building without obtaining the prior written consent of the Landlord.
25.20 BROKERS. The parties hereto acknowledge that the brokers named
in Section 1.18 were the sole real estate brokers that represented the Landlord
herein, and that no commissions are owed by Landlord to any other brokers
whatsoever, and Tenant agrees to indemnify Landlord from claims for commission
from any other brokers arising out of the execution of this Lease.
25.21 GUARANTOR. In the event that there is a guarantor of this Lease,
said guarantor shall have the same obligations as Tenant under this Lease.
25.22 GOVERNING LAW. This lease shall be governed by and construed in
accordance with the laws of the state in which the Building is located.
25.23 JOINT AND SEVERAL LIABILITY. If two or more individuals,
corporations, partnerships or other business associates (or any combination of
two or more thereof) shall sign this Lease as Tenant, the liability of each
such individual corporation, partnership or other business association to pay
rent and perform all other obligations hereunder shall be deemed to be joint
and several, and all notices, payments and agreements given or made by, with or
to any one of such individuals, corporations, partnerships or other business
associations shall be deemed to have been given or made by, with or to all of
them. In like manner, if Tenant shall be a partnership or other business
association, the members of which are, by virtue of statute or federal law,
subject to personal liability, the liability of each such member be joint and
several.
25.24 NO JOINT VENTURE. Any intention to create a joint venture or
partnership relation between the paries hereto is hereby expressly disclaimed.
25.25 AMERICANS WITH DISABILITIES ACT OF 1990. Tenant shall be
responsible for, and shall bear all costs and expenses associated with, any and
all alterations to the Premises which may be required by the Americans with
Disabilities Act of 1990 (the "ADA"), for the accommodation of disabled
individuals who amy be employed from time to time by Tenant, or any disabled
customers, clients, guests, or invitees or sublessees. Tenant shall indemnify
and hold Landlord harmless from and against any and all liability incurred
arising from the failure of the Premises to conform with the ADA, including the
cost of making any alterations, renovations or accommodations required by the
ADA, or any government enforcement agency, or any courts, any and all fines,
civil penalties, and damages awarded against Landlord (or those awarded against
Tenant which could become a lien upon the property upon which the Premises are
located) resulting from a violation or violations of the ADA, and all reasonable
legal expenses and court costs incurred in defending claims made under the ADA,
including without limitation reasonable consultants', attorneys' and paralegals'
fees, expenses and court costs.
25.26 HAZARDOUS WASTE. The term "Hazardous Materials", as used in this
Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the use and/or the removal of which is required or the use of
which is restricted, prohibited or penalized by an "Environmental Law", which
term shall mean any federal, state or local law, ordinance or other statute of a
governmental or quasi-governmental authority relating to pollution or protection
of the environment. Lessee hereby agrees that (I) no activity will be conducted
on the Premises that will produce any Hazardous Substance, except for such
activities that are part of the ordinary course for Lessee's business activities
(the "Permitted Activities") provided said Permitted Activities are conducted in
accordance with all Environmental Laws and have been approved in advance in
writing by Lessor; Lessee shall be responsible for obtaining any required
permits and paying any fees and providing any testing required by any
governmental agency; (ii) the Premises will not be used in any manner for the
storage of any Hazardous Substances except for the storage of such materials
that are used in the ordinary course of Lessee's business ("Permitted
Materials") provided such Permitted Materials are properly stored in a manner
and location meeting all Environmental Laws and approved in advance in writing
by Lessor; Lessee shall be responsible for obtaining any required permits and
paying any fees and providing any testing required by any governmental agency;
(iii) no portion of the Premises will be used as a landfill or a dump; (iv)
Lessee will not install any underground tanks of any type; (v) Lessee will not
allow any surface or subsurface conditions to exist or come into existence as a
result of Lessee's actions or the conduct of Lessee's business on the Leased
Premises that constitute or with the passage of time may constitute a public or
private nuisance; (vi) Lessee will not permit any Hazardous Substances to be
brought onto the Premises, except for the Permitted Materials described below,
or hereafter approved in writing by Lessor and if so brought or found located
thereon, the same shall be immediately removed, with proper disposal, and all
required cleanup procedures shall be diligently undertaken pursuant to all
Environmental Laws. Lessor or Lessor's representative shall have the right but
not the obligation to enter the Premises for the purposes of inspecting the
storage, use and disposal of Permitted Materials to ensure compliance with all
Environmental Laws. Should it be determined, in Lessor's sole opinion, that said
Permitted Materials are being improperly stored, used, or disposed of, then
Lessee shall immediately take such corrective action within 24 hours, Lessor
shall have the right to perform such work and Lessee shall promptly reimburse
Lessor for any and all costs associated with said work. If at any time during or
after the term of the Lease, the Premises are found to be so contaminated or
subject to said conditions, and such contamination is caused by Lessee or the
conduct of its business on the Leased Premises, Lessee shall diligently
institute proper and thorough cleanup procedures at Lessee's sole cost, and
Lessee agrees to indemnify, save and hold Lessor harmless from all and against
claims, demands, actions, liabilities, costs, expenses, damages and obligations
of any nature arising from or as a result of the use of the Premises by Lessee,
and regardless of whether or not Lessor is found to solely, concurrently, or
jointly negligent with Lessee. The foregoing indemnification and the
responsibilities of Lessee shall survive the termination or expiration of the
Lease. Anything contained herein to the contrary notwithstanding, Lessor shall
not unreasonably
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withhold its consent with respect of the use, storage, generation or
manufacturing of Hazardous Substances on or about the Leased Premises provided
same is done in the ordinary course of Lessee's business, and in compliance with
all environmental laws.
PERMITTED MATERIALS:
NONE.
The parties hereto have executed this Lease on the first page hereof on
the dates specified immediately below their respective signatures.
This instrument is executed and made on behalf of the Trust by a
Trustee or officer of the Trust, not individually but solely as a Trustee under
the Declaration of Trust or as an officer, and the obligations under this
Agreement are not binding upon, nor shall resort be had to the private property
of, any of the Trustees, Shareholders, officers, employees, or agents for the
Trust personally, but bind only the Trust property.
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EXHIBIT 10.4
LEASE AGREEMENT
between
SAWGRASS PLAZA ASSOCIATES
a Florida general partnership
and/or its assigns
and
CORSAIRE, INC.,
a Delaware corporation
d/b/a
NET COMMAND TECH, INC.
Dated: March 22, 1999
Sawgrass Plaza
1550 Sawgrass Corporate Parkway
Suite 210
Sunrise, Florida 33233
<PAGE> 2
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter referred to as the "Lease") is made
and entered into the 22nd day of March, 1999, by and between SAWGRASS PLAZA
ASSOCIATES, a Florida general partnership and/or its assigns (hereinafter
referred to as "Landlord") and CORSAIRE, INC., a Delaware corporation d/b/a Net
Command Tech, Inc. (hereinafter referred to as "Tenant").
W I T N E S S E T H:
THAT LANDLORD, in consideration of the rents and agreements hereafter
promised and agreed by Tenant to be paid and performed, does hereby lease to
Tenant, and Tenant does hereby lease from Landlord, the Premises described
herein, subject to the following terms.
ARTICLE I
DESCRIPTION OF PROPERTY; TERM
SECTION 1.1 DESCRIPTION OF PROPERTY. Landlord hereby leases to Tenant
and Tenant hereby leases from Landlord approximately 3,406 rentable square feet
of office space on the second (2nd) floor (hereinafter referred to as the
"Premises") approximately as shown on Exhibit "A" attached hereto and made a
part of this Lease, (which rentable square footage and any other amounts set
forth in this Lease which are a function of rentable square footage, shall be
subject to adjustment based upon Landlord's final "as-built" measurement of the
Premises) in the building now known as "Sawgrass Plaza" and located at Sawgrass
Corporate Parkway, Sunrise, Florida 33323, (hereinafter referred to as the
"Building"), as described in Exhibit "B" (Legal Description) and depicted on the
site plan attached hereto as Exhibit "C", together with the right to use in
common with other tenants of the Building, their invitees, customers and
employees, the lobby areas, stairways, elevators, hallways, lavatories and all
other common facilities contained in the Building and parking areas. All of the
land and real property underlying the Building or adjacent thereto, with all
improvements thereto including the Building, and used in connection with the
operation of the Building shall be referred to herein as the "Property".
Landlord represents that prior to the commencement of the Lease Term (defined
below) Landlord shall construct the Building consistent with plans and
specifications for the Building with infrastructure work complete so as to
provide Tenant with sufficient access to the Building. Landlord further
represents that the Building shell and interior common areas shall be completed
in a good and workmanlike manner and in compliance with all federal, state and
local law.
SECTION 1.1(a) RIGHT OF OFFER. Provided Tenant has not been in default
of any terms or conditions of this Lease and provided Tenant has notified
Landlord, in writing, of an additional space requirement, Landlord shall notify
Tenant of the upcoming availability of any space in the Building and Tenant
shall have the right of first offer to lease such space upon terms and
conditions mutually agreed upon by Landlord and Tenant, subject and subordinate
to any other rights to such space existing as of the date hereof. Tenant shall
have five (5) days following receipt of Landlord's notification of the upcoming
availability of space in the Building within which to exercise the right of
first offer. If Tenant declines the right of first offer, or fails to respond to
Landlord's notification within the five (5) day period, Landlord shall
thereafter be free to market the space to third party tenants.
SECTION 1.2 TERM. Tenant shall have and hold the Premises for a term of
approximately four (4) years and five (5) months (hereinafter referred to as the
"Term" or "Lease Term"), commencing upon receipt of a certificate of occupancy
for the Premises which is anticipated to be on or about July 1, 1999 in
accordance with the Critical Path attached hereto as Exhibit "G" (the
"Commencement Date") and expiring on November 24, 2003 (the "Expiration Date").
In the event the Commencement Date occurs on a day other than the first day of a
calendar month, the first Base Rent and Additional Rent (hereinafter defined)
payment shall be in the amount of the Base Rent and Additional Rent for the next
full calendar month plus the prorated Base Rent and Additional Rent for the
calendar month in which the Term of this Lease commences, such payment to be due
on the Commencement Date. The parties hereto agree that when the dates of
commencement and termination of this Lease are determined, they will execute an
Estoppel Certificate in the form attached hereto as
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<PAGE> 3
Exhibit "D", certifying said dates. Tenant's intentional failure or refusal to
execute said Estoppel Certificate shall constitute a default hereunder.
ARTICLE II
BASE RENT
SECTION 2.1 BASE RENT; LATE CHARGE; SALES TAX. Commencing on the
Commencement Date, Tenant agrees to pay Landlord base rent for the first year of
the Lease Term in the amount of $14.50 times the rentable square footage of the
Premises as set forth in Section 1.1 above (the "Base Rent"), payable in twelve
(12) equal monthly installments due on or before the first day of each and every
month during the first year of the Lease Term. In addition, Tenant shall be
responsible for the payment of Additional Rent (hereafter defined) as provided
in Article III below (the Base Rent and Additional Rent shall be considered Rent
as that term is used in Florida Statute Chapter 83 and shall sometimes be
collectively referred to as the "Rent"). In the event any monthly Rent payment
is not paid within five (5) business days after it is due, Tenant agrees to pay
a late charge of ten (10%) percent of the amount of the payment due. Tenant
further agrees that the late charge imposed is fair and reasonable, complies
with all laws, regulations and statutes, and constitutes an agreement between
Landlord and Tenant as to the estimated compensation for costs and
administrative expenses incurred by Landlord due to the late payment of Rent by
Tenant. Tenant further agrees that the late charge assessed pursuant to this
Lease is not interest, and the late charge assessed does not constitute a lender
or borrower/creditor relationship between Landlord and Tenant, and may be
treated by Landlord as Additional Rent owed by Tenant. Tenant shall pay to
Landlord all sales, use or other taxes pertaining to the Rent which shall be
remitted by Landlord to the Florida Department of Revenue or other appropriate
taxing authority.
SECTION 2.2 BASE RENTAL ADJUSTMENT. Commencing on the first anniversary
of the Lease (provided such anniversary date falls on the first day of the
month, otherwise on the first day of the following month) and each and every
anniversary thereafter, the Base Rent shall increase by three (3%) percent over
the previous year's Base Rent.
SECTION 2.3 PAYMENT WITHOUT NOTICE OR DEMAND. The Rent called for in
this Lease shall be paid to Landlord without notice or demand, and without
counterclaim, offset, deduction, abatement, suspension, deferment, diminution or
reduction. Tenant hereby waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Lease or the Premises or any
part thereof, or to any offset, deduction, abatement, suspensions, deferment,
diminution or reduction of the Rent on account of any such circumstances or
occurrence.
SECTION 2.4 PLACE OF PAYMENT. All payments of Rent shall be made and
paid by Tenant to Sawgrass Plaza Associates, c/o Stiles Property Management Co.,
6400 N. Andrews Avenue, Fort Lauderdale, Florida 33301, or at such other place
as Landlord may, from time to time, designate in writing to Tenant. All Rent
shall be payable in current legal tender of the United States, as the same is
then by law constituted. Any extension, indulgence, or waiver granted or
permitted by Landlord in the time, manner or mode of payment of Rent, upon any
one (1) or more occasions, shall not be construed as a continuing extension,
indulgence or waiver, and shall not preclude Landlord from demanding strict
compliance herewith.
ARTICLE III
ADDITIONAL RENT
SECTION 3.1 ADDITIONAL RENT. In addition to the Base Rent, Tenant shall
pay as "Additional Rent" its proportionate share ("Tenant's Proportionate
Share") of the Operating Expenses (as herein defined) of the Building and the
Property and the full cost of items billed on a per square foot basis including
janitorial service. Additional Rent shall be paid to Landlord in accordance with
the following provisions:
1. Landlord shall furnish to Tenant prior to thirty (30) days after the
beginning of each
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<PAGE> 4
calendar year, including the first calendar year, a budget setting forth
Landlord's estimate of Operating Expenses for the upcoming year. The Operating
Expenses shall be determined as though the Building were occupied at the actual
occupancy rate or at an occupancy rate of ninety-five (95%) percent, whichever
is higher. Tenant shall pay to Landlord, on the first day of each month as
Additional Rent, an amount equal to one-twelfth (1/12th) of Tenant's
Proportionate Share of Landlord's estimate of the Operating Expenses for that
calendar year. If there shall be any increase or decrease in the Operating
Expenses for any year, whether during or after such year, Landlord shall furnish
to Tenant a revised budget and the Operating Expenses shall be adjusted and paid
or credited, as the case may be. If a calendar year ends after the expiration or
termination of this Lease, the Additional Rent payable hereunder shall be
prorated to correspond to that portion of the calendar year occurring within the
Term of this Lease.
Notwithstanding the foregoing, in the event the total square footage of
the Building is not ninety-five (95%) percent occupied during any calendar year,
appropriate adjustments shall be made to determine both the estimated and actual
Operating Expenses as though the same had been ninety five (95%) percent
occupied for the full calendar year.
2. Within 120 days after the end of each calendar year, Landlord shall
furnish to Tenant an operating statement showing the actual Operating Expenses
incurred for the preceding calendar year, which statement shall be signed by an
officer of Landlord and certified as true and correct. Tenant shall either
receive a refund or be assessed an additional sum based upon the difference
between Tenant's Proportionate Share of the actual Operating Expenses and the
Additional Rent payments made by Tenant during said year. Any additional sum
owed by Tenant to Landlord shall be paid within thirty (30) days of receipt of
assessment. Any refund owed by Landlord to Tenant shall be credited toward
Tenant's next month's rental payment. Each operating statement given by Landlord
shall be conclusive and binding upon Tenant unless, within thirty (30) days
after Tenant's receipt thereof, Tenant shall notify Landlord that it disputes
the accuracy of said operating statement. Failure of Landlord to submit the
written statement referred to herein shall not waive any rights of Landlord,
unless such statement is not submitted within nine (9) months from the end of
the prior calendar year.
3. Landlord's "Operating Expenses", as calculated pursuant to Section
3.1.1 above, shall mean expenses relating to the operation and maintenance of
the Building and the Property, and all amenities and appurtenances relating
thereto, including, without limitation, the following:
(a) wages and salaries of all persons engaged in the maintenance,
management and operation of the Building and Property;
(b) social security taxes and all other taxes which may be levied
against Landlord;
(c) medical and general benefits for all Building employees, pension
payments and other fringe benefits;
(d) administrative expenses and charges;
(e) all insurance premiums;
(f) stand-by sprinkler charges, water charges and sewer charges;
(g) electricity and fuel used in the heating, ventilation,
air-conditioning, lighting and all other operations of the Premises,
Building and Property;
(h) trash removal and recycling expenses;
(i) painting of all common areas in the Building and Property,
including painting, striping and the provision of signage on all
pavement, curbs, walkways, driveways and parking areas in the Building
and upon the Property;
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<PAGE> 5
(j) window cleaning, janitorial services and related equipment and
supplies;
(k) management fees incurred in the operation of the Building and
Property;
(1) cleaning, maintenance and repair of the Building and Property;
(m) maintenance and service contracts;
(n) tools, equipment and supplies necessary for the performance of
repairs and maintenance (which are not required to be capitalized for
federal income tax purposes);
(o) maintenance and repair of all mechanical, electrical and
intrabuilding network cabling equipment in the Building or upon the
Property;
(p) cleaning, maintenance and repair of elevators, restrooms, lobbies,
hallways and other common areas of the Building;
(q) cleaning, maintenance and repair of pavement, curbs, walkways,
lighting facilities, landscaping, driveways, parking areas and drainage
areas upon and adjacent to the Property and the Building;
(r) personal property taxes;
(s) real estate taxes assessed against the Building and the Property.
The term "real estate taxes" shall mean any tax or assessment levied,
assessed or imposed at any time by any governmental authority upon or
against the Building or the Property or any part thereof, any tax or
assessment levied, or any franchise, income, profit or other tax or
governmental imposition levied, assessed or imposed against or upon
Landlord in substitution in whole or in part for any tax or assessment
against or upon the Building and the Property or any part thereof;
(t) assessments for public improvements imposed against the Building
and the Property and assessments of the Association (defined below);
(u) all other costs and expenses which would be considered as an
expense of cleaning, maintaining, managing and operating or repairing
the Building and the Property;
(v) all amounts collected and held by Landlord with respect to reserve
accounts for those items which Landlord has designated, and which shall
include painting, refurbishing, re-carpeting, redecorating or
landscaping any portion of the Building and the Property and/or common
and public areas of the Building exclusive of any work done in any
Tenant's space, and which shall include (a) roof maintenance; (b)
repainting of the Building; and, (c) maintenance of the parking lot.
(w) a reasonable amortization cost due to any capital expenditures
incurred to reduce or limit operating expenses of the Property and
Building;
(x) the amortized portion of any cost or expense for any capital
expenditure which may be required by governmental authority for any
reason, including, without limitation, compliance with the laws
referred to in Section 13.1 below, or which may be required by
Landlord's insurance carrier;
(y) any and all costs associated with providing and maintaining
security at the Building, including any security systems and security
personnel.
(z) any and all costs associated with any governmental taxes, levies or
impositions arising after the execution of this Lease.
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<PAGE> 6
4. "Tenant's Proportionate Share" shall, at any given time, be defined
as that fraction having as a numerator the total rentable square footage leased
hereunder at said time, and having as a denominator the total rentable square
footage of Sawgrass Plaza.
5. The term "Declaration" shall mean that certain Declaration of
Covenants, Conditions and Restrictions for Sawgrass International Corporate
Park. Pursuant to the Declaration, a corporation not-for-profit, known as
Sawgrass Property Owners' Association, Inc. (the "Association") has been formed
to enforce the Declaration and to operate and maintain the Common Areas referred
to therein. Tenant agrees to pay Tenant's Proportionate Share of any and all
maintenance or other assessments imposed by the Association on Landlord as owner
of the Property, as provided in the Declaration.
SECTION 3.2 INTERIM OPERATING EXPENSES. During the period from the
Commencement Date through December 31, 1999, Tenant shall pay as Interim
Operating Expenses $7.00 per square foot per year, payable monthly as Additional
Rent, which is merely an estimate of the actual Interim Operating Expenses for
such period. Not later than 120 days after the end of the calendar year,
Landlord shall compute the actual Operating Expenses incurred during such
period. Tenant shall either receive a refund or be assessed an additional sum
based upon the difference between Tenant's Proportionate Share of the actual
Operating Expenses and the payments of Interim Operating Expenses made by Tenant
during such period. Any additional sum owed by Tenant to Landlord shall be paid
within ten (10) days of receipt of assessment. Any additional sum owed by
Landlord to Tenant shall be credited toward Tenant's next month's rental
payment.
SECTION 3.3 CAP ON CONTROLLABLE OPERATING EXPENSES. Landlord hereby
agrees that "Controllable Operating Expenses" (all expenses other than ad
valorem and non-ad valorem real estate taxes, Building insurance and utilities)
shall not increase by more than six (6%) percent per year over the previous
year's actual Controllable Operating Expenses, cumulative during the Term
hereof, and any renewal terms. Landlord's actual costs for uncontrollable
operating expenses (i.e. real estate taxes, Building insurance and utilities)
shall be passed through to Tenant on a pro-rata basis. Additionally, any
expenses deferred during the first year of operation of the Building because of
construction warranties (i.e. HVAC service contracts, elevator service
contracts, fire/security service contracts, etc.) will be added back to the
operating expenses prior to determining whether or not the controllable
operating expense cap has been exceeded.
ARTICLE IV
SECURITY/DAMAGE DEPOSIT
SECTION 4.1 SECURITY/DAMAGE DEPOSIT. Simultaneously with the execution
of this Lease, Tenant shall pay the sum of $12,300.00 to be held by Landlord as
security for the performance by Tenant of all of the terms, covenants and
conditions hereof and the payment of Rent or any other sum due Landlord
hereunder. It is expressly understood that such deposit shall not be considered
an advance payment of Rent or a measure of Landlord's damages in the event of
default by Tenant. Landlord shall have the right to apply all or any part of the
security deposit against any damage, injury, expense or liability caused
Landlord by Tenant's default after expiration of Tenant's applicable cure
periods, including, but not limited to: (a) unreasonable wear and tear of the
Premises; (b) loss or damage to the Premises or other property of the Landlord
caused by Tenant, Tenant's officers, employees, agents, invitees, or licensees;
(c) the cost of restoring the Premises, except for reasonable wear and tear, to
the same condition it was in at the time Tenant began occupancy thereof; (d)
Rent payments which remain due and owing beyond any applicable grace period.
Landlord shall not be limited in pursuing Landlord's remedies against Tenant for
costs, losses or damages to the Premises or to any other property of Landlord
for any such costs, losses or damages which are in excess of the above described
security deposit. Such money shall bear no interest and may be commingled with
other security deposits or funds of Landlord.
Additionally, simultaneously with the execution of this Lease, Tenant
shall cause the Corporate Guaranty attached hereto as Exhibit "H" to be executed
by Net Command Tech, Inc. guarantying the full payment and performance of
Tenant's obligations under this Lease.
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ARTICLE V
USE OF PREMISES
SECTION 5.1 USE OF PREMISES. Tenant shall use the Premises for general
business and administrative offices and for no other purpose without first
obtaining the written consent of Landlord. Tenant will not use or permit the use
of the Premises or any part thereof for any unlawful purpose, or in violation of
any ordinances, laws, rules or regulations of any governmental body, or of
Landlord provided for in Exhibit "E" herein, Tenant shall not do or permit any
act which would constitute a public or private nuisance or waste or which would
be a nuisance or annoyance or cause damage to Landlord or Landlord's other
tenants or which would invalidate any policies of insurance or increase the
premiums thereof, now or hereafter written on the Building and/or Premises.
ARTICLE VI
PARKING
SECTION 6.1 PARKING. There shall be available at the Building fifteen
(15) parking spaces for the use of Tenant, two (2) of which shall be marked
"reserved" and thirteen (13) of which shall be on a non-exclusive basis.
Landlord shall have no obligation to police or enforce Tenant's reserved parking
spaces.
ARTICLE VII
COMPLETION OF PREMISES
SECTION 7.1 COMPLETION OF BUILDING. Landlord shall construct the
Building in accordance with the Plans and Specifications as permitted by the
City of Sunrise.
SECTION 7.2 TENANT IMPROVEMENTS.
A. Landlord, at Landlord's expense, shall complete the Base
Building Shell as defined in Exhibit "F" attached hereto.
B. Landlord shall complete the Premises in accordance with plans
and specifications prepared by Landlord, and the Critical Path
attached hereto as Exhibit "G". The improvements necessary to
complete the Premises in accordance with such plans and
specifications are referred to herein as the ("Tenant
Improvements").
C. Landlord shall contribute up to $20.00 per rentable square
foot (inclusive of space planning, architectural drawings,
permitting fees and general contractors fees) toward the cost
of Tenant Improvements (the "Tenant Improvement Allowance").
Tenant shall be responsible for the payment of all costs of
construction exceeding those included the Base Building Shell
and the Tenant Improvement Allowance (the "Tenant Improvement
Overage").
D. The Tenant Improvement Overage Shall be paid within five (5)
days of the completion date set forth in the Critical Path for
Tenant's review and approval of the final cost estimate for
Tenant Improvements.
SECTION 7.2(A) COMPLETION BY LANDLORD. The Premises shall be deemed
ready for occupancy on the date Landlord's Work is substantially completed and a
Certificate of Occupancy for the Premises is received. The same shall be deemed
substantially completed notwithstanding the fact that minor or insubstantial
details of construction, mechanical adjustment or decoration remain to be
performed, the non-completion of which does not materially interfere with
Tenant's use of the Premises. Landlord shall give Tenant at least ten (10) days
notice of the date on which Landlord
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estimates Landlord's Work will be substantially completed and a Certificate of
Occupancy issued, and Tenant shall occupy the Premises promptly thereafter.
SECTION 7.3 DELAY BY TENANT. If substantial completion of the Premises
by Landlord is delayed due to any one or more of the following:
(a) Tenant's failure to furnish, approve, or authorize any plans
in accordance with the Critical Path attached hereto as
Exhibit "G" or other time periods/limits set forth herein;
(b) Tenant's delay or failure in submitting to Landlord any
information, authorization, or approvals in compliance within
the time limits set forth in the Critical Path, including,
without limitation, any information required to prepare plans;
(c) changes in or additions to plans as requested by Tenant
resulting in a delay beyond the dates set forth in the
Critical Path;
(d) the performance or completion of any work in the Premises by
Tenant or any person, firm or corporation employed by Tenant;
(e) Tenant's request for materials, components, finishes or
improvements which are not available in a commercially
reasonable time given the anticipated date of substantial
completion of the Premises by Landlord as set forth herein;
(f) Tenant's failure to pay, when due, any amounts required to be
paid by Tenant pursuant to this Lease;
(g) Tenant's failure to comply with all federal, state, or local
laws or regulations, including, without limitation, all codes
and ordinances;
(h) Tenant's request for additional bidding or rebidding of the
cost of all or a portion of the completion of the Premises
beyond the dates set forth in the Critical Path;
(i) changes or postponements requested by Tenant to the work being
completed;
(j) any error in plans or other documents caused by Tenant, or its
employees or agents; and
(k) any other act or omission of Tenant, or its employees or
agents which, in Landlord's reasonable opinion, will result in
delays beyond the dates set forth in the Critical path;
then the Premises shall be deemed ready for occupancy on the date it would have
been ready, but for such delay, and Rent shall commence as of such earlier date.
Any changes to floor plans after execution of the Lease shall be subject to
Landlord's approval, and furthermore, Tenant shall pay for any extra costs that
may be incurred by Landlord which are caused by the changes so requested by
Tenant.
SECTION 7.4 ACCEPTANCE OF PREMISES. Tenant acknowledges that Landlord
has not made any representatives or warranties with respect to the condition of
the Premises and neither Landlord nor any assignee of Landlord shall be liable
for any latent defect therein; provided, however, Landlord shall be responsible
for repairing any latent defects. Upon delivery to Tenant, Landlord shall
conduct a walk-through of the Premises with a representative of Tenant at which
time a "punch-list" of items which remain to be completed (the non-completion of
which do not prohibit Tenant's use of the Premises) shall be prepared. Tenant
shall have ten (10) days after possession of the Premises to notify Landlord of
any additional items discovered following the walk-through. Landlord shall
complete (or commence to complete) such "punch-list" items within thirty (30)
days of the Commencement Date of this Lease. The taking of possession of the
Premises by Tenant shall be conclusive evidence that the
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Premises were in good and satisfactory condition at the time such possession was
taken, except for such "punch list items". If Landlord shall give Tenant
permission to enter into possession of the premises prior to the Commencement
Date, such possession or occupancy shall be deemed to be upon all the terms,
covenants, conditions, and provisions of this Lease, including the execution of
an Estoppel certificate.
ARTICLE VIII
LANDLORD AND TENANT OBLIGATIONS
SECTION 8.1 TENANT'S OBLIGATIONS. Tenant shall be responsible for all
repairs, the need for which arises out of: (a) the performance or existence of
Tenant's Work or alterations; (b) the installation, use or operation of Tenant's
property in the Premises; (c) the moving of Tenant's property in or out of the
Building; (d) the act, omission, misuse or neglect of Tenant or any of its
officers, employees, agents, contractors or invitees. Tenant shall also be
responsible for the replacement of all scratched, damaged or broken doors and
glass in and about the Premises, the maintenance and replacement of window, wall
and floor coverings in the Premises, and for the repair and maintenance of all
sanitary and electrical fixtures therein. All such repairs shall be performed at
such times and in such a manner as shall cause the least interference with the
operation of the Building and the use of the Building by other occupants.
Section 8.2 LANDLORD'S OBLIGATIONS. Landlord shall maintain the
Building in a first-class operating condition including the common areas of the
Building, the Building's roof structure and landscaped areas, and the plumbing,
ventilation, HVAC and electrical systems serving the Premises. Landlord shall be
obligated to keep and maintain the common areas of the Building, and the systems
and facilities serving the Premises, in good working order and shall make all
repairs as and when needed in or about the common areas, except for those
repairs for which Tenant is responsible pursuant to any of the provisions of
this Lease. Unless resulting from the negligence or willful misconduct of
Landlord, Tenant waives all claims against Landlord for damage to person or
property arising for any reason. Unless resulting from the gross negligence or
willful misconduct of Landlord, Landlord shall not be liable for any damage to
Tenant's property caused by (a) water from bursting or leaking pipes or
waste-water about the Property; (b) from an intentional or negligent act of any
other tenant or occupant of the Building or the Property; (c) fire, hurricane or
other acts of God; or (d) riots or vandals; all such risks shall be assumed by
Tenant. Landlord shall not be required to furnish any services or facilities to,
or to make any repairs to or replacements or alterations of the Premises where
necessitated due to the fault of Tenant, its officers, agents, invitees and
employees. Additionally, Tenant waives any and all claims of any kind, nature
or description against Landlord, arising out of the failure of Landlord from
time to time to furnish any of the services requested to be furnished hereunder
including, without limitation, air conditioning, heat, electricity, elevator
service, and restroom facilities.
SECTION 8.3 FLOOR LOADS; NOISE AND VIBRATION. Tenant shall not place a
load upon any floor of the Premises which exceeds the load per square foot which
such floor was designed to carry or which is allowed by law. Business machines
and mechanical equipment belonging to Tenant which cause noise, electrical
interference or vibration that may be transmitted to the structure of the
Building or to the Premises to such a degree as to be objectionable to Landlord
shall, at Tenant's expense, be placed and maintained by Tenant in settings of
cork, rubber, or spring-type vibration eliminators sufficient to eliminate such
noise, electrical interference or vibration.
SECTION 8.4 SERVICES. Landlord shall furnish to the Premises reasonable
quantities of heat, ventilation, air conditioning, electricity, elevator service
and water at all times during the Term of this Lease from 8 a.m. to 7 p.m. on
weekdays, and on Saturdays, from 9 a.m. to 1 p.m. On Sundays and days observed
by the Federal Government or the State of Florida as legal holidays, and such
other days as shall be designated by them as holidays, such service shall not be
provided by Landlord. Landlord will provide after-hour electric service upon
request and Tenant will be charged an hourly rate of $25.00 for each additional
hour, and such rate shall be subject to adjustment consistent with changes in
Florida Power & Light's charge per Kilowatt hour for electrical service that
takes place subsequent to execution of this Lease.
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Tenant shall not, without Landlord's prior written consent in each
instance, connect any fixtures, appliances or equipment (other than lamps,
typewriters, personal computers, computer servers, copy and fax machines and
similar small office machines) to the Building's electrical system. Should
Landlord grant such consent, all additional risers or other equipment required
shall be provided by Landlord and the cost thereof shall be paid by Tenant
within 10 days after being billed therefore. As a condition to granting such
consent, Landlord may require Tenant to agree to pay, as an additional
Operating Expense, an amount adequate to compensate for the additional
electrical energy to be made available to Tenant based upon the estimated
additional capacity of such additional risers or other equipment, as determined
by Landlord from time to time.
SECTION 8.5 JANITORIAL SERVICES. Landlord shall cause the Premises,
including the exterior and interior of the windows thereof, to be cleaned in a
manner standard to the Building. Tenant shall pay to Landlord on demand, the
additional cost incurred by Landlord for: (a) extra cleaning work in the
Premises required because of (i) misuse or neglect on the part of Tenant or
subtenants or its employees or visitors; (ii) the use of portions of the
Premises for purposes requiring greater or more difficult cleaning work than
normal office areas; (iii) interior glass partitions or unusual quantity of
interior glass surfaces, and (iv) non-building standard materials or finishes
installed by Tenant or at its request; (b) removal from the Premises and the
Building of any refuse and rubbish of Tenant in excess of that ordinarily
accumulated in business office occupancy or at times other than Landlord's
standard cleaning times; and (c) the use of the Premises by Tenant other than
during business hours on business days.
SECTION 8.6 TELEPHONE AND CABLE. Tenant shall be solely responsible
for all telephone, television, cable and other communication expenses incurred
in connection with Tenant's use of the Premises. Landlord shall provide
adequate conduit to the ground floor of the Building for Tenant's fiber optic
phone lines.
ARTICLE IX
LANDLORD'S AND TENANT'S PROPERTY
SECTION 9.1 LANDLORD'S PROPERTY. All fixtures, improvements and
appurtenances attached to or built into the Premises at the commencement of,
or during the Term of this Lease, including permanently affixed carpeting or
other similar personal property, whether or not by or at the expense of
Tenant, shall be and remain a part of the Premises, and shall be deemed the
property of Landlord ("Landlord's Property") and shall not be removed by Tenant
except as set forth herein.
SECTION 9.2 TENANT'S PROPERTY. All business and trade fixtures,
machinery and equipment, communications equipment and office equipment, whether
or not attached to or built into the Premises, which are installed in the
Premises by or for the account of Tenant or without expense to Landlord and
which can be removed without damage to any fixture or Tenant Improvement, and
structural damage to the Building, and all furniture, furnishings and other
articles of moveable personal property owned by Tenant and located in the
Premises (hereinafter collectively referred to as "Tenant's Property") shall be
and shall remain the property of Tenant and may be removed by Tenant at any
time during the Term of this Lease so long as Tenant's obligations are current
and no default exists under this Lease. In the event Tenant's Property is so
removed, Tenant shall repair or pay the cost of repairing any damage to the
Premises or to the Building resulting from the installation and/or removal
thereof and restore the Premises to the same physical condition and layout as
they existed at the time Tenant was given possession of the Premises. Any
equipment or other property for which Landlord shall have granted any allowance
or credit to Tenant shall not be deemed to have been installed by or for the
account of Tenant without expense to Landlord, shall not be considered Tenant's
Property and shall be deemed the property of Landlord.
SECTION 9.3 REMOVAL OF TENANT'S PROPERTY. At or before the
Expiration Date of this Lease, or within five (5) days after any earlier
termination hereof, Tenant, at its expense, shall remove from the Premises all
of Tenant's Property (except such items thereof as Landlord shall have
expressly permitted to remain, which property shall become the property of
Landlord), and Tenant
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shall repair any damage to the Premises or the Building resulting from any
installation and/or removal of Tenant's Property, and shall restore the
Premises to the same physical condition and layout as they existed at the time
Tenant was given possession of the Premises (post build-out), reasonable wear
and tear excepted. Any other items of Tenant's Property which shall remain in
the Premises after the Expiration Date of this Lease, or after a period of five
(5) days following an earlier termination date, may, at the option of Landlord,
be deemed to have been abandoned, and in such case, such items may be retained
by, or otherwise disposed of by Landlord. Landlord may request Tenant to remove
and pay to Landlord the cost of repairing any damage to the Premises or the
Building resulting from any installation and/or removal of Tenant's Property
and the cost of restoring the Premises to the same physical condition and
layout as they existed at the time Tenant was given possession of the Premises,
reasonable wear and tear excepted.
SECTION 9.4 LANDLORD'S LIEN AND SECURITY INTEREST. As security for
the performance of Tenant's obligations under this Lease, Tenant hereby grants
to Landlord a security interest in, and Landlord's lien upon all of Tenant's
Property located in the Premises. Tenant hereby irrevocably appoints Landlord
as Tenant's attorney-in-fact and empowers Landlord to execute on Tenant's
behalf a UCC-1 Financing Statement, renewals and terminations thereof, for the
purpose of perfecting Landlord's security interest as provided herein or as
otherwise provided by law.
ARTICLE X
INSURANCE
SECTION 10.1 TENANT'S INSURANCE.
1. Tenant shall, during the Term of this Lease, maintain the
following insurance coverages:
a. Insurance against public liability, including that from
personal injury or property damage in or about the Premises resulting from the
occupation, use or operation of the Premises, in amount of not less than One
Million ($1,000,000) Dollars Combined Single Limit for both bodily injury and
property damage.
b. Insurance upon all property in the Premises owned by
Tenant, or for which Tenant is legally liable. The insurance specified herein
shall provide protection against perils included within the standard Florida
form of fire and extended coverage insurance policy, together with insurance
against vandalism and malicious mischief.
2. All policies of insurance required from Tenant in this Section
shall be issued in a form acceptable to Landlord by insurance companies with
general policyholder's rating of "A" as rated in the most current available
"Best's Insurance Reports", and qualified to do business in Florida. Each and
every such policy:
(a) shall be issued in the names of Landlord and Tenant and any
other parties in interest designated in writing by notice from
Landlord to Tenant ("Additional Party") either as an insured under the
policy or as additional insured;
(b) shall be for the mutual and joint benefit and protection of
Landlord, Tenant and any Additional Party;
(c) shall be delivered to Landlord and any Additional Party by
delivery of an original certificate of insurance or a certified copy
on or before delivery of possession of the Premises to Tenant and
thereafter, within 30 days prior to the expiration of each policy, and
as often as any such policy shall expire or terminate, renewal or
additional policies shall be procured and maintained in like manner
and to like extent;
(d) shall contain a provision that the insurer will give to Landlord
and any Additional Party at least 30 days notice in writing in advance
of any cancellation, termination or lapse,
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or the effective date of any reduction in the amount of insurance;
(e) shall be written as a primary policy which does not contribute
to and is not in excess of coverage which Landlord may carry; and
(f) shall contain a provision that Landlord and any Additional
Party, although named as an insured, shall nevertheless be entitled to
recover under said policies for any loss occasioned to it, its
servants, officers, agents, invitees and employees by reason of the
negligence of Tenant.
3. Any insurance provided for in this Section may be maintained by
means of a policy or policies of blanket insurance, provided, however, that:
(i) Landlord and any Additional Party shall be named either as an insured or as
an additional insured thereunder as their respective interest may appear;
(ii) the coverage afforded Landlord and any Additional Party will not be
reduced or diminished by reason of the use of such blanket policy of insurance;
and (iii) the requirements set forth in this Article are otherwise satisfied.
4. These insurance requirements are subject to modification in the
event, and to the extent any mortgagee of Landlord requires different
insurance. In such event, the requirements of such mortgagee shall control.
SECTION 10.2 LANDLORD'S INSURANCE. Landlord shall carry fire and
extended casualty coverage, to include boiler and machinery coverage, on the
Building with limits equal to the replacement value of the Building. Landlord
shall also carry liability coverage on the Building in the same limits as
required of Tenant. All such insurance policies shall be issued by an insurer
licensed to do business in Florida.
SECTION 10.3 DESTRUCTION OF THE PREMISES OR BUILDING. If, during
the Term hereof, the Premises are damaged by reason of fire or other casualty,
Tenant shall give immediate notice thereof to Landlord. Subject to the prior
rights of any mortgagee, Landlord shall restore the Premises to substantially
the same condition they were in immediately before said destruction. If, in
Landlord's reasonable opinion, which opinion shall be rendered within forty
five (45) days of destruction, the restoration can be accomplished within 180
working days following the issuance of a building permit for reconstruction,
such destruction shall not terminate this Lease. If, in Landlord's reasonable
opinion, the restoration cannot be performed within the time stated in this
paragraph, then at any time within the thirty (30) day period after such
determination, either party may terminate this Lease upon fifteen (15) days
notice to the other party during which time Tenant shall remove all of Tenant's
Property from the Premises. If both parties fail to terminate this Lease and
restoration is permitted under existing laws, Landlord shall restore the
Premises within 180 working days following receipt of a building permit for
reconstruction, and this Lease shall continue in full force and effect. Rent
shall be abated during the period in which the Premises (or portion thereof on
a prorated basis) are rendered untenantable as a result of such damage,
unless said damage was caused by the negligence or intentional wrongful act of
Tenant or its officers, employees, agents or invitees. Should this Lease be
terminated by either party, the entire insurance proceeds shall be and remain
the outright property of Landlord, subject to the prior rights of any mortgagee
and except any proceeds received for Tenant's Property, or proceeds received
from Tenant's business interruption insurance, if any.
In the event that the Building has been damaged or destroyed by fire
or other casualty to the extent that the cost of restoration of the Building
will exceed a sum constituting fifty percent (50%) of the total replacement
cost thereof and Landlord, in its reasonable opinion, determines that the
Premises cannot be restored within the 180 day time period referenced in the
preceding paragraph, which opinion shall be rendered within forty five (45) days
of the date of damage or destruction, then at any time within the thirty (30)
day period after such determination, either Party may terminate this Lease upon
fifteen (15) days notice to the other party, during which time Tenant shall
remove all of Tenant's Property from the Premises. If both parties fail to
terminate the Lease and restoration is permitted under existing laws, Landlord
shall restore the Premises within said 180 day period and this Lease shall
continue in full force and effect. Rent shall be abated during the period in
which the Premises (or portion thereof on a prorated basis) are rendered
untenantable as a result of such damage, unless said
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damage was caused by the negligence or intentional wrongful act of Tenant or its
officers, employees, agents or invitees. If Landlord fails to restore the
Premises within said 180 days, Tenant may terminate this Lease.
ARTICLE XI
ALTERATIONS AND MECHANIC'S LIENS
SECTION 11.1 ALTERATIONS BY TENANT No alterations shall be made by
Tenant after completion of Tenant Improvements unless the following conditions
are met:
(a) Tenant shall provide a sealed set of plans prepared and
certified by an architect to Landlord, and Tenant shall have received
the prior written consent of Landlord;
(b) all such alterations or improvements shall be performed by
Landlord at Tenant's expense, or by a licensed contractor approved by
Landlord, in Tenant's discretion;
(c) Tenant shall have procured all permits, licenses and other
authorizations required for the lawful and proper undertaking thereof,
and immediately upon completion of any such alterations, Tenant shall
obtain a proper Certificate of Occupancy and deliver same to Landlord;
(d) all alterations when completed shall be of such a nature as not
to (i) reduce or otherwise adversely affect the value of the Premises;
(ii) diminish the general utility or change the general character
thereof; (iii) result in an increase of the Operating Expenses, or
(iv) adversely affect the mechanical, electrical, plumbing, security
or other such systems of the Building or the Premises;
(e) all alterations made by Tenant shall remain on and be
surrendered with the Premises on expiration or termination of this
Lease, except that Landlord can elect, simultaneously with its
approval of Tenant's plans and specifications, to require Tenant to
remove any and all alterations Tenant has made to the Premises.
(f) Tenant shall be liable for any increase in the Building
insurance costs caused, in whole or part, by any alterations make by
Tenant to the Premises.
SECTION 11.2 MECHANIC'S, MATERIALMEN'S AND LABORER'S LIENS. Tenant
agrees that it will make full and prompt payment of all sums necessary to pay
for the cost of repairs, alterations, improvements, changes or other work done
by Tenant to the Premises and further agrees to indemnify and hold harmless
Landlord from and against any and all such costs and liabilities incurred by
Tenant, and against any and all mechanic's, materialman's or laborer's liens
arising out of or from such work or the cost thereof which may be asserted,
claimed or charged against the Premises or the Building or Property.
Notwithstanding anything to the contrary in this Lease, the interest of Landlord
in the Premises shall not be subject to liens for improvements made by or for
Tenant, whether or not the same shall be made or done in accordance with any
agreement between Landlord and Tenant, and it is specifically understood and
agreed that in no event shall Landlord or the interest of Landlord in the
Premises be liable for or subjected to any mechanic's, materialmen's or
laborer's liens for improvements or work made by or for Tenant. This Lease
specifically prohibits the subjecting of Landlord's interest in the Premises to
any mechanic's, materialmen's or laborer's liens for improvements made by Tenant
or for which Tenant is responsible for payment under the terms of this Lease.
All persons dealing with Tenant are hereby placed upon notice of this provision.
Tenant shall advise its contractors, subcontractors, materialmen and any other
lienors of this provision. In the event any notice or claim of lien shall be
asserted of record against the interest of Landlord in the Premises or Building
or the site on which it is located on account of or growing out of any
improvement or work done by or for Tenant, or any person claiming by, through or
under Tenant, for improvements or work the cost of which is the responsibility
of Tenant, Tenant agrees to have such notice of claim of lien canceled and
discharged of record as a claim against the interest of Landlord in the Premises
or the
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Building or Property (either by payment or bond as permitted by law) within ten
(10) days after notice to Tenant by Landlord, and in the event Tenant shall fail
to do so, Tenant shall be considered in default under this Lease.
ARTICLE XII
ASSIGNMENT AND SUBLETTING
SECTION 12.1 TENANT'S TRANSFER.
(a) Tenant shall not voluntarily assign or encumber its interest in
this Lease or in the Premises, or sublease all or any part of the Premises, or
allow any other person or entity to occupy or use all or any part of the
Premises, without first obtaining Landlord's written consent, which consent may
be withheld at Landlord's sole discretion. Any assignment, encumbrance or
sublease without Landlord's prior written consent shall be voidable and, at
Landlord's election, shall constitute a default hereunder. No consent to any
assignment, encumbrance, or sublease shall constitute a further waiver of the
provisions of this provision. Notwithstanding the foregoing, Tenant may assign
this Lease or sublet all or a portion of the Premises to an affiliate,
subsidiary or related entity of Tenant without Landlord's prior written consent,
provided Landlord has reasonable approval rights as to any change in the use of
the Premises. An affiliate, subsidiary or related entity of Tenant shall be
defined as one that is 51% owned or controlled by Tenant.
(b) If Tenant is a partnership, a withdrawal or change, voluntary,
involuntary, or by operation of law of any partner/or partners owning 50% or
more of the partnership, or the dissolution of the partnership, shall be deemed
a voluntary assignment, subject to the requirements of Paragraph 12.1(a) above.
(c) If Tenant is a corporation, Tenant shall provide written notice
to Landlord of any dissolution, merger or consolidation, or other reorganization
of Tenant, or the sale of or the transfer of controlling percentage of the
capital stock of Tenant, or the sale of 51% of the total combined voting power
of all classes of Tenant's capital stock issued, outstanding, and entitled to
vote for the election of directors. Notwithstanding written notice to Landlord,
any such transaction contemplated in this subparagraph (c) shall not be subject
to Landlord's consent.
(d) In the event Landlord consents to the sublease of all or any
part of the Premises, such sublease shall be subordinate to and subject to the
terms of this Lease. Landlord shall be entitled to receive the total amount of
any increased Rent provided for in said assignment or sublease, including sales
tax, paid by a sublessee or assignee.
(e) Any assignment consented to by Landlord shall be evidenced by a
validly executed assignment and assumption of lease agreement, upon such terms
and provisions as shall be approved by Landlord in its sole discretion.
(f) If, without such prior written consent of Landlord, this Lease is
transferred or assigned by Tenant, or if the Premises, or any part thereof, are
sublet or occupied by anybody other than Tenant, whether as a result of any act
or omission by Tenant, or by operation of law or otherwise, Landlord may, in
addition to and not in diminution of, or substitution for, any other rights and
remedies under this Lease, or pursuant to law to which Landlord may be entitled
as a result thereof, collect and retain Rent directly front the transferee,
assignee, subtenant or occupant and apply the net amount collected to the Rent
due from Tenant to Landlord under this Lease.
SECTION 12.2 TENANT'S LIABILITY. Notwithstanding any assignment or
sublease, and notwithstanding the acceptance of Rent by Landlord from any such
assignee or sublessee, Tenant shall continue to remain liable for the payment
of Rent hereunder and for the performance of all of the agreements, conditions,
covenants and terms herein contained.
SECTION 12.3 LANDLORD'S RIGHT OF CANCELLATION. Notwithstanding
anything contained herein to the contrary, should Tenant desire or attempt to
assign the Lease or sublease the Premises,
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Landlord shall have the right, but not the obligation, to cancel and terminate
the Lease and deal with Tenant's prospective assignee or sublessee directly and
without any obligation to Tenant.
SECTION 12.4 LANDLORD'S TRANSFER. Landlord shall have the right to
sell, assign, mortgage, or otherwise encumber or dispose of Landlord's interest
in the Building, the Property, the Premises and this Lease. In the event of any
such disposition, Landlord shall have no further liability or obligation to
Tenant under this Lease.
SECTION 12.5 MINIMUM RENTAL REQUIREMENT. Notwithstanding anything to
the contrary contained in this ARTICLE XII or in this Lease, Tenant may not,
under any circumstances, assign this Lease or sublet the Premises or any part
thereof until at least ninety (90%) percent of the rentable space in the
Building has been leased by Landlord, except in the event of an assignment or
sublease to an affiliate, subsidiary or related entity of Tenant.
ARTICLE XIII
OBLIGATION TO COMPLY
SECTION 13.1 OBLIGATIONS OF TENANT. Landlord shall, during the Term
of this Lease, comply with all valid laws, ordinances, regulations, orders and
requirements of any governmental authority which may now or hereafter be
applicable to the common areas of the Building or Property. Landlord represents
that, as of the Commencement Date, the Premises, the Building and the Property
are in conformance with all currently existing governmental regulations,
including those imposed by the ADA. Tenant shall, during the Term of this Lease,
at its sole cost and expense, comply with all valid laws, ordinances,
regulations, orders and requirements of any governmental authority which may now
or hereafter be applicable to the Premises or to its use, whether or not the
same shall interfere with the use or occupancy of the Premises, arising from (a)
Tenant's use of the Premises; (b) the manner or conduct of Tenant's business or
operation of its installations, equipment or other property therein; (c) any
cause or condition created by or at the instance of Tenant; or (d) breach of any
of Tenant's obligations hereunder, whether or not such compliance requires work
which is structural or non-structural, ordinary or extraordinary, foreseen or
unforeseen. Tenant shall pay all of the costs, expenses, fines, penalties and
damages which may be imposed upon Landlord by reason or arising out of Tenant's
failure to fully and promptly comply with and observe the provisions of this
Section. Tenant shall give prompt notice to Landlord of any notice it receives
of the violation of any law or requirement of any public authority with respect
to the Premises or the use or occupation thereof. Tenant's obligation to comply
with laws shall include, without limitation, those laws and regulations
contemplated by Sections 24.2 and 24.3 below and Title III of the Americans With
Disabilities Act of 1990, as Amended. In the event Tenant receives any notice
alleging violation of any of the aforementioned laws, ordinances, regulations,
orders, rules or requirements relating to any portion of the Premises, the
Building or of the Property; or any notice of regulatory action or investigation
instituted in connection therewith, Tenant shall provide written notice to
Landlord thereof within ten (10) days after receipt of same by Tenant.
SECTION 13.2 RULES AND REGULATIONS. Tenant shall comply with all
rules and regulations now existing (See Exhibit "E"), or as may be subsequently
published by Landlord to tenants of the Building, with ten (10) days written
notice prior to effectiveness or enforcement.
SECTION 13.3 ATTORNEYS' FEES. With respect to any default, failure
to perform or any other dispute between Tenant and Landlord arising out of this
Lease, the prevailing party shall be entitled to recover all costs incurred,
including reasonable attorney's fees, which shall include, but not be limited
to, such fees incurred prior to institution of litigation or in litigation,
including trial and appellate review, and in arbitration, bankruptcy or other
administrative or judicial proceeding.
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ARTICLE XIV
RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
SECTION 14.1 PAYMENT OR PERFORMANCE. Landlord shall have the right,
upon ten (10) days prior written notice to Tenant (or without notice in case of
emergency or in order to avoid any fine, penalty, or cost which may otherwise
be imposed or incurred), to make any payment or perform any act required of
Tenant under any provision in this Lease, and in exercising such right, to
incur necessary and incidental costs and expenses, including reasonable
attorney's fees. Nothing herein shall imply any obligation on the part of
Landlord to make any payment or perform any act required of Tenant, and the
exercise of the right to do so shall not constitute a release of any
obligation, waiver of any default or obligation of Landlord to make any similar
payment or perform any similar act in the future.
SECTION 14.2 REIMBURSEMENT. All payments made, and all costs and
expenses incurred in connection with Landlord's exercise of the right set forth
in Section 14.1, shall be reimbursed by Tenant within ten (10) days after
receipt of a bill setting forth the amounts so expended. Any such payments,
costs and expenses made or incurred by Landlord shall be treated as Rent owed
by Tenant.
ARTICLE XV
NON LIABILITY AND INDEMNIFICATION
SECTION 15.1 NON LIABILITY OF LANDLORD. Neither Landlord, nor any
joint venture partner, officer, director, agent, servant, or employee of
Landlord, nor any Superior Mortgagee (as defined in Article XX below), shall be
liable to Tenant for any loss, injury, or damage to Tenant or to any other
person, or to its property, irrespective of the cause of such injury, damage or
loss, unless caused by or resulting from the negligence of Landlord, in the
operation or maintenance of the Premises or the Building, subject to the
doctrine of comparative negligence in the event of negligence on the part of
Tenant or any of its subtenants, licensees, employees, invitees, officers,
agents or contractors. Tenant agrees that any Superior Mortgagee will not be
liable to Tenant for injury, damage or loss caused by or resulting from the
negligence of Landlord. Further, neither Landlord, nor any Superior Mortgagee,
nor any joint venture partner, director, officer, agent, servant, or employee
of Landlord shall be liable; (a) for any damage caused by other tenants or
persons in, upon or about the Building, or caused by operations in construction
of any private, public or quasi-public work; or (b) for incidental or
consequential damages or lost profits arising out of any loss of use of the
Premises or any equipment or facilities therein by Tenant or any person
claiming through or under Tenant. Tenant shall not hold Landlord liable for any
latent defect in the Premises, the Property or the Building (Landlord shall,
however, be responsible for correcting any latent defects in the Premises or
the Building), nor shall Landlord be liable for injury or damage to person or
property caused by fire, theft, or resulting from the operation of elevators,
heating or air conditioning or lighting apparatus, or from falling plaster, or
from steam, gas, electricity, water, rain, or dampness, which may leak or flow
from any part of the Building or Property, or from the pipes, appliances or
plumbing work of the Building, Premises or Property, however Landlord will carry
insurance coverage for these losses as they relate to the Building, and Tenant
shall carry insurance coverage for these losses as they relate to Tenant's
Property in the Premises.
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SECTION 15.2 INDEMNIFICATION BY TENANT. Tenant shall indemnify and
hold Landlord and all Superior Mortgagees and its or their respective joint
venture partners, directors, officers, agents, employees and invitees, harmless
against and from any and all claims from or in connection with; (a) the conduct
or management of the Premises or any business therein, or any condition created
(other than by Landlord) in or about the Premises during the Term of this Lease
or during the period of time, if any, prior to the Commencement Date that
Tenant may have been given access to the Premises; (b) any act, omission or
negligence of Tenant or any of its subtenants or licensees or its or their
partners, directors, officers, agents, employees or contractors; (c) any
accident, injury or damage whatsoever (unless caused solely by Landlord's gross
negligence) occurring in, at or upon the Premises; and (d) any breach or
default by Tenant in the full and prompt payment and performance of Tenant's
obligations under this Lease; together with all costs, expenses and liabilities
incurred in or in connection with each such claim, action or proceeding brought
against Landlord and/or its employees, including without limitation, all
reasonable attorney's fees and expenses. In case any action or proceeding is
brought against Landlord or a Superior Mortgagee, Tenant, upon notice from
Landlord or such Superior Mortgagee, shall resist and defend such action or
proceeding (by counsel reasonably satisfactory to Landlord or such Superior
Mortgagee).
SECTION 15.3 INDEMNIFICATION BY LANDLORD. Landlord shall indemnify and
hold Tenant and its joint venture partners, directors, officers, agents,
employees and invitees, harmless against and from any and all claims from or in
connection with: (a) Landlord's conduct within the Premises, or any condition
created by Landlord in or about the Premises during the Term of this Lease;
(b) any act, omission or negligence of Landlord or its partners, directors,
officers, agents, employees or contractors; and (c) any accident, injury or
damage whatsoever (unless caused solely by Tenant, its agents' invitees or
employees' gross negligence) occurring in, at or upon the common areas together
with all costs, expenses and liabilities incurred in or in connection with each
such claim, action or proceeding brought against Tenant and/or its employees,
including without limitation all reasonable attorneys' fees and expenses. In
case any such action or proceeding is brought against Tenant without fault on
its part, Landlord, upon notice from Tenant shall resist and defend such action
or proceeding (by counsel reasonably satisfactory to Tenant).
SECTION 15.4 INDEPENDENT OBLIGATIONS; FORCE MAJEURE. The obligations
of Tenant hereunder shall not be affected, impaired or excused, nor shall
Landlord have any liability whatsoever to Tenant, because; (a) Landlord is
unable to fulfill, or is delayed in fulfilling, any of its obligations under
this Lease by reason of strike, other labor trouble, governmental action or
inaction, controls or shortages of fuel, supplies, labor or materials, acts of
God or any other cause, whether similar or dissimilar, beyond Landlord's
reasonable control; or (b) of any failure or defect in the supply, quantity or
character of electricity or water furnished to the Premises, by reason of any
requirement, act or omission of the public utility or others serving the
Building with electric energy, steam, oil, gas or water, or for any other
reason whether similar or dissimilar, beyond Landlord's reasonable control.
ARTICLE XVI
DEFAULT
SECTION 16.1 EVENTS OF DEFAULT. Tenant shall be in default under
this Lease if any one or more of the following events shall occur:
(a) Tenant shall fail to pay any installment of the Rent or any
other expenses called for hereunder as and when the same shall become
due and payable, and such default shall continue for a period of five
(5) days after the same is due; or
(b) Tenant shall default in the performance of or compliance with
any of the other terms or provisions of this Lease, and such default
shall continue for a period of twenty (20) days after the giving of
written notice thereof from Landlord to Tenant, or, in the case of any
such default which cannot, with bona fide due diligence, be cured
within said twenty (20) days, Tenant shall fail to proceed within said
twenty (20) day period to cure such default and thereafter to
prosecute the curing of same with all due diligence (it being intended
that as to a default not susceptible of being cured with due diligence
within such period of
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twenty (20) days, the time within which such default may be cured
shall be extended for such period as may be necessary to permit the
same to be cured with bona fide due diligence); or
(c) Tenant shall assign, transfer, mortgage or encumber this Lease
or sublet the Premises in a manner not permitted by Article XII; or
(d) Tenant shall file a voluntary petition in bankruptcy or any
Order for Relief be entered against it, or shall file any petition or
answer seeking any arrangement, reorganization, composition,
re-adjustment or similar relief under any present or future bankruptcy
or other applicable law, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver, or liquidator of Tenant of
all or any substantial part of Tenant's properties; or
(e) If any creditor of Tenant shall file a petition in bankruptcy
against Tenant or for reorganization of Tenant, under state or federal
law, and if such petition is not discharged within ninety (90) days
after the date on which it is filed; or
(f) Tenant shall vacate or abandon the Premises,
then, and in any such event, or during the continuation thereof (subject to the
time period described in subparagraph (e) above, Landlord may, at its option
elect any remedy available under Florida Law or as provided in Article XVII.
SECTION 16.2 HOLDOVER. Should Tenant hold over and remain in
possession of the Premises at the expiration of any Term hereby created, Tenant
shall, by virtue of this Section, become a tenant-at-sufferance and shall pay
Landlord twice the Rent per month of the last monthly installment of Rent above
provided to be paid. Said tenancy shall be subject to all the conditions and
covenants of this Lease as though the same had been a tenancy-at-sufferance
instead of a tenancy as provided herein, and Tenant shall give to Landlord at
least thirty (30) days prior written notice of any intention to remove from the
Premises, and shall be entitled to ten (10) days prior notice of any intention
of Landlord to remove Tenant from the Premises in the event Landlord desires
possession of the Premises; provided, however, that said tenant-at-sufferance
shall not be entitled to ten (10) days notice in the event the said Rent is not
paid in advance without demand, the said ten (10) days written notice being
hereby expressly waived.
ARTICLE XVII
REMEDIES/DAMAGES
In the event Tenant is in default under this Lease as provided in
Article XVI, Landlord may elect, in addition to any and all remedies provided
by Florida Law, any or all of the following remedies:
SECTION 17.1 TERMINATION OF LEASE. By written notice to Tenant,
designate a date upon which the Lease shall terminate ("Termination Date"), and
thereupon, on the Termination Date, this Lease and all rights of Tenant
hereunder shall terminate. Such termination by Landlord shall not affect the
obligations of Tenant arising under the Lease prior to the Termination Date or
the other remedies of Landlord provided in this Lease.
SECTION 17.2 TERMINATION OF TENANT'S POSSESSION. Landlord may
elect to terminate Tenant's possessory rights, without terminating the Lease,
and upon such election, Tenant shall surrender the Premises to Landlord, and
Landlord, at any time after such termination, may, without further notice,
re-enter and repossess the Premises without being liable to any prosecution or
damages therefore, and no person claiming through or under Tenant or by virtue
of any statute or of any order of any court shall be entitled to possession of
the Premises. At any time or from time to time after any such termination of
Tenant's possession, Landlord may relet the Premises or any part thereof, in
the name of Landlord or otherwise, for such term or terms and on such
conditions as Landlord, in its
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sole discretion, may determine, and may collect and receive the rents
therefore. Landlord shall not be responsible or liable for any failure to relet
the Premises or any part thereof or for any failure to collect any rent due
upon any such reletting. The termination of Tenant's possession shall not
relieve Tenant of its liability and obligations under this Lease, including the
obligation to pay Rent, and such liability and obligations shall survive any
such termination. Any Rent or other monetary obligation of Tenant that has been
abated, deferred or forgiven by Landlord in this Lease or any amendment
thereto, and the cost of all Tenant Improvements provided or paid for by
Landlord pursuant to Section 7.1 above, shall immediately become due and
payable upon the occurrence of an event of default by Tenant under this Lease.
If Landlord, at its option shall relet the Premises during said period,
Landlord shall credit Tenant with the net rents received by Landlord from such
reletting, such net rents to be determined by first deducting from the gross
rents, as and when received by Landlord, the expenses incurred or paid by
Landlord in terminating this Lease and in securing possession thereof, as well
as the expenses of reletting, including, without limitation, the alteration and
preparation of the Premises for new tenants, brokers' commissions, attorneys'
fees and all other expenses properly chargeable against the Premises and the
rental therefrom. It is hereby understood that any such reletting may be for a
period shorter or longer than the remaining Term of this Lease but in no event
shall Tenant be entitled to receive any excess of such net rents over the sum
payable by Tenant to Landlord hereunder, nor shall Tenant be entitled in any
suit for the collection of damages pursuant hereto to a credit in respect of
any net rents from a reletting, except to the extent that such rents are
actually received by Landlord.
SECTION 17.3 DAMAGES. Landlord may elect, whether this Lease or
Tenant's possession is terminated or not, to recover damages from the Tenant in
accordance with either of the following provisions:
(a) The present value of the entire amount of the Rent which would
become due and payable during the remainder of the Term of this Lease, in which
event Tenant agrees to pay the same at once, together with all Rent theretofore
due, at Landlord's address as provided herein; provided, however, that such
payment shall not constitute a penalty or forfeiture or liquidated damages, but
shall constitute payment in advance of the Rent for the remainder of the Term.
Such present value shall be determined utilizing a discount rate of six percent
(6%). The acceptance of such payment by Landlord shall not constitute a waiver
of any failure of Tenant thereafter occurring to comply with any term,
provision, condition or covenant of this Lease. If Landlord elects the remedy
given in this Section 173(a), then same shall be Landlord's sole remedy for
such default; or
(b) sums equal to the Rent which would have been payable by Tenant
in accordance with the Lease payable upon the due dates as set forth in the
Lease through the Expiration Date of this Lease.
Lawsuits for the recovery of such damages, or any installments thereof, may be
brought by Landlord from time to time at its election, and nothing contained
herein shall be deemed to require Landlord to postpone suit until the date when
the Term of this Lease would have expired, nor limit or preclude recovery by
Landlord against Tenant of any sums or damages which, in addition to the
damages particularly provided above, Landlord may lawfully be entitled by
reason or any default hereunder on the part of Tenant. All remedies of
Landlord provided for herein, or otherwise at law or in equity, shall be
cumulative and concurrent.
ARTICLE XVIII
EMINENT DOMAIN
SECTION 18.1 TAKING. If the whole of the Building or the Premises
or if a portion of the Building or the Premises which will materially and
adversely affect Tenant's use and occupancy of the Premises shall be taken by
condemnation or in any other manner for any public or quasi-public use or
purpose, this Lease shall terminate as of the date of vesting of title on such
taking (herein called "Date of Taking"), and the Base Rent and Additional Rent
shall be prorated and adjusted as of such date.
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SECTION 18.2 AWARD. Landlord shall be entitled to receive the
entire award or payment in connection with any taking without deduction
therefrom; provided, however, Tenant shall be entitled to receive a separate
award attributable to its relocation costs and its tenant improvements so long
as any such separate award does not represent the value of the loss of the
Tenant's leasehold estate or otherwise reduce the amount of the award that
would have otherwise been made payable to Landlord.
SECTION 18.3 TEMPORARY TAKING. If the temporary use or occupancy of
all or any part of the Premises shall be taken by condemnation or in any other
manner for any public or quasi-public use or purpose during the Term of this
Lease, Tenant shall be entitled, except as hereinafter set forth, to receive
that portion of the award or payment for such taking which represents
compensation for the temporary use and occupancy of the Premises, for the
taking of Tenant's Property and for moving expenses, and Landlord shall be
entitled to receive all other award or payment, including, without limitation,
that portion which represents reimbursement for the cost of restoration of the
Premises. This Lease shall be and remain unaffected by such taking and Tenant
shall continue to pay the Rent in full when due. If the period of temporary use
or occupancy shall extend beyond the Expiration Date of this Lease, that part
of the award which represents compensation for the use and occupancy of the
Premises (or a part thereof) shall be divided between Landlord and Tenant so
that Tenant shall receive so much thereof as represents the period up to and
including such Expiration Date and Landlord shall receive so much as represents
the period after such Expiration Date. All monies received by Landlord as, or
as part of, an award for temporary use and occupancy for a period beyond the
date through which the Rent has been paid by Tenant, shall be held and applied
by Landlord as a credit against the Rent becoming due hereunder.
SECTION 18.4 PARTIAL TAKING. In the event of any taking of less
than the whole of the Building or Premises which does not result in termination
of this Lease, then: (a) subject to the prior rights of a Superior Mortgagee,
Landlord, at its expense, shall proceed with reasonable diligence to restore
the remaining parts of the Building and the Premises (other than those parts of
the Premises which are Landlord's property and Tenant's property) to
substantially their former condition to the extent that the same is feasible
(subject to reasonable changes which Landlord shall deem desirable), so as to
constitute a complete and tenantable Building and Premises; and (b) Tenant, at
its expense, shall proceed with reasonable diligence to restore the remaining
parts of the Premises which are deemed Landlord's Property and Tenant's
Property pursuant hereto, to substantially their former condition to the extent
feasible, subject to reasonable changes which Tenant shall deem desirable and
Landlord shall approve. Such work by Tenant shall be deemed alterations as
described in Section 11.1 hereinabove. In the event of any partial taking,
Tenant shall be entitled to a reduction in Rent for the remainder of the Lease
Term following such partial taking based upon the percentage of Premises taken
relative to the original Premises leased.
ARTICLE XIX
QUIET ENJOYMENT
SECTION 19.1 QUIET ENJOYMENT. Landlord agrees that Tenant, upon
paying all Rent and all other charges herein provided for and observing and
keeping the covenants, agreements, terms and conditions of this Lease and the
rules and regulations of Landlord affecting the Premises on its part to be
performed, shall lawfully and quietly hold, occupy and enjoy the Premises
during the Term hereof, expressly subject to the terms, limitations and
conditions contained in this Lease.
ARTICLE XX
SUBORDINATION AND ATTORNMENT
SECTION 20.1 SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE. This
Lease, and all rights of Tenant hereunder, are and shall be subordinate to any
mortgage, long-term lease or other encumbrance, whether now of record or
recorded after the date of this Lease, affecting the Premises, the Building or
the Property. Such subordination is self-operative without any further act of
Tenant. Any mortgage, long-term lease or other encumbrance to which this Lease
is subject and subordinate is
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hereinafter referred to as a "Superior Mortgage", and the holder of a Superior
Mortgage is hereinafter referred to as a "Superior Mortgagee". If any Superior
Mortgagee shall succeed to the rights of Landlord hereunder, whether through
possession or foreclosure action or delivery of a new lease or deed, then, at
the request of such party (hereinafter referred to as "Successor Landlord"),
Tenant shall attorn to and recognize such Successor Landlord as Tenant's
Landlord under this Lease and shall promptly execute and deliver any instrument
such Successor Landlord may reasonably request to evidence such attornment.
Upon such attornment, this Lease shall continue in full force and effect as a
direct Lease between Successor Landlord and Tenant, upon all terms, conditions,
and covenants as set forth in this Lease, except that the Successor Landlord
shall not: (a) be liable for any previous act or omission of Landlord under
this Lease; (b) be subject to any offset; or (c) be bound by any previous
modification of this Lease or by any previous prepayment, unless such
modification or prepayment shall have been previously approved in writing by
such Successor Landlord if such approval was required. Further, upon such
attornment, Landlord shall be released from any further obligation hereunder.
Tenant shall, within ten (10) days of a request by Landlord, execute and
deliver any documents or instruments that may be required by Superior Mortgagee
or Landlord to confirm such subordination or Attornment. So long as Tenant is
not in default under this Lease, Tenant's possession of the Premises and
Tenant's rights and privileges under this Lease shall not be diminished or
interfered with by any Successor Landlord during the term of this Lease. This
particular provision shall be binding upon any assigns or successors in
interest to Landlord. Notwithstanding the subordination and attornment of this
Lease to any Superior Mortgagee which presently exists or which may hereafter
be made, or to any renewal, modification, replacement or extension hereafter of
any Superior Mortgagee, such Superior Mortgagee, by separate recordable
agreement, shall agree that so long as this Lease is in effect and not in
default, Tenant's leasehold interest under this Lease shall not be terminated
or disturbed. Such non-disturbance agreement shall also include subordination
and attornment provisions satisfactory to Superior Mortgagees.
SECTION 20.2 NOTICE TO LANDLORD AND SUPERIOR MORTGAGEE. If any act
or omission of Landlord would give Tenant the right, immediately or after the
lapse of a period of time, to cancel this Lease or to claim a partial or total
eviction, Tenant shall not exercise such right; (a) until it has given written
notice of such act or omission to Landlord and any Superior Mortgagee; and (b)
until a reasonable period of time (not to exceed 30 days) for remedying such
act or omission shall have elapsed following the giving of such notice and
following the time when such Superior Mortgagee shall have become entitled
under such Superior Mortgage to remedy the same. In the event any Superior
Mortgagee shall request reasonable modifications to this Lease as a condition
to financing or refinancing, Tenant shall not withhold, delay or defer in
providing its consent thereto, unless such Lease modifications decrease the
area of the Premises, increase the Rent owed under this Lease, or materially
affect Tenant's use and enjoyment of the Premises in an adverse manner. In the
event Tenant has not provided its consent to modifications requested by a
Superior Mortgagee within ten (10) days after written notice from Landlord,
Landlord, at its sole option, shall have the right to either terminate this
Lease, or to execute any instrument for and on behalf of Tenant as its
attorney-in-fact. In acknowledgment thereof, Tenant hereby appoints Landlord as
its irrevocable attorney-in-fact for the purpose of executing any instruments
required to carry out the intent of this Section on behalf of Tenant after
proper notice, and default hereunder by Tenant.
ARTICLE XXI
LANDLORD'S RIGHT OF ACCESS
SECTION 21.1 ACCESS FOR MAINTENANCE AND REPAIR. Except for the space
within the inside surfaces of all walls, hung ceilings, floors, windows, and
doors bounding the Premises, all of the Building including, without limitation,
exterior walls, core interior walls and doors and any core corridor entrance,
any terraces or roofs adjacent to the Premises, and any space in or adjacent to
the Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts,
electric or other utilities, sinks, or other facilities of the Building, and
the use thereof, as well as access thereto throughout the Premises for the
purposes of operation, maintenance, decoration and repair, are reserved to
Landlord. Landlord reserves the right, and Tenant shall permit Landlord, to
install, erect, use and maintain pipes, ducts and conduits in and through the
Premises. Landlord shall be allowed to take all materials into and upon the
Premises that may be required in connection therewith, without any liability to
Tenant and without any
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reduction of Tenant's covenants and obligations hereunder. Landlord and its
agents shall have the right to enter upon the Premises for the purpose of making
any repairs therein or thereto which shall be considered necessary or desirable
by Landlord, in such a manner as not to unreasonably interfere with Tenant in
the conduct of Tenant's business on the Premises. Except in the case of
emergency, Landlord shall provide Tenant with 48 hours prior written notice
before entering the Premises.
SECTION 21.2 ACCESS FOR INSPECTION AND SHOWING. Upon reasonable
notice to Tenant and during normal business hours, Landlord and its agents
shall have the right to enter and/or pass through the Premises at any time to
examine the Premises and to show them to prospective purchasers, mortgagees or
lessees of the Building. During the period of four (4) months prior to the
Expiration Date of this Lease, Landlord and its agents may exhibit the Premises
to prospective tenants.
SECTION 21.3 LANDLORD'S ALTERATIONS AND IMPROVEMENTS. If, at any
time, any windows of the Premises are temporarily darkened or obstructed by
reason of any repairs, improvements, maintenance and/or cleaning in or about
the Building, or if any part of the Building, other than the Premises, is
temporarily or permanently closed or inoperable, the same shall be without
liability to Landlord and without any reduction or diminution of Tenant's
obligations under this Lease; provided however, Landlord shall use its best
efforts to minimize the duration of such darkening or obstruction. Landlord
reserves the right to make such changes, alterations, additions, and
improvements in or to the Building and the fixtures and equipment thereof, as
well as in or to the street entrances, doors, halls, passages, elevators,
escalators and stairways thereof, and other public portions of the Building and
the Property, as Landlord shall deem necessary or desirable, and no such
alterations or changes shall be deemed a breach of Landlord's covenant of quiet
enjoyment or a constructive eviction.
ARTICLE XXII
SIGNS AND OBSTRUCTION
SECTION 22.1 SIGNS. Tenant shall not place or maintain or cause to be
placed or maintained upon any exterior door, roof, wall or window of the
Premises or the Building, any sign, awning, canopy or advertising matter of any
kind, nor place or maintain any decoration, lettering or advertising matter on
the glass of any window or door of the Premises, except as previously approved
in writing by Landlord, in Landlord's sole discretion. Tenant shall not place
or maintain any freestanding sign within or upon the Common Area of the
Premises or the Building or immediately adjacent thereto, without first
obtaining Landlord's express prior written consent. No interior or exterior
sign visible from the exterior of the Building shall be permitted. Tenant
further agrees to maintain any such signage approved by Landlord in good
condition and repair at all times and to remove the same at the end of the Term
of this Lease if requested by Landlord. Upon removal thereof, Tenant agrees to
repair any damage to the Premises caused by such installation and/or removal.
Notwithstanding the foregoing, subject to Landlord's prior written approval of
the plans and specifications for same, Tenant shall have the right to install
prominent signage in Tenant's reception area.
SECTION 22.2 OBSTRUCTION. Tenant shall not obstruct the corridors,
elevators, stairs, common areas, sidewalks, parking lots or other public
portions of the Building or the Property in any manner whatsoever.
ARTICLE XXIII
NOTICES
SECTION 23.1 NOTICES. Any notice or other information required or
authorized by this Lease to be given by either Party to the other may be given
by hand with receipt or by certified pre-paid mail, return receipt requested; or
by nationally recognized overnight courier service, to the other Party at the
address stated below. Such address may be changed by either respective Party at
any time by giving thirty (30) days prior written notice as herein provided.
Any notice or information given pursuant to this Section shall be deemed to
have been given when received by the Party to whom it has been directed.
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AS TO LANDLORD: SAWGRASS PLAZA ASSOCIATES
c/o Stiles Property Management
Company
6400 N. Andrews Avenue
Fort Lauderdale, Florida 33309
WITH A COPY TO: Stiles Corporation
6400 N. Andrews Avenue
Ft. Lauderdale, Florida 33309
Attn: Legal Department
AS TO TENANT: Net Command Tech, Inc.
1550 Sawgrass Corporate Parkway
Suite 210
Sunrise, Florida 33323
Attn:
------------------------------
ARTICLE XXIV
MISCELLANEOUS
SECTION 24.1 SUBSTITUTE PREMISES.
INTENTIONALLY DELETED
SECTION 24.2 ENVIRONMENTAL INDEMNITY. Tenant agrees to indemnify and
hold Landlord harmless from and against any and all loss, claim, liability,
damages, injuries to person, property, or natural resources, cost, expense,
action or cause of action, arising in connection with the release or presence
of any "Hazardous Substances" at the Premises, through the acts of Tenant, its
officers, employees, contractors, agents or invitees, whether foreseeable or
unforeseeable, regardless of the source of such release and when such release
occurred or such presence is discovered. The foregoing indemnity includes,
without limitation, all costs in law or in equity of removal, remediation of
any kind, and disposal of such Hazardous Substances; all costs of determining
whether the Premises is in compliance and to cause the Premises to be in
compliance with all applicable environmental laws, all costs associated with
claims for damages to persons, property, or natural resources, and Landlord's
reasonable attorneys' and consultants' fees and costs, whether or not
litigation is instituted. For the purposes of definition, Hazardous Substances
includes, without limitation, any toxic or hazardous wastes, pollutants or
substances, including, without limitation, asbestos, PBCs, petroleum products
and by-products, substances defined or listed as "hazardous substances" or
"toxic substances" or similarly identified in or pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9061 et. seq., or as identified in or pursuant to the Hazardous
Materials Transportation Act 49 U.S.C. Section 1902 et seq.
SECTION 24.3 RADON GAS. Pursuant to Florida Statutes, Section
404.056[7], the following disclosure is required by law: Radon is a naturally
occurring radioactive gas that, when it has accumulated in a building in
sufficient quantities, may present health risks to persons who are exposed to
it over time. Levels of Radon that exceed federal and state guidelines have
been found in buildings in Florida. Additional information regarding Radon and
radon testing may be obtained from your county public health unit.
SECTION 24.4 BROKER COMMISSION. Landlord and Tenant-covenant, warrant
and represent that Stiles Realty Co. and Florida Corporate Realty, Inc.
(hereinafter collectively referred to as "Brokers") were instrumental in
bringing about or consummating this Lease. Further, neither Landlord nor Tenant
have had any conversations or negotiations with any broker except those Brokers
concerning the leasing of the Premises. Both parties agree to indemnify the
other against and from any claims for any brokerage commissions (except those
payable to Brokers) and all costs, expenses and
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<PAGE> 24
liabilities in connection therewith, including, without limitation, reasonable
attorneys' fees and expenses, for any breach of the foregoing representation.
Landlord shall pay all brokerage commissions due Brokers in accordance with a
separate agreement between Landlord and Broker.
SECTION 24.5 ESTOPPEL CERTIFICATES. Each party agrees, at any time and
from time to time as requested by the other party, to execute and deliver to
the other a statement certifying that this Lease is unmodified and in full force
and effect (or if there have been modifications, that the same are in full force
and effect as modified and stating the modifications), certifying the dates to
which the Base Rent and Additional Rent have been paid, stating whether or not
the other party is in default in performance of any of its obligations under
this Lease, and, if so, specifying each such default, and stating whether or not
any event has occurred which, with the giving of notice or passage of time, or
both, would constitute such a default, and, if so, specifying each such event.
Tenant also shall include in any such statements such other information
concerning this Lease as Landlord, its mortgagee or purchaser may reasonably
request. In the event either party fails to comply with this Section, such
failure shall constitute a material breach of the Lease.
SECTION 24.6 NO RECORDATION. This Lease shall not be recorded by
Tenant in the Public Records of Broward County, Florida. Any attempted
recordation by Tenant shall render this Lease null and void and entitle Landlord
to the remedies provided for Tenant's default. At the request of Landlord,
Tenant shall promptly execute, acknowledge and deliver to Landlord a Memorandum
of Lease with respect to this Lease, and a Memorandum of Modification of Lease
with respect to any modification of this Lease, prepared by Landlord and
sufficient for recording. Such Memorandum shall not be deemed to change or
otherwise affect any of the obligations or provisions of this Lease.
SECTION 24.7 GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State of Florida, and in the event
litigation arises between the Parties in connection with any of the terms of
this Lease, venue shall lie in the Circuit Court in Broward County, Florida, or
in the Federal District Court for the Southern District of Florida. If any
provision of this Lease or the application thereof to any person or circumstance
shall, for any reason and to any extent, be invalid or unenforceable, the
remainder of this Lease shall remain in full force and effect. The table of
contents, captions, headings and titles in this Lease are solely for convenience
of reference and shall not affect its interpretation. This Lease shall be
construed without regard to any presumption or other rule requiring construction
against the party causing this Lease to be drafted. Each covenant, agreement,
obligation, or other provision of this Lease on Tenant's part to be performed,
shall be deemed and construed as a separate and independent covenant of Tenant,
not dependent on any other provision of this Lease. All terms and words used in
this Lease, regardless of the number or gender in which they are used, shall be
deemed to include any other number and any other gender, as the context may
require.
SECTION 24.8 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained in
this Lease will be deemed or construed to create a partnership or joint venture
between Landlord and Tenant, or to create any other relationship between the
parties other than that of Landlord and Tenant.
SECTION 24.9 APPROVAL BY SUPERIOR MORTGAGEE. If required by a Superior
Mortgagee, this Lease shall not become binding upon Landlord until approval of
the Lease by Landlord's Superior Mortgagee for the Building.
SECTION 24.10 FINANCIAL STATEMENTS. Prior to the Commencement Date,
and annually thereafter throughout the term of this Lease, Tenant shall provide
Landlord, within ninety (90) days after the end of each of Tenant's fiscal
years, and without notice or demand, its most current and complete financial
statement including, but not limited to, its balance sheet and profit and loss
statement, certified by an officer of Tenant. Further, Tenant shall provide its
most current financial information specified above to Landlord upon ten (10)
days written notice from Landlord.
SECTION 24.11 CAPACITY TO EXECUTE LEASE. If Tenant is other than a
natural person, Tenant represents that it is legally constituted, in good
standing and authorized to conduct business in the State of Florida. Tenant
further represents that the person who is executing this Lease on its behalf has
the full power and authority to perform such execution and deliver the Lease to
Landlord, and that
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<PAGE> 25
upon such execution and delivery, the Lease shall be valid and binding upon
Tenant in accordance with its respective terms and conditions. To further
evidence the foregoing, upon request by Landlord, Tenant shall deliver to
Landlord an appropriate corporate or partnership resolution specifying that the
signatory to the Lease has been duly authorized to execute same on behalf of
Tenant, and a Certificate of Good Standing from the State of Florida if Tenant
is anything other than a natural person or a general partnership.
SECTION 24.12 EXCULPATION OF LANDLORD. Landlord's obligations and
liability to Tenant with respect to this Lease shall be limited solely to
Landlord's interest in the Property, and neither Landlord nor any of the
partners of Landlord, nor any officer, director, or shareholder of any of the
partners of Landlord, shall have any personal liability whatsoever with respect
to this Lease.
SECTION 24.13 WAIVER OF TRIAL BY JURY. IT IS MUTUALLY AGREED BY AND
BETWEEN LANDLORD AND TENANT THAT THE RESPECTIVE PARTIES HERETO SHALL, AND THEY
HEREBY DO, WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER ON ANY MATTER ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT OR TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR BY ANY COURSE OF
CONDUCT OR COURSE OF DEALING.
SECTION 24.14 SATELLITE ANTENNA. Tenant shall have the non-exclusive
right to place a satellite antenna on the roof of the Building at Tenant's sole
cost and expense. The location, size, method of installation and wiring of said
antenna shall be subject to Landlord's prior written approval and shall also be
subject to any other approval rights in other leases within the Building
pertaining to satellite antennae. Tenant will be responsible for any electric
costs associated with such antenna. Upon the expiration or earlier termination
of this Lease, if requested by Landlord, Tenant shall remove the antenna and
repair any damage to the roof of the Building resulting from such installation
or removal thereof.
SECTION 24.15 CONSENT. Where either party's consent shall be required
in this lease, such consent shall not be unreasonably withheld, conditioned,
delayed or denied.
SECTION 24.16 ENTIRE AGREEMENT. This Lease constitutes the entire
understanding between the parties and shall bind the parties, their successors
and assigns. No representations, except as herein expressly set forth, have
been made by either party to the other, and this Lease cannot be amended or
modified except by a writing signed by Landlord and Tenant.
IN WITNESS WHEREOF, the parties have executed this Lease the day and
year first above written.
<TABLE>
<CAPTION>
"LANDLORD"
<S> <C>
Signed, sealed and delivered
in the presence of: Sawgrass Plaza Associates,
a Florida general partnership
Illegible through its authorized agent,
- ------------------------------------- Stiles Corporation
Illegible
- ------------------------------------- By: /s/ Rocco Ferrera
----------------------------------
Rocco Ferrera, Vice President
"TENANT"
Signed, sealed and delivered
in the presence of: CORSAIRE, INC., a Delaware corporation
corporation d/b/a Net Command Tech, Inc.
Illegible
- -------------------------------------
By: /s/ William R. Dunavant
Illegible ----------------------------------
- ------------------------------------- President and CEO
----------------------------------
Print Name & Title
William R. Dunavant
</TABLE>
24
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into this
29th day of September 1999, between Net Command Tech, Inc., a Delaware
corporation with offices at 111 2nd Avenue NE, Suite 600, St. Petersburg,
Florida 33701 and Frank Musolino ("Executive"), with an address of 1623
Riverhills Drive, Temple Terrace, Florida 33617.
RECITALS
The Company desires to be assured of the Executive's association and
services.
Executive is willing and desires to be employed by the Company and the
Company is willing to employ Executive as President and Chief Executive Officer,
of the Company, upon the terms, covenants and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. Employment. The Executive shall be employed as President and Chief
Executive Officer of the Company, subject to the supervision and direction of
the Board of Directors.
2. Term. The initial term of this Agreement shall be for a period of three
(3) years ("Initial Term") commencing on September 29, 1999, unless terminated
earlier pursuant to Paragraph 6 below; provided, however, that Executive will
act as President and Chief Executive Officer only until such time as the Board
hires a permanent replacement. At such time, Executive shall become a senior
advisor to the Company for the duration of the Initial Term.
3. Compensation; Reimbursement.
3.1 Base Salary. For all services rendered by Executive under this
Agreement, the Company shall issue Executive a Stock Purchase Warrant in the
form of Exhibit "A" attached hereto.
3.2 Additional Benefits. Executive shall be entitled to all employment
fringe benefits provided to other executive officers of the Company, as approved
by the Company Board of Directors, to include participation in the Company
Incentive Stock Option program.
3.3 Reimbursement. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses incurred in connection with the performance of
Executive's duties under this Agreement (1) so long as such expenses constitute
business deductions from taxable income for the Company or are excludable from
taxable income to the Executive under the governing laws and regulations of the
Internal Revenue Code (provided, however, that Executive shall be entitled to
full reimbursement in any case where the Internal Revenue Service may, under
Paragraph 274(n) of the Internal Revenue code, disallow to the Company 50% of
meals and entertainment expenses); and (2) to the extent such expenses do not
exceed the amounts
<PAGE> 2
allocable for such expenses in budgets that are approved from time to time by
Company. The reimbursement of Executive's business expenses shall be upon
monthly presentation to and approval by Company of valid receipts and other
appropriate documentation for such expenses.
4. Scope of Duties.
4.1 Assignment of Duties. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's Board of Directors
commensurate with Executive's experience and responsibilities in the position
for which he is employed pursuant to Section 1 above. Such duties shall be
exercised subject to the control and supervision of the Board of Directors.
4.2 General Specification of Duties. Executive's duties shall include,
but not be limited to, duties and performance goals listed on Exhibit B.
4.3 Executive's Devotion of Time. During normal business hours and while
on Company premises, Executive hereby agrees to devote Executive's full time,
abilities and energy to the faithful performance of the duties assigned to
Executive and to the promotion and forwarding of the business affairs of the
Company, and not to divert any opportunities within the Company's business
expertise and specialties, which, business includes, but is not limited to
software engineering, design, research, application, development, marketing,
sale and distribution ("Business") from the Company (to include its
subsidiaries, joint venturers and strategic partners, collectively, defined as
"Affiliates") to himself or to any other person or business entity.
4.4 Primary Business Endeavor. Executive shall not, during the term of
this Agreement, be engaged in any other business activity that competes in the
Company's Business without the prior consent of the Board of Directors of
Company; provided, however, that this restriction shall not be construed as
preventing Executive from investing Executive's personal assets in passive
investments in business entities not in competition with the Company, or its
Affiliates and licensees, or from pursuing business opportunities as permitted
by Paragraph 4.5.
4.5 Business Opportunities. Executive hereby agrees to promote and
develop all business opportunities that come to Executive's attention relating
to current or anticipated future business of the Company or its Affiliates, if
any, in a manner consistent with the best interest of the Company and with
Executive's duties under this Agreement. Should Executive discover a business
opportunity that relates to the current or anticipated future business of the
Company or its Affiliates, if any, Executive shall first offer such opportunity
to Company. Should the Company not exercise its right to pursue this business
opportunity within 10 days then Executive may develop the business opportunity
for himself or herself; provided, however, that such development may in no way
conflict or interfere with the duties owed by Executive to the Company and
Company under this Agreement. Further, Executive may develop such business
opportunities only on Executive's time, and may not use any service, personnel,
equipment, supplies, facility, or trade secrets of the Company or its Affiliates
in development of any such opportunities. As used herein, the term "business
opportunity" shall not include
2
<PAGE> 3
business opportunities involving investments in publicly traded stocks, bonds
or other securities, or other investments of a personal nature.
4.6 Non-Compete Agreement. Executive shall enter into a separate
non-compete agreement with Company which shall, according to its terms, continue
and survive for one year after expiration or termination of this Agreement and
shall continue and survive for one year after expiration or termination of
employment, according to its terms, if Executive works for the Company without
any renewal of this Agreement.
5. Confidentiality of Trade Secrets and Other Materials.
5.1 Trade Secrets. Other than in the performance of Executive's
duties hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company or its
Affiliates. Any technique, method, process, formula, computer software,
algorithm, source code, object code software technology, or other technology
developed, engineered, or used by the Company or its subsidiaries, in the
Company's Business shall be considered a "trade secret" under this Agreement.
5.2 Ownership of Trade Secrets; Assignment of Rights. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, source codes,
object codes, algorithms, software, marketing and sales plans, client lists,
client files and materials, computer software, and any other information and
data qualifying as trade secrets under Chapter 688 of the Florida Statutes, the
Uniform Trade Secrets Act, other provisions of Florida law, and this Agreement,
(collectively, "Trade Secrets") made or developed by Executive, by the Company
or by any Company subsidiaries in the Company's Business or for Company product
research and development are the property of Company and shall not be used by
Executive in any way adverse to the interests of the Company or the Company
Companies. Unless so authorized by the Board of Directors, Executive shall not
deliver, reproduce or in any way allow such documents or things to be deliver,
reproduce or in any way allow such documents or things to be delivered or used
by any third party without specific direction or consent of the Board of
Directors. Executive shall use all reasonable precautions to ensure that the
Trade Secrets and proprietary information of the Company and any Company
subsidiaries is not disclosed to any unauthorized persons or used in an
unauthorized manner or published without the specific direction or consent of
the Company president. Executive hereby assigns to Company any rights which he
may have in any such trade secrets or proprietary information. Executive hereby
assigns to Company any rights which he may have in any such Trade Secrets or
proprietary information.
5.3 Employment Inventions. The Company shall own all inventions,
improvements, patents and patent applications, works of authorship, copyrights,
ideas, software programs, codes, algorithmic applications, technology, and
discoveries (collectively, "Inventions") conceived or developed by Executive as
part of the Company's research, development, introduction, production and/or
sale of software products and applications into the public marketplace or the
government sector. Executive agrees to disclose all such inventions to
3
<PAGE> 4
the Company, and Executive assigns all right, title and interest in and to the
Inventions to the Company.
5.4 Ministerial Acts. Executive agrees to execute all documents and do
all things necessary to assist the Company, at Company expense, to obtain
worldwide protection for the Inventions, Trade Secrets, and other intellectual
property developed during the Agreement term.
5.5 Sections Survive Termination of Agreement. Executive's obligations
under this Paragraph 5 shall survive termination of this Agreement.
6. Termination.
6.1 Bases for Termination.
Executive's employment may be terminated at any time by mutual
agreement of the parties. In the case of mutually agreed termination, the
decision shall be in written form signed by both parties.
This Agreement shall automatically terminate on the last day of the
month in which Executive dies or becomes permanently incapacitated. "Permanent
incapacity" as used herein shall mean mental or physical incapacity, or both,
reasonably determined by the Company's Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company Board of
Directors, either Executive's regularly attending physician or a duly licensed
physician selected by Company Board of Directors, rendering Executive unable to
perform substantially all of Executive's duties hereunder and which appears
reasonably certain to continue for at least six consecutive months without
substantial improvement. Executive shall be deemed to have "become permanently
incapacitated" on the date Company Board of Directors has determined that
Executive is permanently incapacitated and so notifies Executive.
Executive's employment may be terminated by Company "with cause,"
effective upon delivery of written notice to Executive given at any time if any
of the following occur:
(a) any action by Executive which constitutes willful breach of
duty, habitual neglect of duty, continued breach of duty, fraud upon
the Company, its affiliates, or a customer of any of them, and/or theft
or embezzlement of the property of the Company, or its Affiliates, or
the property of a customer of any of them.
(b) any material breach of Executive's obligations in Paragraph 5
above; or any material acts or events which inhibit Executive from
fully performing Executive's responsibilities to the Company in good
faith, such as (i) a felony criminal conviction, (ii) any other
criminal conviction involving Executive's lack of honesty or
Executive's moral turpitude; or (iii) acts of misconduct, as defined
under Chapter 443, Florida Statutes (Unemployment Compensation) and
court or administrative decisions interpreting that statute.
4
<PAGE> 5
6.2 Dismissal from Premises. At Company's option, Executive shall
immediately leave the Company's premises on the date that any notice of
termination is given under this paragraph 6. Executive shall be allowed
adequate time to gather his personal belongings and property.
6.3 Failure to Perform. The failure of Executive to perform
services for the Company under this Agreement due to temporary or permanent
illness, disability, death (or any other circumstances set forth in Paragraph
6.1(2)) shall not be deemed to create an event of "cause" described in
Paragraphs 6.1(3)(a)-(c).
7. Injunctive Relief. Company and Executive hereby acknowledge and agree
that any default under Paragraph 5 above will cause damage to the Company in an
amount difficult to ascertain. Accordingly, in addition to any other relief to
which the Company may be entitled, the Company shall be entitled to such
injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Paragraph 5.
8. Miscellaneous.
8.1 Transfer and Assignment. This Agreement is personal as to
Executive and shall not be assigned or transferred by Executive without the
prior written consent of the Company president. This Agreement shall be
binding upon and inure to the benefit of all of the parties hereto and their
respective permitted heirs, personal representatives, successors and assigns.
8.2 Severability. Nothing contained herein shall be construed to
require the commission of any act contrary to law. Should there be any conflict
between any provisions hereof and any present or future statute, law,
ordinance, regulation, or other pronouncement having the force of law, the
latter shall prevail, but the provision of this Agreement affected thereby
shall be curtailed and limited only to the extent necessary to bring it within
the requirements of the law, and the remaining provisions of this Agreement
shall remain in full force and effect.
8.3 Governing Law. This Agreement is made under and shall be
construed pursuant to the laws of the State of Florida.
8.4 Counterparts. This agreement may be executed in several
counterparts and all documents so executed shall constitute one agreement,
binding on all of the parties, notwithstanding that all of the parties did not
sign the original as the same counterparts.
8.5 Entire Agreement. This agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior oral or written agreements, arrangements, and
understandings with respect thereto. No representation, promise, inducement,
statement or intention has been made by any party hereto that is not embodied
herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement or statement not so set forth herein.
5
<PAGE> 6
8.6 Modification. This Agreement may be modified, amended,
superseded, or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the party or parties to be bound by any such modification,
amendment, supersession, cancellation, or waiver.
8.7 Waiver. The waiver by either of the parties, express or implied,
of any right under this Agreement or any failure to perform under this
Agreement by the other party shall not constitute or be deemed as a waiver of
any other right under this Agreement or of any other failure to perform under
this Agreement by the other party, whether of a similar or dissimilar nature.
8.8 Cumulative Remedies. Each and all of the several rights and
remedies provided in this Agreement, or by law or in equity, shall be
cumulative, and no one of them shall be exclusive of any other right or remedy,
and the exercise of any one of such rights or remedies shall not be deemed a
waiver of, or an election to exercise, any other such right or remedy.
8.9 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning and interpretation of this Agreement. In construing this Agreement,
none of the parties hereto shall have any term or provision construed against
such party solely by reason of such party having drafted the same.
8.10 Notices. Any notice under this Agreement must be in writing,
sent by express 24-hour guaranteed courier, hand-delivered, or may be served by
depositing the same in the United States mail, addressed to the party to be
notified, postage-prepaid and registered or certified with a return receipt
requested. The addresses of the parties for the receipt of notice shall be as
follows:
If to the Company: Corsaire, Inc./Net Command Tech, Inc.
111 2nd Avenue NE, Suite 600
St. Petersburg, Florida 33701
With Copy to: Thomas J. Hess, Esq.
501 Brickell Key Drive, Suite 407
Miami, Florida 33131
If to Executive: Frank Musolino
1623 Riverhills Drive
Temple Terrace, Florida 33617
With Copy to: Geoffrey Todd Hodges, Esquire
Agliano, Hodges & Whittemore, P.A.
400 N. Tampa Street, Suite 2630
Tampa, Florida 33602
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner
6
<PAGE> 7
shall be deemed to be effective as of the time of actual delivery thereof. Each
party may change its address for notice by giving notice thereof in the manner
provided above.
8.11 Survival. Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement and be binding on Executive and
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be executed as of the date first set forth above.
EXECUTIVE COMPANY
NET COMMAND TECH, INC.
/s/ Frank Musolino By: /s/ Robert Chalnick
- -------------------------- ------------------------------------
FRANK MUSOLINO
7
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into this
1st day of March 1999, to be effective as of March 1, 1999, between Corsaire,
Inc., a Delaware corporation with offices at 62 Indian Trace, Weston, Florida
33326 and Robert Chalnick ("Executive"), with an address of 1021 Northwest
108th Avenue, Plantation, FL 33322.
RECITALS
A. The Company desires to be assured of the Executive's association
and services;
B. Executive is willing and desires to be employed by the Company and
the Company is willing to employ Executive as Executive Vice President, Finance
and Administration of the Company, upon the terms, covenants and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as
follows:
1. EMPLOYMENT. The Executive shall be employed as Executive Vice
President Finance and Administration of the Company, subject to the supervision
and direction of the President. The locale of Executive's permanent employment
shall be in Broward County, Florida.
2. TERM.
2.1. INITIAL TERM. The initial term of this Agreement shall be for a
period of three (3) years ("Initial Term") commencing on March 1, 1999, unless
terminated earlier pursuant to Paragraph 6 below; provided, however, that
Executive's obligations in Paragraph 5 below shall continue in effect after any
such termination of employment under Paragraph 6 or otherwise.
2.2. RENEWAL TERM. Subject to the approval of the Company Board of
Directors, this Agreement shall be eligible for renewal upon expiration of the
initial term for an additional term of one year, upon such terms and conditions
as are negotiated and agreed upon by the parties. Any such (renewal) employment
agreement shall be subject to the final approval of the Company Board of
Directors. The Company shall provide Executive at least 60 days notice of its
intent to renew or not renew this Agreement. If the Company advises that it
wishes to renew this Agreement, then Executive shall provide the Company
president at least 15 days notice of Executive's intent to renew or not renew
this Agreement.
<PAGE> 2
3. COMPENSATION; REIMBURSEMENT.
3.1 BASE SALARY. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of One Hundred Thirty
Two Thousand Dollars ($132,000.00) per annum, payable every two weeks in equal
installments ("Base Salary").
The amount of the Base Salary may be increased at any time and from time to
time by the Board of Directors of the Company, and shall be reviewed annually
by the Company President and Board of Directors (or Board Committee) for annual
adjustments based on job and operating division performance. No such change
shall in any way abrogate, alter, terminate or otherwise affect the other terms
of this Agreement.
3.2 INCENTIVE BONUS. In addition to the Base Salary, Executive shall
be eligible for an incentive bonus ("Incentive Bonus") during the first year in
an amount not less than fifty-percent (50%) of the Base Salary (the "Minimum
Bonus"). The Incentive Bonus shall be based upon the operating results for that
year of the Company, or the Executive's operating division, as the case may be,
and shall be paid, if earned, within 30 days after such operating results have
been determined by the Company's accountants.
3.3 ADDITIONAL BENEFITS. In addition to Base Salary and any bonuses
paid, Executive shall be entitled to all employment fringe benefits provided
to other executive officers of the Company, as approved by the Company Board of
Directors, to include participation in the Company Incentive Stock Option
program.
3.4 REIMBURSEMENT. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business
entertainment incurred in connection with the performance of Executive's duties
under this Agreement (1) so long as such expenses constitute business
deductions from taxable income for the Company are excludable from taxable
income to the Executive under the governing laws and regulations of the
Internal Revenue Code (provided, however, that Executive shall be entitled to
full reimbursement in any case where the Internal Revenue Service may, under
Paragraph 274(n) of the Internal Revenue Code, disallow to the Company 50% of
meals and entertainment expenses); and (2) to the extent such expenses do not
exceed the amounts allocable for such expenses in budgets that are approved
from time to time by Company. The reimbursement of Executive's business
expenses shall be upon monthly presentation to and approval by Company of valid
receipts and other appropriate documentation for such expenses.
2
<PAGE> 3
4. SCOPE OF DUTIES.
4.1 ASSIGNMENT OF DUTIES. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's president commensurate
with Executive's experience and responsibilities in the position for which he
or she is employed pursuant to Section 1 above. Such duties shall be exercised
subject to the control and supervision of the Company president.
4.2 GENERAL SPECIFICATION OF DUTIES. Executive's duties shall include,
but not be limited to, duties and performance goals listed on Exhibit B.
4.3 EXECUTIVE'S DEVOTION OF TIME. During normal business hours and
while on Company premises, Executive hereby agrees to devote Executive's full
time, abilities and energy to the faithful performance of the duties assigned
to Executive and to the promotion and forwarding of the business affairs of the
Company, and not to divert any opportunities within the Company's business
expertise and specialties, which, business includes, but is not limited to
software engineering, design, research, application, development, marketing,
sale and distribution ("Business") from the Company (to include its
subsidiaries, joint ventures and strategic partners, collectively, defined as
"Affiliates") to himself or to any other person or business entity.
4.4 PRIMARY BUSINESS ENDEAVOR. Executive shall not, during the term of
this Agreement, be engaged in any other business activity that competes in the
Company's Business without the prior consent of the Company president and Board
of Directors of Company; provided, however, that this restriction shall not be
construed as preventing Executive from investing Executive's personal assets in
passive investments in business entities not in competition with the Company,
or its Affiliates and licensees, or from pursuing business opportunities as
permitted by Paragraph 4.5.
4.5 BUSINESS OPPORTUNITIES. Executive hereby agrees to promote and
develop all business opportunities that come to Executive's attention relating
to current or anticipated future business of the Company or its Affiliates, if
any, in a manner consistent with the best interests of the Company and with
Executive's duties under this Agreement. Should Executive discover a business
opportunity that does not relate to the current or anticipated future business
of the Company or its Affiliates, if any, Executive shall first offer such
opportunity to Company through the Company president. Should the Company not
exercise its right to pursue this business opportunity within a reasonable
period of time, not to exceed sixty (60) days, then Executive may develop the
business opportunity for himself or herself; provided, however, that such
development may in no way conflict or interfere with the duties owed by
Executive to the Company and Company under this Agreement. Further, Executive
may develop such business opportunities only on Executive's time, and may not
use any service, personnel, equipment, supplies, facility, or trade secrets of
the Company or its Affiliates in development of any such opportunities.
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As used herein, the term "business opportunity" shall not include business
opportunities involving investment in publicly traded stocks, bonds or other
securities, or other investments of a personal nature.
4.6 NON-COMPETE AGREEMENT. Executive shall enter into a separate
non-compete agreement with Company which shall, according to its terms,
continue and survive for one year after expiration or termination of this
Agreement and shall continue and survive for one year after expiration or
termination of employment, according to its terms, if Executive works for the
Company without any renewal of this Agreement.
5. CONFIDENTIALITY OF TRADE SECRETS AND OTHER MATERIALS.
5.1 TRADE SECRETS. Other than in the performance of Executive's duties
hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company or its
Affiliates. Any technique, method, process, formula, computer software,
algorithm, source code, object code software technology, or other technology
developed, engineered, or used by the Company or its subsidiaries, in the
Company's Business shall be considered a "trade secret" under this Agreement.
5.2 OWNERSHIP OF TRADE SECRETS; ASSIGNMENT OF RIGHTS. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, source codes,
object codes, algorithms, software, marketing and sales plans, client lists,
client files and materials, computer software, and any other information and
data qualifying as trade secrets under Chapter 688 of the Florida Statutes, the
Uniform Trade Secrets Act, other provisions of Florida law, and this Agreement,
(collectively, "Trade Secrets") made or developed by Executive, by the Company
or by any Company subsidiaries in the Company's Business or for Company product
research and development are the property of Company and shall not be used by
Executive in any way adverse to the interests of the Company or the Company
Companies. Unless so directed in writing by the Company president, Executive
shall not deliver, reproduce or in any way allow such documents or things to be
delivered or used by any third party without specific direction or consent of
the Company president. Executive shall use all reasonable precautions to ensure
that the Trade Secrets and proprietary information of the Company and any
Company subsidiaries is not disclosed to any unauthorized persons or used in an
unauthorized manner or published without the specific direction or consent of
the Company president. Executive hereby assigns to Company any rights which he
may have in any such trade secrets or proprietary information. Executive hereby
assigns to Company any rights which he may have in any such Trade Secrets or
proprietary information.
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5.3 EMPLOYMENT INVENTIONS. The Company shall own all inventions,
improvements, patents and patent applications, works of authorship, copyrights,
ideas, software programs, codes, algorithmic applications, technology, and
discoveries (collectively, "Inventions") conceived or developed by Executive as
part of the Company's research, development, introduction, production and/or
sale of software products and applications into the public marketplace or the
government sector. Executive agrees to disclose all such Inventions to the
Company, and Executive assigns all right, title, and interest in and to the
Inventions to the Company.
5.4 MINISTERIAL ACTS. Executive agrees to execute all documents and
do all things necessary to assist the Company, at Company expense, to obtain
worldwide protection for the Inventions, Trade Secrets, and other intellectual
property developed during the Agreement term.
5.5 SECTIONS SURVIVE TERMINATION OF AGREEMENT. Executive's obligations
under this Paragraph 5 shall survive termination of this Agreement.
6. TERMINATION
6.1 BASES FOR TERMINATION.
(1) Executive's employment may be terminated at any time by mutual
agreement of the parties. In the case of mutually agreed termination, the
decision shall be in written form signed by both parties.
(2) This Agreement shall automatically terminate on the last day of
the month in which Executive dies or becomes permanently incapacitated.
"Permanent incapacity" as used herein shall mean mental or physical incapacity,
or both, reasonably determined by the Company Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company Board of
Directors, either Executive's regularly attending physician or a duly licensed
physician selected by Company Board of Directors, rendering Executive unable to
perform substantially all of Executive's duties hereunder and which appears
reasonably certain to continue for at least six consecutive months without
substantial improvement. Executive shall be deemed to have "become permanently
incapacitated" on the date Company Board of Directors has determined that
Executive is permanently incapacitated and so notifies Executive.
(3) Executive's employment may be terminated by Company "with cause,"
effective upon delivery of written notice to Executive given at any time if any
of the following occur:
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(a) any action by Executive which constitutes willful breach of duty,
habitual neglect of duty, continued breach of duty, fraud upon the
Company, its affiliates, or a customer of any of them, and/or theft or
embezzlement of the property of the Company, or its Affiliates, or the
property of a customer of any of them;
(b) any material breach of Executive's obligations in Paragraph 5
above; or any material acts or events which inhibit Executive from
fully performing Executive's responsibilities to the Company in good
faith, such as (i) a felony criminal conviction; (ii) any other
criminal conviction involving Executive's lack of honesty or
Executive's moral turpitude; or (iii) acts of misconduct, as defined
under Chapter 443, Florida Statutes (Unemployment Compensation) and
court or administrative decisions interpreting that statute.
6.2 DISMISSAL FROM PREMISES. At Company's option, Executive shall
immediately leave the Company's premises on the date that any notice of
termination is given under this paragraph 6. Executive shall be allowed
adequate time to gather his personal belongings and property.
6.3 FAILURE TO PERFORM. The failure of Executive to perform services
for the Company under this Agreement due to temporary or permanent illness,
disability, death, (or any other circumstances set forth in Paragraph 6.1(2))
shall not be deemed to create an event of "cause" described in Paragraphs
6.1(3)(a)-(c).
7. INJUNCTIVE RELIEF. Company and Executive hereby acknowledge and
agree that any default under Paragraph 5 above will cause damage to the Company
in an amount difficult to ascertain. Accordingly, in addition to any other
relief to which the Company may be entitled, the Company shall be entitled to
such injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Paragraph 5.
8. MISCELLANEOUS.
8.1 TRANSFER AND ASSIGNMENT. This Agreement is personal as to Executive
and shall not be assigned or transferred by Executive without the prior written
consent of the Company president. This Agreement shall be binding upon and
inure to the benefit of all of the parties hereto and their respective
permitted heirs, personal representatives, successors and assigns.
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8.2 SEVERABILITY. Nothing contained herein shall be construed to
require the commission of any act contrary to law. Should there be any conflict
between any provisions hereof and any present or future statute, law,
ordinance, regulation, or other pronouncement having the force of law, the
latter shall prevail, but the provision of this Agreement affected thereby
shall be curtailed and limited only to the extent necessary to bring it within
the requirements of the law, and the remaining provisions of this Agreement
shall remain in full force and effect.
8.3 GOVERNING LAW. This Agreement is made under and shall be
construed pursuant to the laws of the State of Florida.
8.4 COUNTERPARTS. This Agreement may be executed in several
counterparts and all documents so executed shall constitute one agreement,
binding on all of the parties, notwithstanding that all of the parties did not
sign the original or the same counterparts.
8.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements, and
understandings with respect thereto. No representation, promise, inducement,
statement or intention has been made by any party hereto that is not embodied
herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement, or statement not so set forth herein.
8.6 MODIFICATION. This Agreement may be modified, amended, superseded,
or canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation, or waiver.
8.7 DISPUTE RESOLUTION. Except as provided for in Paragraph 7 of this
Agreement, any dispute, any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
Miami, Florida accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Each
party shall bear its own costs and expenses of arbitration, including attorney
fees if incurred.
8.8 WAIVER. The waiver by either of the parties, express or implied,
of any right under this Agreement or any failure to perform under this
Agreement by the other party, shall not constitute or be deemed as a waiver of
any other right under this Agreement or of any other failure to perform under
this Agreement by the other party, whether of a similar or dissimilar nature.
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8.9 CUMULATIVE REMEDIES. Each and all of the several rights and
remedies provided in this Agreement, or by law or in equity, shall be
cumulative, and no one of them shall be exclusive of any other right or remedy,
and the exercise of any one of such rights or remedies shall not be deemed a
waiver of, or an election to exercise, any other such right or remedy.
8.10 HEADING. The section and other headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning and interpretation of this Agreement. In construing this Agreement,
none of the parties hereto shall have any term or provision construed against
such party solely by reason of such party having drafted the same.
8.11 NOTICES. Any notice under this Agreement must be in writing, sent
by express 24-hour guaranteed courier, hand-delivered, or may be served by
depositing the same in the United States mail, addressed to the party to be
notified, postage-prepaid and registered or certified with a return receipt
requested. The addresses of the parties for the receipt of notice shall be as
follows:
If to the Company: Corsaire, Inc.
62 Indian Trace,
Weston, Florida 33326
With Copy to: Thomas J. Hess, Esq.
501 Brickell Key Drive, Suite 407
Miami, FL 33131
If to Executive: Robert Chalnick
1021 Northwest 108th Avenue,
Plantation, FL 33322
With Copy to:
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Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof.
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Each party may change its address for notice by giving notice thereof in the
manner provided above.
8.12 SURVIVAL. Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement and be binding on Executive and
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be executed as of the date first set forth above.
Net Command Tech, Inc. Executive
a Delaware corporation
By: /s/ William Roger Dunavant /s/ Robert Chalnick
---------------------------------------- ---------------------
William Roger Dunavant, Robert Chalnick
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into this 11th
day of April, 1999, to be effective as of the 13th of April, between Corsaire,
Inc., a Delaware corporation with offices at 1550 Sawgrass Pkwy., Suite 220,
Sunrise, FL 33329 and Joseph L. Morgan ("Executive"), with an address of 8221
Inistork Court, Dublin, Ohio 43017.
RECITALS
A. The Company desires to be assured of the Executive's association and
services;
B. Executive is willing and desires to be employed by the Company and
the Company is willing to employ Executive as the Chief Technical Officer of
the Company, upon the terms, covenants and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. EMPLOYMENT. The Executive shall be employed as the Chief Technical
Officer of the Company, subject to the supervision and direction of the
President and Chief Executive Officer.
2. TERM.
2.1 INITIAL TERM. The initial term of this Agreement shall be for a
period of 2 years ("Initial Term") commencing on the date contemplated above,
unless terminated earlier pursuant to Paragraph 6 below; provided, however, that
Executive's obligations in Paragraph 5 below shall continue in effect after any
such termination of employment under Paragraph 6 or otherwise.
2.2 RENEWAL TERM. Subject to the approval of the Company Board of
Directors, this Agreement shall be eligible for renewal upon expiration of the
initial term for an additional term of one year, upon such terms and conditions
as are negotiated and agreed upon by the parties. Any such (renewal) employment
agreement shall be subject to the final approval of the Company Board of
Directors. The Company shall provide Executive at least 60 days notice of its
intent to renew or not renew this Agreement. If the Company advises that it
wishes to renew this Agreement, then Executive shall provide the Company
president at least 15 days notice of Executive's intent to renew or not renew
this Agreement.
<PAGE> 2
3. COMPENSATION; REIMBURSEMENT.
3.1 BASE SALARY. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of One Hundred Twenty
Thousand Dollars ($120,000) per annum, payable monthly in equal installments
(the "Base Salary").
The amount of the Base Salary may be increased at any time and from time to
time by the Board of Directors of the Company, and shall be reviewed annually
by the Company President and Board of Directors (or Board Committee) for annual
adjustments based on job and operating division performance. No such change
shall in any way abrogate, alter, terminate or otherwise affect the other terms
of this Agreement.
3.2 INCENTIVE BONUS. In addition to the Base Salary, Executive shall be
eligible for an incentive bonus ("Incentive Bonus") during the first year in an
amount not less than fifty-percent (50%) of the Base Salary (the "Minimum
Bonus") nor more than one hundred percent (100%) of the Base Salary. The
Incentive Bonus shall be based upon the operating results for that year of the
Company, or the Executive's operating division, as the case may be, and shall
be paid, if earned, within 30 days after such operating results have been
determined by the Company's accountants.
3.3 ADDITIONAL BENEFITS. In addition to Base Salary and any bonuses paid,
Executive shall be entitled to the employment benefits provided to other
executive officers of the Company, as approved by the Company Board of
Directors. These benefits include, but are not limited to those listed on
Exhibit "A" attached hereto.
3.4 REIMBURSEMENT. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business
entertainment incurred in connection with the performance of Executive's duties
under this Agreement (1) so long as such expenses constitute business
deductions from taxable income for the Company are excludable from taxable
income to the Executive under the governing laws and regulations of the
Internal Revenue Code (provided, however, that Executive shall be entitled to
full reimbursement in any case where the Internal Revenue Service may, under
Paragraph 274(n) of the Internal Revenue Code, disallow to the Company 20% of
meals and entertainment expenses); and (2) to the extent such expenses do not
exceed the amounts allocable for such expenses in budgets that are approved
from time to time by Company. The reimbursement of Executive's business
expenses shall be upon monthly presentation to and approval by Company of
valid receipts and other appropriate documentation for such expenses.
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<PAGE> 3
4. SCOPE OF DUTIES.
4.1 ASSIGNMENT OF DUTIES. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's president commensurate
with Executive's experience and responsibilities in the position for which he
is employed pursuant to Section 1 above. Such duties shall be exercised subject
to the control and supervision of the Company president.
4.2 GENERAL SPECIFICATION OF DUTIES. Executive's duties shall include,
but not be limited to, the following duties and performance goals:
Being responsible for identifying any and all technologies that may
now or in the future be related to Corsaire's core business or any
business that may be related to Corsaire, their affiliates or
assigns. Furthermore, after said technologies have been identified, it
shall become the Executive's duty to perfect the aforementioned
technology as directed by the President, CEO, or by the majority vote
of the board of directors.
4.3 EXECUTIVE'S DEVOTION OF TIME. During normal business hours and while
on Company premises, Executive hereby agrees to devote Executive's full time,
abilities and energy to the faithful performance of the duties assigned to
Executive and to the promotion and forwarding of the business affairs of the
Company, and not to divert any opportunities within the Company's business
expertise and specialties, which, business includes, but is not limited to
software engineering, design, research, application and development
("Business") from the Company (to include its subsidiaries, joint venturers and
strategic partners, collectively, defined as "Affiliates") to himself or to any
other person or business entity.
4.4 PRIMARY BUSINESS ENDEAVOR. Executive shall not, during the term of
this Agreement, be engaged in any other business activity that competes in the
Company's Business without the prior consent of the Company president and Board
of Directors of Company; provided, however, that this restriction shall not be
construed as preventing Executive from investing Executive's personal assets in
passive investments in business entities not in competition with the Company,
or its Affiliates and licensees, or from pursuing business opportunities as
permitted by Paragraph 4.5.
4.5 BUSINESS OPPORTUNITIES. Executive hereby agrees to promote and
develop all business opportunities that come to Executive's attention relating
to current or anticipated future business of the Company or its Affiliates, if
any, in a manner consistent with the best interests of the Company and with
Executive's duties under this Agreement. Should Executive discover a business
opportunity that does not relate to the current or anticipated future business
of the Company or its Affiliates, if any, Executive shall first offer such
opportunity to Company through the Company president or Chief Executive Officer.
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<PAGE> 4
Should the Company not exercise its right to pursue this business opportunity
within a reasonable period of time, not to exceed sixty (60) days, then
Executive may develop the business opportunity for himself or herself;
provided, however, that such development may in no way conflict or interfere
with the duties owed by Executive to the Company and Company under this
Agreement. Further, Executive may develop such business opportunities only on
Executive's time, and may not use any service, personnel, equipment, supplies,
facility, or trade secrets of the Company or its Affiliates in development of
any such opportunities. As used herein, the term "business opportunity" shall
not include business opportunities involving investment in publicly traded
stocks, bonds or other securities, or other investments of a personal nature.
4.6 NON-COMPETE AGREEMENT. Executive shall enter into a separate
non-compete agreement with Company which shall, according to its terms,
continue and survive for one year after expiration or termination of this
Agreement and shall continue and survive for one year after expiration or
termination of employment, according to its terms, if Executive works for the
Company without any renewal of this Agreement.
5. CONFIDENTIALITY OF TRADE SECRETS AND OTHER MATERIALS.
5.1 TRADE SECRETS. Other than in the performance of Executive's duties
hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company or its
Affiliates. Any technique, method, process, formula, computer software,
algorithm, source code, object code software technology, or other technology
developed, engineered, or used by the Company or its subsidiaries, in the
Company's Business shall be considered a "trade secret" under this Agreement.
5.2 OWNERSHIP OF TRADE SECRETS; ASSIGNMENT OF RIGHTS. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, source codes,
object codes, algorithms, software, marketing and sales plans, client lists,
client files and materials, computer software, and any other information and
data qualifying as trade secrets under Chapter 688 of the Florida Statutes, the
Uniform Trade Secrets Act, other provisions of Florida law, and this Agreement
(collectively, "Trade Secrets") made or developed by Executive, by the Company
or by any Company subsidiaries in the Company's Business or for Company product
research and development are the property of Company and shall not be used by
Executive in any way adverse to the interests of the Company or the Company
Companies.
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Unless so directed in writing by the Company president, Executive shall not
deliver, reproduce or in any way allow such documents or things to be delivered
or used by any third party without specific direction or consent of the Company
president. Executive shall use all reasonable precautions to ensure that the
Trade Secrets and proprietary information of the Company and any Company
subsidiaries is not disclosed to any unauthorized persons or used in an
unauthorized manner or published without the specific direction or consent of
the Company president. Executive hereby assigns to Company any rights which he
may have in any such trade secrets or proprietary information. Executive hereby
assigns to Company any rights which he may have in any such Trade Secrets or
proprietary information.
5.3 EMPLOYMENT INVENTIONS. The Company shall own all inventions,
improvements, patents and patent applications, works of authorship, copyrights,
ideas, software programs, codes, algorithmic applications, technology, and
discoveries (collectively, "Inventions") conceived or developed by Executive
as part of the Company's research, development, introduction, production and/or
sale of software products and applications into the public marketplace or the
government sector.
Executive agrees to disclose all such Inventions to the Company, and Executive
assigns all right, title, and interest in and to the Inventions to the Company.
5.4 MINISTERIAL ACTS. Executive agrees to execute all documents and do
all things necessary to assist the Company, at Company expense, to obtain
worldwide protection for the Inventions, Trade Secrets, and other intellectual
property developed during the Agreement term.
5.5 SECTIONS SURVIVE TERMINATION OF AGREEMENT. Executive's obligations
under this Paragraph 5 shall survive termination of this Agreement for one
year, if this Agreement is terminated for "cause". However, inasmuch as the
Executive relies on his intellectual property for gainful employment, in the
event this Agreement is terminated as a result of mutual consent, Corsair shall
not have rights to future discoveries (of the Executive) commencing from the
mutual agreed upon termination date.
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6. TERMINATION
6.1 BASIS FOR TERMINATION.
(1) Executive's employment may be terminated at any time by mutual
agreement of the parties. In the case of mutually agreed termination, the
decision shall be in written form signed by both parties.
(2) This Agreement shall automatically terminate on the last day of the
month in which Executive dies or becomes permanently incapacitated. "Permanent
Incapacity" as used herein shall mean mental or physical incapacity, or both,
reasonably determined by the Company's Board of Directors based upon a
certification of such incapacity by, in the discretion of the Company Board of
Directors, either Executive's regularly standing physician or a duly licensed
physician selected by Company Board of Directors, rendering Executive unable to
perform substantially all of Executive's duties hereunder and which appears
reasonably certain to continue for at least six consecutive months without
substantial improvement. Executive shall be deemed to have "become permanently
incapacitated" on the date Company Board of Directors has determined that
Executive is permanently incapacitated and so notifies Executive.
(3) Executive's employment may be terminated by Company "with cause,"
effective upon delivery of written notice to Executive given at any time if any
of the following occurs:
(a) any action by Executive which constitutes willful breach of
duty, habitual neglect of duty, continued breach of duty, fraud upon
the Company, its affiliates, or a customer or any of them, and/or
theft or embezzlement of the property of the Company, or its
Affiliates, or the property of a customer of any of them;
(b) any material breach of Executive's obligations in Paragraph 5
above; or any material acts or events which inhibit Executive from
fully performing Executive's responsibilities to the Company in good
faith, such as (i) a felony criminal conviction; (ii) any other
criminal conviction involving Executive's lack of honesty or
Executive's moral turpitude; or (iii) acts of misconduct, as defined
under Chapter 443, Florida Statutes (Unemployment Compensation) and
court or administrative decisions interpreting that statute.
6.2 DISMISSAL FROM PREMISES. At Company's option, Executive shall
immediately leave the Company's premises on the date that any notice of
termination is given under this paragraph 6. Executive shall be allowed
adequate time to gather his personal belongings and property.
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6.3 SEVERANCE PAYMENT. Executive shall receive two weeks severance pay
for each year worked, determined in accordance with the salary schedule set
forth in Paragraph 3.1, in the event of any termination under this Paragraph 6.
6.4 FAILURE TO PERFORM. The failure of Executive to perform services for
the Company under this Agreement due to temporary or permanent illness,
disability, death, (or any other circumstances set forth in Paragraph 6.1(2))
shall not be deemed to create an event of "cause" described in Paragraphs
6.1(3)(a)-(c).
7. INJUNCTIVE RELIEF. Company and Executive hereby acknowledge and agree
that any default under Paragraph 5 above will cause damage to the Company in an
amount difficult to ascertain. Accordingly, in addition to any other relief to
which the Company may be entitled, the Company shall be entitled to such
injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Paragraph 5.
8. MISCELLANEOUS.
8.1 TRANSFER AND ASSIGNMENT. This Agreement is personal as to Executive
and shall not be assigned or transferred by Executive without the prior written
consent of the Company president. This Agreement shall be binding upon and
inure to the benefit of all of the parties hereto and their respective
permitted heirs, personal representatives, successors and assigns.
8.2 SEVERABILITY. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation, or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be
curtailed and limited only to the extent necessary to bring it within the
requirements of the law, and the remaining provisions of this Agreement shall
remain in full force and effect.
8.3 GOVERNING LAW. This Agreement is under and shall be construed
pursuant to the laws of the State of Florida.
8.4 COUNTERPARTS. This Agreement may be executed in several counterparts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
8.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements, and
understandings with respect thereto.
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No representation, promise, inducement, statement or intention has been made by
any party hereto that is not embodied herein, and no party shall be bound by or
liable for any alleged representation, promise, inducement, or statement not so
set forth herein.
8.6 MODIFICATION. This Agreement may be modified, amended, superseded, or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation, or waiver.
8.7 DISPUTE RESOLUTION. Except as provided for in Paragraph 7 of this
Agreement, any dispute, any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in Miami,
Florida in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Each
party shall bear its own costs and expenses of arbitration, including attorney
fees if incurred.
8.8 WAIVER. The waiver by either of the parties, express or implied, of
any right under this Agreement or any failure to perform under this Agreement
by the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
8.9 CUMULATIVE REMEDIES. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise
of any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
8.10 HEADINGS. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement. In construing this Agreement, none of the
parties hereto shall have any term or provision construed against such party
solely by reason of such party having drafted the same.
8.11 NOTICES. Any notice under this Agreement must be in writing, sent by
express 24-hour guaranteed courier, hand-delivered, or may be served by
depositing the same in the United States mail, addressed to the party to be
notified, postage-prepaid and registered or certified with a return receipt
requested. The addresses of the parties for the receipt of notice shall be as
follows:
8
<PAGE> 9
If to the Company: Corsaire, Inc.
1550 Sawgrass Pkwy., Suite 220
Sunrise, FL 33329
With Copy to: Tom Hess, Esquire
If to Executive: Joseph L. Morgan
8221 Inistork Court
Dublin, Ohio 43017
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its address for notice
by giving notice thereof in the manner provided above.
8.12 SURVIVAL. Any provision of this Agreement which imposes an obligation
after termination or expiration of this Agreement shall survive the termination
or expiration of this Agreement and be binding on Executive and Company.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be executed as of the date first set forth above.
IT IS AGREED THAT TOM HESS, ESQUIRE, SHALL HAVE THE RIGHT TO CLARIFY ANY
STATEMENTS THAT CAN BE CONSTRUED TO BE AMBIGUOUS OR REQUIRE FURTHER
CLARIFICATION TO ACCURATELY DESCRIBE THE INTENT OF THIS DOCUMENT.
Corsaire, Inc. Joseph L. Morgan
a Delaware corporation
By: /s/ William Roger Dunavant 4/14/99 /s/ Joseph L. Morgan 4/14/99
-------------------------------------- --------------------------------
William Roger Dunavant, date date
President and Chief Executive Officer
* Will be Board approved on first meeting.
* William Dunavant approved.
9
<PAGE> 1
EXHIBIT 10.8
SUITE 333
383 CAMINO DEL RIO NORTH
SAN DIEGO, CALIFORNIA 92108-1789
TELEPHONE (619) 280-8000
FACSIMILE (619) 280-8001
REPLY TO FILE NO. 3159K
NOVEMBER 21, 1998
Mr. William R. Dunavant
2461 Provence Circle
Weston, Florida 33327
Re: YOUR EMPLOYMENT AGREEMENT AS PRESIDENT
OF CORSAIRE, INC.
Dear Mr. Dunavant:
The undersigned is the attorney for Corsaire, Inc. also known as Corsaire
Snowboard, Inc. ("Corsaire").
Pursuant to your discussions with our Mr. Rene M. Hamouth ("Hamouth") and
yourself ("Dunavant"), please let this letter serve as your agreement with
respect to your employment as the President of Corsaire.
Accordingly, the following are the agreed upon terms and conditions of
your employment agreement:
1. TITLE, JOB DESCRIPTION AND TERM OF EMPLOYMENT: Dunavant agrees to
serve as the "President" of Corsaire for a period of three (3) years beginning
November 20, 1998 with the duties and responsibilities customarily required of
a president of a U.S. publicly traded company.
2. APPOINTMENT AS DIRECTOR: In addition to the services to be provided
as the President of Corsaire, Dunavant hereby accepts the appointment as a
Director of Corsaire to fill a vacancy that presently exists on the Corsaire
Board of Directors.
3. ACKNOWLEDGEMENT OF APPOINTMENT OF ADDITIONAL DIRECTORS: Dunavant
acknowledges that concurrent with his appointment as a Director, that the
present sole Director of Corsaire is appointing four (4) still additional
Directors to fill still other vacancies on the Board of Directors. Dunavant
shall have the right to select one (1) of these four (4) additional Directors.
4. RESIGNATION OF HAMOUTH AS A DIRECTOR: Upon appointment of Dunavant
and the additional four (4) Directors, Hamouth will resign as a Director of
Corsaire.
<PAGE> 2
5. STOCK COMPENSATION: In addition to a salary to be determined by the
new Board of Directors, Corsaire agrees to issue to Dunavant the following
restricted shares of common stock:
1. ONE MILLION (1,000,000) shares upon execution of this Employment
Agreement.
2. An additional ONE MILLION (1,000,000) shares at such time as
Corsaire achieves annual earnings of $.50 per share or achieves
annual sales revenue of $10,000,000 or achieves annual before
tax earnings of $5,000,000.
6. ADDITIONAL EMPLOYMENT BENEFITS: Dunavant shall be entitled to such
additional employment benefits as are normal and customary for a President of a
U.S. publicly traded company that is similar in size and nature as Corsaire.
7. COUNTERPARTS: This Agreement may be signed in one or more
counterparts.
8. FACSIMILE TRANSMISSION SIGNATURES: A signature received pursuant to a
facsimile transmission shall be sufficient to bind a party to this Agreement.
If the above meets with your approval and agreement, please initial each
page in the lower right hand corner, sign and date the signature page where
indicated and fax myself and Mr. Hamouth a copy of the initialed and signed
letter. Mr. Hamouth will likewise fax you a copy of his initialed and signed
letter.
Very truly yours,
/s/ Carmine J. Bua, III
---------------------------------
CARMINE J. BUA, III
CJB: dic
cc: Mr. Rene Hamouth (via fax)
2
<PAGE> 3
AGREED AND ACCEPTED
DATED: November 21, 1998 /s/ WILLIAM R. DUNAVANT
-----------------------------
WILLIAM R. DUNAVANT
CORSAIRE, INC.
DATED: November 21, 1998 /s/ RENE M. HAMOUTH
-----------------------------
RENE M. HAMOUTH
President and Director
WITNESSES: Illegible
--------------------
11/20/98
3
<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT RESIGNATION AND SEPARATION AGREEMENT
THIS EMPLOYMENT RESIGNATION AND SEPARATION AGREEMENT ("Agreement") dated June
18, 1999, between NET COMMAND TECH, INC., (f/k/a Corsaire, Inc.) a Delaware
corporation ("Company"), c/o 62 Indian Trace, Suite 286, Weston, FL 33326 Ft.
Lauderdale, FL and William R. Dunavant ("Executive"), with an address of 2461
Provence Circle, Weston, FL 33327.
RECITALS
A. For all purposes of this Agreement, the reference to "Company" shall
include CORSAIRE, INC., the former name of Net Command Tech, Inc., and all
majority-owned and wholly owned subsidiaries of NCT (first tier and second
tier), including, but not limited to Satellite Access Systems, Inc., a Delaware
corporation, Modern Telnet Limited (a British corporation), and Baraka
IntraCom, Inc., a Delaware corporation;
B. The parties have agreed that Executive's voluntary resignation serves
the best interest of the Company and Dunavant; and
C. The parties have agreed to formalize Executive's voluntary
resignation by execution of resignation documents, this Agreement, a
Non-Competition Agreement, and mutual releases.
1. TERMINATION AND CANCELLATION OF EMPLOYMENT AGREEMENTS. All employment
agreements and addenda, written and oral, between Executive and the Company are
hereby canceled, except for those portions of the attached Employment Agreement
and Addendum ("Employment Agreement") of March 1, 1999 between Executive and
the Company that expressly describe and/or require: (1) separation pay and
benefit provisions in the event of termination without cause; and (2) survival
after termination of employment. Executive hereby resigns from all executive
officer and board positions, effective June 18, 1999, and the parties shall
have no further obligations to each other, past or present, under the
Employment Agreement, save for the obligations described in items (1) and (2)
above.
2. SEPARATION PACKAGE. Upon execution of this Agreement and for twelve months
thereafter, Executive shall receive, and the Company shall provide, the
compensation and benefits described in the Employment Agreement as entitlements
for Executive's termination without cause, to include retention of the two
million shares Executive received upon execution of the Employment Agreement.
Upon the Company's appointment of outside directors, Executive may petition the
Company Board of Directors for a review of his separation package.
3. RETURN OF COMPANY PROPERTY. Upon execution of this Agreement, you have
agreed to return, and will return, to the Company, certain items of Company
property to be specified later on, customer and contact lists, and any and all
other files, records, and any other Company property associated with your
employment with the Company, to include business cards and stationary bearing
the Company logo and name. The parties acknowledge that Executive and the
Company have exchanged personal computers, namely Executive's laptop for the
Company's Dell desktop computers.
<PAGE> 2
4. CONFIDENTIALITY AND OTHER OBLIGATIONS.
In return for the above-described package, the following covenants and
conditions, (which include protections and safeguards granted to the Company
under the laws of Florida and Delaware):
(a) CONFIDENTIALITY. The following information ("Confidential Information")
relating to the Company are valuable, special and unique assets and trade
secrets of the Company: (1) the technology, algorithms, source codes, object
codes, GUI, and know-how that comprise the Company's data compression,
streaming, and transmission technology and products (video and still image), to
include, but not limited to, vector technology and the Magic Modules software
technology and copyright, MPEG 4 imaging, streaming and compression (2) the
identity, location, and records/files, manual and computerized, relating to the
Company's present and anticipated domestic and foreign licensors, technicians
and software and chip suppliers, designers, manufacturers, and customers; (3)
pending and existing intellectual property matters, to include patenting,
trademarking, brand naming, service marking, and copyrighting of the Company's
products, product lines, technologies and inventions; (4) the sources,
pricing, and costs of the software, GUI, chips, and hardware/equipment
components that comprise the technology, products, product lines, and services
that the Company will, or plans to, introduce into commerce, to include but not
limited to, technological strategic partnering, direct product sales, joint
ventures, and technology licenses; (5) financial, business, tax, and
investment/investor data and records; (6) marketing, sales, and advertising
data and information related to the Company's existing, planned, and proposed
products, product lines, technologies delivered and to be delivered into
commerce (including, but not limited, to those under, or scheduled for,
development); (7) securities transactions being contemplated; (8) acquisitions,
joint venture, strategic partnering, and licensing arrangements being
contemplated; (9) areas potentially subject to licensing; (10) ongoing
negotiations; and (11) future plans and operations, to include, but not limited
to, the products, technologies, and market research and development done in
support of such future plans and operations. As part of your execution of this
termination letter agreement, you hereby represent that you do not have any
copies or samples of the Company's Confidential Information.
(b) RESTRICTIONS. Confidential Information can be in printed, oral, automated,
or audiovisual form. In consideration for the sum indicated above, you agree
not to copy any of the Company's manual or computerized records/files and not
to disclose any of the Company's Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
unless Executive has been given prior written permission by the Company Chief
Executive Officer to disclose specific the Company Confidential Information to
a third party specifically approved in writing beforehand by the Company Chief
Executive Officer. In such event, Executive shall only disclose that Company
Confidential Information specifically approved in writing by the Company Chief
Executive Officer. The notice provisions and data in the Employment Agreement
shall apply.
If a duly constituted administrative or government agency compels Executive
to disclose Company Confidential Information for any reason, Executive shall
immediately contact the Company to allow the Company to discuss the disclosure
with the subject agency.
2
<PAGE> 3
This confidentiality covenant has no time or geographical limitation, however,
it will not apply to any Company Confidential Information that is or becomes
part of the public domain.
5. FUTURE RELATIONSHIPS. Nothing in this Agreement or the Non-Competition
Agreement shall prevent the parties from entering into arms-length VAR and
licensing agreements for the Company's technology and products at a later date.
The parties will then enter into appropriate confidentiality and non-disclosure
agreements in connection with such arms length agreements.
6. ARBITRATION; GOVERNING LAW. Any disputes connected to, or arising under
this Agreement or the Employment Agreement shall be settled by arbitration
conducted by the American Arbitration Association ("AAA") under the AAA rules
for Employment Disputes. The arbitration venue shall be in Tampa, Florida. This
Agreement shall be governed by the internal laws of the State of Florida.
7. COUNTERPARTS. This Agreement may be executed in several counterparts and
all documents so executed shall constitute one agreement, binding on all of the
parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements, and
understandings with respect thereto. No representation, promise, inducement,
statement or intention has been made by any party hereto that is not embodied
herein, and no party shall be bound by or liable for any alleged
representation, promise, inducement, or statement not so set forth herein.
9. MODIFICATION. This Agreement may only be modified, amended, superseded, or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may only be waived, by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation, or waiver.
10. WAIVER. The waiver by either of the parties, express or implied, of any
right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
11. CUMULATIVE REMEDIES. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise
of any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
3
<PAGE> 4
12. HEADINGS. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning and interpretation
of this Agreement. In construing this Agreement, none of the parties shall have
any term or provision construed against such party solely by reason of such
party having drafted the same.
12. SURVIVAL. Any provision of this Agreement which imposes an obligation
after termination or expiration of this Agreement shall survive the termination
or expiration of this Agreement and be binding on Executive and Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
Net Command Tech, Inc.,
a Delaware corporation
By: /s/ CHARLES C. BREAM /s/ WILLIAM R. DUNAVANT
-------------------------- ----------------------------
Charles C. Bream, William R. Dunavant
President
4
<PAGE> 1
EXHIBIT 10.10
ADDENDUM
TO OFFICE BUILDING LEASE
TO LEASE DATED JULY 1, 1996
BETWEEN TRANSCONTINENTAL REALTY INVESTORS, INC., LANDLORD
AND AAXICO SALES, INC. and SATELLITE ACCESS SYSTEMS, INC., TENANT
THIS ADDENDUM is made this 1st day of July, 1996, by and between
TRANSCONTINENTAL REALTY INVESTORS, INC., as Landlord, and AAXICO SALES, INC.
and SATELLITE ACCESS SYSTEMS, INC., as Tenant.
WHEREAS, Landlord and Tenant are the parties to the above-described Lease
for the Premises; and
WHEREAS, the parties desire to amend said Lease.
NOW THEREFORE, in consideration of the mutual promises and obligations
contained herein, the adequacy and sufficiency of which is hereby acknowledged,
Landlord and Tenant contract and agree as follows:
1. Renewal Option - provided Tenant is not in default of this Lease, Tenant
shall have the option to renew this Lease one time by written notice to
Landlord not later than six (6) months or earlier than nine (9) months
prior to lease expiration, for a term of four (4) years under the same
terms and conditions as provided herein, except that the Base Rent shall be
at the current market rate at the time the option is exercised.
2. Installation of Satellite Array - Landlord shall permit Tenant to erect, at
no cost to Landlord, a satellite array on the roof of the Building or at
the Project subject to compliance with all laws, codes, ordinances and
regulations and subject to the location and manner of construction of the
array being approved by Landlord and satisfactory to Tenant. Landlord and
Tenant agree that the satellite array shall remain the personal property of
Tenant and shall not become a fixture. All costs of erecting, maintaining,
insuring and removing the array as well as repairs or restoration to the
site of installation shall be the sole responsibility of Tenant. Tenant
will be responsible for all damages caused by such erection, maintenance or
removal. The satellite array shall not exceed the specifications as
detailed in attached "Exhibit G".
EXCEPT AS HEREBY AMENDED, all other provisions of said Lease are hereby
confirmed and ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum on the
date first above written.
<TABLE>
<CAPTION>
<S> <C>
LANDLORD: TRANSCONTINENTAL REALTY TENANT: AAXICO SALES, INC.
INVESTORS, INC.
By: /s/ David W. Starowicz By: Illegible
------------------------------- ----------------------------------
David W,. Starowicz,
Vice President Title: President
7/8/96 July 2, 1996
------------------------------- ----------------------------------
Date Date
WITNESS: /s/ Michelle C. McDowell WITNESS: /s/ Melanie F. Woods
-------------------------- -----------------------------
WITNESS: /s/ Andrea J. Rogers WITNESS: /s/ Cristina Gonzalez
-------------------------- -----------------------------
TENANT: SATELLITE ACCESS SYSTEMS, INC
By: Illegible
----------------------------------
CEO
June 28, 1996
----------------------------------
Date
WITNESS: Illegible
-------------------------------------
WITNESS: Illegible
-------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.11
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is entered into this 31st day of July, 1996, by and
between TRANSCONTINENTAL REALTY INVESTORS, INC., (hereinafter called "LANDLORD")
and AAXICO SALES, INC. AND SATELLITE ACCESS SYSTEMS, INC. (hereinafter called
"TENANT");
WITNESSETH;
WHEREAS, the LANDLORD and TENANT have previously entered into a Lease dated
this 1st day of July, 1996, premises containing approximately 11,146 square feet
and located at 111 Second Avenue NE, in St. Petersburg, FL (hereinafter referred
to as the "Original Lease"); and
WHEREAS, LANDLORD and TENANT are desirous of modifying and amending certain
parts of the Original Lease;
NOW THEREFORE, in consideration of the mutual promises and obligations
contained herein, the adequacy and sufficiency of which is hereby acknowledged,
it is agreed by and between the parties that the Lease shall be hereby amended
in the following manner and upon the terms and conditions hereinafter set forth:
Tenant shall be allowed, at Tenant's cost, to submeter the building
HVAC system to allow air conditioning to the premises during non
standard building hours. Tenant agrees to pay after hours air
conditioning charges directly to Florida Power. Tenant further agrees
to share the cost of all maintenance and repair of the 16th floor HVAC
system, with Tenant responsible for 61% and the Landlord responsible
for 39% of the cost. Tenant acknowledges that the HVAC system is
turned off from time to time for regular maintenance and repairs and
that Landlord will provide Tenant with reasonable notice whenever
possible.
Except as provided herein, all other terms, conditions, and covenants under said
Original Lease shall remain in full force and effective and cannot be modified
unless said modification is reduced to writing and signed by all parties.
<TABLE>
<CAPTION>
<S> <C>
LANDLORD: TENANT:
Transcontinental Realty Investors, Inc. AAXICO SALES, INC.
By: /s/ David W. Starowicz By: Illegible
------------------------------------- -------------------------------
David W. Starowicz TITLE:
Vice President
DATE: 8/16/96 Date: July 25, 1996
---------------------------------- ---------------------------
WITNESS: /s/ Michelle C. McDowell WITNESS: Illegible
-------------------------------- -------------------------
WITNESS: Illegible WITNESS: Illegible
-------------------------------- -------------------------
TENANT:
SATELLITE ACCESS SYSTEMS, INC.
By: Illegible
-----------------------------
TITLE: CEO
DATE: July 22, 1996
---------------------------
WITNESS: Illegible
------------------------
WITNESS: Illegible
------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.12
SQUARE FOOTAGE AMENDMENT
THIS SQUARE FOOTAGE AMENDMENT (this "Amendment") dated as of this 7th day
of May, 1999 amending that certain Lease Agreement dated March 22, 1999 and any
and all Letters of Agreement, Addenda, Amendments or Extensions thereof
(collectively, the "Lease") by and between SAWGRASS PLAZA ASSOCIATES
("Landlord") and CORSAIRE, INC., ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into the Lease relating to certain
office space (the "Premises") within the building known as Sawgrass Plaza (the
"Building") located at 1550 Sawgrass Corporate Parkway, Sunrise, Florida; and
WHEREAS, subsequent to the date of the Lease, the actual square footage of
the Premises has been measured according to the current B.O.M.A. standard for
square footage calculation; and
NOW, THEREFORE, for and in considerations of the terms, covenants and
conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Landlord and Tenant agree as follows:
1. Notwithstanding anything contained in the Lease, as amended, to the
contrary, the Premises shall mean 3,433 rentable square feet comprising the
second (2nd) floor of the Building known as Suite 220.
2. The Base Rent, Additional, Tenant Improvement Allowance and all other
amounts specified in the Lease which are a function of the rentable square
footage of the Premises shall be adjusted accordingly.
All other terms and conditions of the Lease not amended hereby are in full
force and effect and binding upon the parties thereto.
Any provision of this Amendment shall prevail over conflicting provisions
contained in the Lease.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
<TABLE>
<CAPTION>
<S> <C>
Signed, sealed and delivered
in the presence of: Sawgrass Plaza Associates,
a Florida general partnership
Illegible through its authorized agent,
- --------------------------------- Stiles Corporation
/s/ Janet M. Nathon By: /s/ Rocco Ferrera
- --------------------------------- ---------------------------
Rocco Ferrera,
Vice President
"TENANT"
Signed, sealed and delivered
in the presence of: CORSAIRE, INC., a Delaware corporation
d/b/a Net Command Tech, Inc.
Illegible By: /s/ William K. Dunavant
- --------------------------------- -------------------------
Illegible President/Dunavant
- --------------------------------- -----------------------------
Print Name and Title
</TABLE>
<PAGE> 1
EXHIBIT 10.13
ADDENDUM
THIS ADDENDUM ("Addendum") entered into this 1st day of March, 1999, by and
between Net Command Tech, Inc. (f/k/a Corsaire, Inc.), a Delaware corporation
("Company") with offices at 62 Indian Trace, Weston, Florida 33326 and Robert
Chalnick ("Executive"), with an address of 1021 Northwest 108th Avenue,
Plantation, Florida 33322.
W I T N E S S E T H:
WHEREAS, the Company and the Executive have entered into an Employment
Agreement ("Agreement") on this same date; and
WHEREAS, the Company and Executive have agreed that this Addendum shall form a
part of the Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PRECEDENCE AND INCORPORATION. This Addendum forms a part of the Agreement
attached. The Agreement and this Addendum shall be considered one document. The
terms contained in this Addendum shall take precedence over any Agreement terms
that are inconsistent with this Addendum. Terms used in this Addendum shall
have the same meaning as ascribed to them in the Agreement.
2. INTERIM BASE SALARY REVIEW. Executive's Base Salary shall be reviewed for
an interim increase on July 1, 1999.
3. SEPARATION PAY. Executive shall be entitled to receive twelve (12) month's
pay as separation pay in the event of Executive's termination of employment
with the Company, so long as Executive is not terminated with cause, as that
term is defined in Paragraph 6 of the Agreement. Executive shall also receive
any bonus earned (pro-rata) at the time of termination, so long as Executive is
not terminated with cause, as that term is defined in Paragraph 6 of the
Agreement. Payment shall be made, in the Company's sole discretion, in a lump
sum or periodic payments over six months. Executive's life, medical, and other
insurance coverages shall be maintained at the Company's expense for a period
of twelve (12) months or until such time that Executive obtains new full time
employment, so long as Executive is not terminated with cause, as that term is
defined in Paragraph 6 of the Agreement.
The Company has no severance pay policy or plan and this separation pay shall
not be considered severance pay. However, this paragraph 3 shall survive
termination of the Agreement, provided that it is not terminated under
Paragraph 6 of the Agreement.
<PAGE> 2
4. STOCK ISSUANCE. Executive shall be issued two hundred fifty thousand
(250,000) shares of the Company's common stock at a price of $.001 per share
upon execution of this Agreement. These shares shall be registered by the
Company if Executive is terminated without cause.
5. STOCK OPTIONS. Executive shall receive cashless options for two hundred
fifty thousand (250,000) shares at a price of $5.00 per share, with 10,000
vesting per month for the first twenty-five (25) months of employment. Should
Executive be terminated without cause, or terminated or demoted because of a
corporate reorganization and/or takeover/acquisition, or should there be a
change in control of fifty-one-percent (51%) or more by a single shareholder or
shareholder group (all these described events collectively defined as ("Control
Event"), all options accrued at the time of the Control Event shall vest
immediately. Executive shall also be eligible to participate in the Company's
Incentive Stock Option Program.
6. BENEFITS. Executive shall receive the following fringe benefits in
addition to his base benefits, which shall be vested upon Executive's
commencement of employment with the Company:
A. Four weeks paid vacation during the first year of the
Initial Term. Five weeks paid vacation each year thereafter. Unused vacation
days in any year can be carried over and accumulated to subsequent years.
B. Six (6) personal/sick days each year and up to six days off
per year for national holidays, such holidays being in addition to vacation
days.
C. Health Insurance (PPO), Dental Insurance, Disability
Insurance, and Life Insurance in the amount of $500,000.00 for Executive and
his dependents. Company shall pay all premiums required for these coverages.
D. Participation in the Company's 401K Plan, with matching
contributions made annually by the Company up to two-percent (2%) of
Executive's Base Salary for each year.
E. A Company vehicle, leased not to exceed $800 per month,
with the Company paying all lease, gasoline, maintenance and insurance costs.
F. Club membership fees up to a maximum of $3,500 per year.
G. Tax accounting reimbursement up to $1,500 per year, for
personal advisory services regarding Company stock and income tax filing.
H. Company shall pay Executive's attendance at seminars and
conferences that will enhance the Company's reputation, standing, or
profitability. Attendance at the described events shall not be categorized as
sick, personal, or vacation days.
I. Company shall pay Executive's professional due and
continuing professional education requirements for Executive's retention as a
Certified Public Accountant. Professional education under this paragraph shall
not be categorized as sick, personal, or vacation days.
2
<PAGE> 3
7. RELOCATION. If Executive agrees to a relocation from his present employment
locale and domicile, Company shall reimburse Executive for all relocation
expenses typical for executives, including domicile closing costs, points and
commissions, with the intent that executive does not incur any financial loss
in the overall cost of the relocation, with the exception of purchase and sale
prices of his changes in domiciles.
8. COUNTERPARTS. This Addendum may be executed in counterparts, each of which
shall be deemed an original. All such counterparts together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above.
NET COMMAND TECH, INC. "Executive"
By: /s/ William R. Dunavant /s/ Robert Chalnick
------------------------------ ---------------------------
William R. Dunavant, President Robert Chalnick
3
<PAGE> 1
EXHIBIT 10.14
ADDENDUM TO NOVEMBER 21, 1999 EMPLOYMENT AGREEMENT
THIS ADDENDUM dated as of January 1, 1999, is to that certain EMPLOYMENT
AGREEMENT (the "Agreement") dated as of November 21, 1998 by and among
Snowboard Corsaire, Inc. ("Corsaire"), and William R. Dunavant ("Dunavant")
RECITALS
WHEREAS, the parties have determined that the Agreement needs to be
modified in certain respects; and
WHEREAS, the parties are simultaneously excuting the Agreement and this
Addendum.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
The following numbered paragraph in the Agreement shall be replaced in its
entirety by the following paragraph. All other paragraphs in the Agreement
shall remain in full force and effect and are incorporated herein by reference.
5. STOCK COMPENSATION. In addition to a salary to be determined by the
new Board of Directors, Corsaire agrees to issue to Dunavant TWO MILLION
(2,000,000) shares of Corsaire common stock upon execution of this Addendum.
Said shares are subject to the Company's absolute right of cancellation if
Dunavant has not become president of Corsaire on or before March 31, 1999.
AGREED AND ACCEPTED on this 1st day January, 1999.
Snowboard Corsaire, Inc.
/s/ William R. Dunavant By: /s/ Rene Hamouth
- ------------------------ ----------------------------------------
William R. Dunavant Rene Hamouth, President and Sole Director
<PAGE> 1
EXHIBIT 10.15
ADDENDUM
THIS ADDENDUM ("Addendum") entered into this 1st day of March, 1999, by and
between Net Command Tech, Inc., a Delaware corporation ("Company") with offices
at 62 Indian Trace, Weston, Florida 33326 and William R. Dunavant
("Executive"), with an address of 2461 Provence Circle, Weston, Florida 33327.
W I T N E S S E T H :
WHEREAS, the Company and the Executive have entered into an Employment
Agreement ("Agreement") on this same date; and
WHEREAS, the Company and Executive have agreed that this Addendum shall form a
part of the Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PRECEDENCE AND INCORPORATION. This Addendum forms a part of the Agreement
attached. The Agreement and this Addendum shall be considered one document. The
terms contained in this Addendum shall take precedence over any Agreement terms
that are inconsistent with this Addendum. Terms used in this Addendum shall
have the same meaning as ascribed to them in the Agreement.
2. INTERIM BASE SALARY REVIEW. Executive's Base Salary shall be reviewed for
an interim increase on January 1, 2000.
3. SEPARATION PAY. Executive shall be entitled to receive twelve (12) month's
pay as separation pay in the event of Executive's termination of employment
with the Company, so long as Executive is not terminated with cause, as that
term is defined in Paragraph 6 of the Agreement. Executive shall also receive
any bonus earned (pro-rata) at the time of termination, so long as Executive is
not terminated without cause, as that term is defined in Paragraph 6 of the
Agreement. Payment shall be made, in the Company's sole discretion, in a lump
sum or periodic payments over six months. Executive's life, medical, and other
insurance coverages shall be maintained at the Company's expense for a period
of twelve (12) months or until such time that Executive obtains new full time
employment, so long as Executive is not terminated without cause, as that term
is defined in Paragraph 6 of the Agreement. Additionally, the Company vehicle
provided to Executive under Paragraph 6E shall be purchased by the Company and
given/titled to Dunavant, so long as Executive is not terminated with cause,
as that term is defined in Paragraph 6 of the Agreement.
The Company has no severance pay policy or plan and this separation pay shall
not be considered severance pay. However, this paragraph 3 shall survive
termination of the Agreement, provided that it is not terminated under
Paragraph 6 of the Agreement.
<PAGE> 2
4. STOCK ISSUANCE. Executive shall be issued two million shares (2,000,000)
shares of the Company's common stock at a price of $.001 per share upon
execution of this Agreement. These shares shall be registered by the Company if
Executive is terminated without cause.
5. STOCK OPTIONS. During each year Executive is employed by the Company,
Executive shall receive cashless options exercisable at $5.00 per share, equal
in value to five-percent (5%) of the Company's gross sales for that year. Should
Executive be terminated without cause, or terminated or demoted because of a
corporate reorganization and/or takeover/acquisition, or should there be a
change in control of fifty-one-percent (51%) or more by a single shareholder or
shareholder group (all these described events collectively defined as ("Control
Event"), all options accrued at the time of the Control Event shall vest
immediately at the rate described above for the gross sales at the time of the
Control Event, or five-percent (5%) of the price paid for the change in control
(as calculated by an independent professional appraiser), whichever is greater.
Executive shall also participate in the Company's Incentive Stock Option
Program.
6. BENEFITS. Executive shall receive the following fringe benefits in
addition to his base benefits, which shall be vested upon Executive's
commencement of employment with the Company:
A. Four weeks paid vacation during the first year of the
Initial Term. Five weeks paid vacation each year thereafter. Unused vacation
days in any year can be carried over and accumulated to subsequent years.
B. Six (6) personal/six days each year and up to six days off
per year for national holidays, such holidays being in addition to vacation
days.
C. Health Insurance (PPO), Dental Insurance, Disability
Insurance, and Life Insurance in the amount of $1,000,000.00 for Executive and
his dependents. Company shall pay the premiums required for these coverages on
Executive only.
D. Participation in the Company's 401K Plan, with matching
contributions made annually by the Company up to two-percent (2%) of
Executive's Base Salary for each year.
E. A Company vehicle, leased not to exceed $800 per month,
with the Company paying all lease, gasoline, maintenance and insurance costs.
F. Club membership fees up to a maximum of $3,500 per year.
G. Tax accounting reimbursement up to $1,500 per year, for
personal advisory services regarding Company stock and income tax filing.
H. Company shall pay Executive's attendance at seminars and
conferences that will enhance the Company's reputation, standing, or
profitability. Attendance at the described events shall not be categorized as
sick, personal, or vacation days.
2
<PAGE> 3
7. RELOCATION. If Executive agrees to a relocation from his present
employment locale and domicile, Company shall reimburse Executive for all
relocation expenses typical for executives, including domicile closing costs,
points and commissions, with the intent that executive does not incur any
financial loss in the overall cost of the relocation, with the exception of
purchase and sale prices of his changes in domiciles.
8. COUNTERPARTS. This Addendum may be executed in counterparts, each of which
shall be deemed an original. All such counterparts together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above.
NET COMMAND TECH, INC. "Executive"
By: /s/ William R. Dunavant /s/ William R. Dunavant
---------------------------- -----------------------------
William R. Dunavant William R. Dunavant
President
3
<PAGE> 1
EXHIBIT 10.16
INTERIM CLOSING AGREEMENT
THIS INTERIM CLOSING AGREEMENT ("Interim Agreement") is entered into on April
26, 1999, by and among Satellite Access Systems Inc. ("SAS"), a Nevada
corporation with a principal address of 111 Second Avenue N.E., 16th Floor, St.
Petersburg, FL, all the SAS shareholders, all the SAS directors, and Corsaire,
Inc. ("Corsaire"), a Delaware corporation, with a principal business address of
62 Indian Trace, Suite 286, Weston, FL 33326, and provides as follows, in
consideration of the mutual promises, covenants, and representations contained
herein:
1. OPERATING AGREEMENT. The parties are presently operating under a TAX FREE
ACQUISITION AGREEMENT ("Acquisition Agreement") dated April 21, 1999, in which
SAS and the SAS shareholders have provided for the exchange of 5,075,000 shares
of SAS common stock ("SAS Shares"), which represents one hundred-percent (100%)
of the outstanding and issued shares of SAS capital stock, to Corsaire in
return for 2,352,942 shares of Corsaire (restricted) common stock ("Corsaire
Shares"). The Corsaire shares shall be initially issued in a single master
certificate ("Master Certificate") in the name of SAS in accordance with the
escrow period requirements described in paragraph 3 below.
The parties agree that the Acquisition Agreement and this Interim Agreement
supersede the Letter of Intent dated April 9, 1999 between them, and that this
Interim Agreement and the Acquisition agreement supplement and operate
concurrently with each other.
2. TAX FREE EXCHANGE; REGISTRATION EXEMPTION
(a) TAX FREE EXCHANGE. The parties intend that the contemplated acquisition
reorganization be tax free pursuant to Section 368 of the Internal Revenue Code
of 1986. No revenue ruling or opinion of counsel is being sought in this regard.
(b) REGISTRATION EXEMPTION. The parties hereto intend that the stock to be
exchanged under the Acquisition Agreement and this Interim Agreement shall be
exempt from the registration requirements of the Securities Act of 1933 (1933
Act), as amended, and applicable state statutes. The Corsaire shares issued
under this Agreement are Restricted Securities as that term is defined in Rule
144 under the 1933 Act, and shall not be offered for sale or otherwise
transferred except pursuant to an effective registration statement under the
1933 Act, or pursuant to an exemption from registration under the 1933 Act, the
availability of which must be established to Corsaire's satisfaction.
3. DEFINITIVE AGREEMENT; OPERATION OF INTERIM AGREEMENT. The Definitive
Agreement between the parties, as that term is defined in the Acquisition
Agreement, (which shall be the final form memoralization of Corsaire's
acquisition of SAS), shall be completed by May 5, 1999. The parties agree to
the following closing procedures under this Interim Agreement:
(I) Corsaire shall issue and deliver the Master Certificate to SAS; SAS shall
endorse and deliver the SAS Shares to Corsaire. The delivery of the SAS Shares
hereunder will result in Corsaire's immediate acquisition of record and
beneficial ownership of all of SAS's capital stock, free and clear of all liens
and encumbrances, subject to sub-sections (II)-(VII) below.
<PAGE> 2
Each SAS shareholder holds the authority to exchange their shares hereunder,
and has had full opportunity to discuss the exchange offer with Corsaire's
officers, and Corsaire has made all documentation addressing this exchange
available to the SAS shareholders.
The Corsaire Shares represented by the Master Certificate and issued and
delivered in accordance with the provisions of this Interim Agreement will be
and are duly authorized, validly issued, fully paid and nonassessable.
(II) The parties shall hold their respective shares received under this
exchange for a period of not less than thirty (30) and not more than forty-five
(45) days after execution of this Interim Agreement by all parties concerned
("Escrow Period"). Corsaire shall advise SAS if the Escrow Period will have a
forty-five (45) day duration prior to the end of the 30th day. The exchanged
shares shall be delivered to the stock escrow holders, who shall be the
attorneys for Corsaire (Thomas J. Hess, Esq., Thomas J. Hess, P.A.) and the
attorneys for SAS (David J. Sockol, Esq.). Corsaire's transmission of stock
issuance instructions to the Corsaire stock transfer agent shall be deemed
issuance and delivery of the Corsaire Shares. (See attached Composite Exhibit
A. (Instructions to Corsaire stock transfer agent)).
(III) During the Escrow Period, Corsaire will obtain an opinion letter from
special intellectual property counsel ("IP Opinion Letter") on the SAS
copyright(s) regarding validity and infringement. SAS will provide Corsaire
with its documentation for the SAS copyrights, which documentation shall be
governed by the confidentiality clauses of the Acquisition Agreement.
(IV) During the Escrow period, the parties shall complete all the disclosures,
schedules and exhibits that will be attached to the Definitive Agreement,
recognizing that the main body of the Definitive Agreement will be completed
prior to the end of the Escrow Period.
(V) If during or at the conclusion of the Escrow Period the IP Opinion Letter
concludes that the SAS Copyright(s) are invalid or infringing, Corsaire will
assist SAS to cure the defect. If the SAS Copyright(s) cannot be cured, the
parties will endeavor to resolve the issues created by the defects, provided
that such resolution shall be cost effective and economically rational in
Corsaire's judgment.
(VI) If during or at the conclusion of the Escrow Period, the actual
liabilities of SAS are greater than Four Million Dollars ($4,000,000.00) SAS
will transfer back to Corsaire that amount of Corsaire Shares that equal the
excess liabilities, at a price of $12.75 per share.
(VII) The Escrow Period will be closed upon expiration of the Escrow Period.
Corsaire may, in writing, declare the Escrow Period closed at any time during
the Escrow Period. Upon the natural expiration of the Escrow Period or
declaration of its early closure, the exchanged shares shall be released from
escrow and SAS will advise Corsaire in writing as to the allocation of Corsaire
shares to be received by the SAS shareholders from the Corsaire Master
Certificate. This written allocation shall bear the concurring signatures of the
SAS shareholders. Corsaire shall immediately direct its transfer agent to issue
individual certificates to the SAS shareholders upon receipt of the written
allocation and Master Certificate.
2
<PAGE> 3
4. FURTHER ASSURANCES. The parties hereto each agree that from time to time,
as and when reasonably requested by the other, it will execute, acknowledge,
deliver and file all proper deeds, assurances, assignments, bills of sale,
assumptions and other documents, and do, or cause to be done, all other acts
and things necessary or proper in order to carry out the intent and purposes of
this Agreement at no cost or expense of the party requested.
5. MISCELLANEOUS
(i) AMENDMENTS. This Agreement may only be amended via written document by all
parties, provided that all requisite director and shareholder approvals are
obtained for any material amendments to the terms set forth in this Agreement.
(ii) AGREEMENT TERMINATION PROCEDURES. If the parties are unable to consummate
a Definitive Agreement, the Acquisition Agreement and this Interim Agreement
shall be deemed terminated and: (1) Corsaire shall immediately effect the
return of the SAS Shares to SAS with all endorsements canceled, and (2) SAS
shall immediately effect the return of the Corsaire Master Certificate to
Corsaire.
(ii) LIABILITIES, ATTORNEY FEES AND COSTS IN EVENT OF TERMINATION. In the event
of the termination of this Agreement for any reason, each party shall bear its
own costs and expenses, including attorney fees, and the parties shall have no
further legal obligation to each other, or be liable for any damages to each
other as a result of the termination of this Agreement and/or the Acquisition
Agreement.
(iii) PROPER PARTIES TO THE AGREEMENT. SAS confirms that the parties signing
this Initial Agreement represent all the SAS shareholders and directors, and
that there are no dissenting shareholders or directors.
(iv) NON-WAIVER. Except as expressly provided in this Initial Agreement, no
waiver of any covenant, condition, or provision of this agreement, shall be
deemed to have been made unless made expressly in writing and signed by the
party against whom such waiver is charged; and (a) the failure of any party to
insist in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Initial Agreement shall not be construed as a
waiver or relinquishment for the future of any such provisions, covenants, or
conditions; and (b) the acceptance of performance of anything required to be
performed hereunder with the knowledge of the breach or failure of a covenant,
condition, or provision hereof shall not be deemed a waiver of such breach or
failure.
3
<PAGE> 4
(v) GOVERNING LAWS; SUCCESSORS AND ASSIGNS; COUNTERPARTS; ENTIRE AGREEMENT.
This Agreement (a) shall be construed under and in accordance with the internal
laws of the state of Florida, excluding conflict of laws principles; (b) shall
be binding on and shall inure to the benefit of the parties to the Agreement
and their respective successors and assigns; (c) may be executed by
telefacsimile and/or in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more counterparts shall have been signed by each of the parties and delivered
to SAS and Corsaire; and (d) embodies the entire agreement and understanding,
superseding all prior agreements and understandings between the parties hereto
relating to the subject matter of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Initial
Agreement to be executed by their duly authorized officers and in their
individual and official capacities, as the case may be, effective as of the
date first written above.
Corsaire, Inc. Satellite Access Systems Inc.
By: /s/ William R. Dunavant By: /s/ Glenn A. Kovar
------------------------------ --------------------------
William R. Dunavant Glenn A. Kovar,
President President
SAS SHAREHOLDERS:
/s/ Illegible
- --------------------------------- -----------------------------
[name] Director [name] Director
/s/ Brent Kovar
- --------------------------------- -----------------------------
[name] Director [name]
- --------------------------------- -----------------------------
[name] [name]
SAS DIRECTORS:
- --------------------------------- -----------------------------
[name] [name]
- --------------------------------- -----------------------------
[name] [name]
4
<PAGE> 5
ADDENDUM TO INTERIM CLOSING AGREEMENT
THIS ADDENDUM dated May 14, 1999, by and among Satellite Access Systems Inc.
("SAS"), a Nevada corporation with a principal address of 111 Second Avenue
N.E., 16th Floor, St. Petersburg, FL and Net Command Tech, Inc. (f/k/a Corsaire,
Inc.), a Delaware corporation, with a principal business address of 62 Indian
Trace, Suite 286, Weston, FL 33326, and provides as follows, in consideration
of the mutual promises, covenants, and representations contained herein:
WHEREAS, the parties entered into that certain Interim Closing Agreement of
April 26, 1999 by and among Net Command Tech, Inc. (formerly Corsaire, Inc.),
SAS, the SAS shareholders, and the SAS directors;
WHEREAS, the president of SAS is empowered by the above-named SAS parties to
execute this Addendum; and
WHEREAS, the parties have decided to waive the requirement of a Definitive
Agreement (originally scheduled for May 5, 1999) as that term is defined in the
Acquisition Agreement and execute a final closing memorandum in its place on or
before the expiration of the due diligence period;
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PRECEDENCE AND INCORPORATION. This Addendum forms a part of the Interim
Closing Agreement and Acquisition Agreement. The Agreement and this Addendum
shall be considered one document. The terms contained in this Addendum shall
take precedence over any Agreement terms that are inconsistent with this
Addendum. Terms used in this Addendum shall have the same meaning as ascribed
to them in the Agreement.
2. WAIVER OF DEFINITIVE AGREEMENT. The parties are presently operating under
the Interim Closing Agreement which scheduled a DEFINITIVE CLOSING AGREEMENT by
May 5, 1999. The parties hereby waive the Definitive Closing Agreement, and
will proceed to a final closing memorandum to be executed on or before the
expiration of the due diligence period described in the Interim Closing
Agreement.
3. COUNTERPARTS. This Addendum may be executed in counterparts, each of which
shall be deemed an original. All such counterparts together shall constitute
one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above.
Satellite Access Systems Inc.
By: /s/ William R. Dunavant By: /s/ Glenn A. Kovar
-------------------------- ---------------------------
William R. Dunavant, Glenn A. Kovar,
President President
<PAGE> 6
SECOND ADDENDUM TO INTERIM CLOSING AGREEMENT
THIS SECOND ADDENDUM dated June 2, 1999, by and among Satellite Access Systems
Inc. ("SAS"), a Nevada corporation with a principal address of 111 Second
Avenue N.E., 16th Floor, St. Petersburg, FL and Net Command Tech, Inc. ("NTC,"
f/k/a Corsaire, Inc.), a Delaware corporation, with a principal business
address of 62 Indian Trace, Suite 286, Weston, FL 33326, and provides as
follows, in consideration of the mutual promises, covenants, and
representations contained herein:
WHEREAS, the parties entered into that certain Interim Closing Agreement of
April 26, 1999, and Addendum to Interim Closing Agreement of May 14, 1999
("First Addendum") by and among NTC (formerly Corsaire, Inc.), SAS, the SAS
shareholders, and the SAS directors;
WHEREAS, the president of SAS is empowered by the above-named SAS parties to
execute this Second Addendum; and
WHEREAS, the parties have decided to confirm and clarify Paragraph 3 VI of the
Interim Closing Agreement which addresses the procedure for SAS liabilities
exceeding four million dollars ($4,000,000.00).
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PRECEDENCE AND INCORPORATION. This Second Addendum forms a part of the
First Addendum, the Interim Closing Agreement and the Acquisition Agreement. The
Agreement and this Second Addendum shall be considered one document. The terms
contained in this Second Addendum shall take precedence over any Agreement
terms that are inconsistent with this Addendum. Terms herein shall have the
same meaning as ascribed to them in the above-noted Agreements.
2. INDEMNIFICATION. SAS and the SAS Stockholders, severally agree to
indemnify and hold Net Command Tech, Inc. harmless from and against any and all
liabilities, damages, losses, claims, demands, costs, or expenses (including
interest, penalties, reasonable attorneys' and accountants' fees and expenses,
court costs, and fees of expert witnesses) (all of the foregoing hereinafter
collectively referred to as the "Claims") which NTC shall suffer or incur in
excess of four million dollars ($4,000,000.00) ("Indemnification Sum"), whether
liquidated or unliquidated, accrued or contingent, connected with or arising
out of any Claims that existed or arose prior to June 10, 1999. This
indemnification shall survive until the expiration of the statute of
limitations attached to any individual or aggregate Claims (pursuant to the
respective laws governing the Claim(s));
Claims that exceed the Indemnification Sum, individually or in the aggregate,
shall be indemnified by the return of the NTC shares (represented in the Master
Certificate) to NTC in that amount exceeding the Indemnification Sum, as
calculated using a value of $12.75 per share. An amount of 235,295 shares from
the Master Certificate shall be reserved and held in escrow until the Claims
are determined to be settled or paid in full.
<PAGE> 7
3. DISPOSITION OF ESCROWED SHARES. If Claims associated with existing SAS
transactions with Virtual Products, Inc. ("VPI") and GRGI exceed the
Indemnification Sum, or cause the Indemnification Sum to be exceeded, and the
NTC stock held in escrow must be used to settle or fully pay such Claims, then
any balance of escrowed NTC stock remaining after the settlement or payment in
full of the VPI and GRGI claims shall be returned to the SAS shareholders within
sixty (60) days after the fully executed settlements are implemented or payment
is made in full. If Claims associated with SAS transactions with VPI and GRGI
are settled without need for the escrowed NTC shares, then all the escrowed NTC
shares shall be returned to the SAS stockholders within sixty (60) days after
the settlements are fully executed and implemented.
4. STOCKHOLDER OBLIGATIONS. Each of the undersigned SAS Stockholders hereby
acknowledges his or her obligation under this Second Addendum. Each SAS
stockholder further agrees to approve the transfer of his or her NTC shares in
that pro rata and aggregate amount that will comprise and constitute the NTC
shares held in escrow to pay Claims in excess of the Indemnification Sum.
These escrowed shares shall be contributed on an equal basis from all SAS
stockholders.
If the Claims exceed the Indemnification Sum and the escrowed shares are not
sufficient to pay or settle the Claims in full, each SAS stockholder further
agrees to and approves the transfer of his or her pro-rata share of the
1,568,628 shares that will be distributed to them once the threshold of NTC
sales described in Paragraph 2 of the Tax Free Acquisition Agreement
($10,000,000.00) has been met.
Each of the undersigned SAS Stockholders waives any right to require NTC to (i)
proceed against SAS if the NTC shares held in escrow are insufficient to pay or
settle the Claims in full; or (ii) proceed against any other SAS Stockholder
beyond the stockholder's pro rata obligation under this Addendum. Each of the
undersigned SAS Stockholders further waives any right of subrogation,
reimbursement, contribution, or indemnity up to their pro rata obligation
hereunder against or from SAS. Each of the undersigned SAS Stockholders further
waives the benefit of any statute of limitations affecting SAS liability with
respect to the Claims set forth above.
5. COUNTERPARTS. This Addendum may be executed, in counterparts, each of
which shall be deemed an original. All such counterparts together shall
constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above:
Corsaire, Inc. Satellite Access Systems Inc.
By: /s/ William R. Dunavant By: /s/ Brent Kovar
------------------------------ --------------------------
William R. Dunavant, Brent Kovar,
President Executive Vice President
2
<PAGE> 8
SAS SHAREHOLDERS:
/s/ Illegible
- ----------------------- --------------------------
[name]: [name]:
/s/ Joy Kovar
- ----------------------- --------------------------
[name]: [name]:
/s/ Brent Kovar
- ----------------------- --------------------------
[name]: [name]:
SAS DIRECTORS:
/s/ Illegible
- ----------------------- --------------------------
[name]: [name]:
/s/ Brent Kovar
- ----------------------- --------------------------
[name]: [name]:
3
<PAGE> 9
THIRD ADDENDUM TO INTERIM CLOSING AGREEMENT
THIS THIRD ADDENDUM dated June 10, 1999, by and among Satellite Access Systems
Inc. ("SAS"), a Nevada corporation, with a principal address of 111 Second
Avenue N.E., 16th Floor, St. Petersburg, FL and Net Command Tech, Inc.
("NTC," f/k/a Corsaire, Inc.), a Delaware corporation, with a principal
business address of 62 Indian Trace, Suite 286, Weston, FL 33326, and provides
as follows, in consideration of the mutual promises, covenants, and
representations contained herein:
WHEREAS, the parties entered into the certain Interim Closing Agreement of
April 26, 1999, by and among NTC, SAS, the SAS shareholders, and the SAS
directors;
WHEREAS, the parties entered into that certain Addendum to Interim Closing
Agreement of May 14, 1999 ("First Addendum") and the Second Addendum to Interim
Closing Agreement of June 2, 1999 ("Second Addendum");
WHEREAS, the president of SAS is empowered by the above-named SAS parties to
execute this Addendum; and
WHEREAS, the parties have agreed to extend the closure of the due diligence
period until June 16, 1999 to enable the final preparation and issuance of an
intellectual opinion letter confirming the non-infringement and valid title of
the SAS copyright, Magic Modules.
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PRECEDENCE AND INCORPORATION. This Addendum forms a part of the Interim
Closing Agreement and Acquisition Agreement. The Agreement and this Addendum
shall be considered one document. The terms contained in this Addendum shall
take precedence over any Agreement terms that are inconsistent with this
Addendum. Terms used in this Addendum shall have the same meaning as ascribed
to them in the Agreement.
2. EXTENSION OF CLOSURE OF DUE DILIGENCE. The parties are presently operating
under the Interim Closing Agreement, the First Addendum and the Second
Addendum. In the First Addendum, the parties waived the Definitive Closing
Agreement, and agreed to proceed to a final closing memorandum to be executed
on or before the expiration of the due diligence period described in the
Interim Closing Agreement. The due diligence period expired on June 10, 1999.
The intellectual opinion letter confirming the non-infringement and valid title
of the SAS computer source code copyright requires additional finalization.
Accordingly, the parties hereby agree to extend closure of the due diligence
period until June 16, 1999 to complete the copyright due diligence, and shall
execute the final closing memorandum on or before June 18, 1999.
3. COUNTERPARTS. This Addendum may be executed in counterparts, each of which
shall be deemed an original. All such counterparts together shall constitute
one Agreement.
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above.
Corsaire, Inc. Satellite Access Systems Inc.
By: /s/ William R. Dunavant By: /s/ Glenn A. Kovar,
-------------------------- --------------------------
William R. Dunavant, Glenn A. Kovar,
President President
SAS SHAREHOLDERS:
/s/ Illegible
- ------------------------------ -----------------------------
[name]: [name]:
- ------------------------------ -----------------------------
[name]: [name]:
- ------------------------------ -----------------------------
[name]: [name]:
SAS DIRECTORS
/s/ Illegible
- ------------------------------ -----------------------------
[name]: Director [name]:
- ------------------------------ -----------------------------
[name]: [name]:
2
<PAGE> 1
Exhibit 10.17
FINAL CLOSING MEMORANDUM
THIS FINAL CLOSING MEMORANDUM ("Closing Memorandum") dated June 25, 1999,
June 28, 1999 by and among Satellite Access Systems, Inc. ("SAS"), a Nevada
corporation with a principal address of 111 Second Avenue N.E., 16th Floor, St.
Petersburg, FL and Net Command Tech, Inc. ("NCT," f/k/a Corsaire, Inc.), a
Delaware corporation, with an address of 62 Indian Trace, Suite 286, Weston, FL
33326, and provides as follows, in consideration of the mutual promises,
covenants, and representations contained herein:
WHEREAS, the parties entered into that certain Tax-Free Acquisition Agreement of
April 21, 1999, an Interim Closing Agreement on April 26, 1999 ("Interim
Closing Agreement"), the Addendum to Interim Closing Agreement of May 14, 1999,
the Second Addendum ("Second Addendum") to Interim Closing Agreement of June 2,
1999, and the Third Addendum ("Third Addendum") to the Interim Closing Agreement
of June 10, 1999, and the Fourth Addendum ("Fourth Addendum") of June 18, 1999
(collectively, "Closing Agreements");
WHEREAS, the president of SAS is empowered by the SAS shareholders and
directors to execute this Closing Memorandum on their behalf;
WHEREAS, the parties have satisfactorily completed the due diligence period and
have satisfied all closing conditions and/or waived any unperformed closing
conditions required under the Closing Agreements (except for those conditions
that by their nature survive the Closing Documents, namely payment and
assumption of SAS liabilities, execution of the escrow parameters set forth for
NCT stock in the Second Addendum, and completion of the physical exchange of
NCT stock certificates with the holders of one hundred-percent (100%) of the
issued and outstanding SAS stock);
WHEREAS, NCT has possession of original SAS shares, with stock powers endorsed
to NCT, amounting to eighty-six-percent (86%) of the actual total issued and
outstanding SAS shares;
WHEREAS, NCT has written (SAS shareholder) consents to the acquisition equaling
eighty-six-percent (86%) of the actual total issued and outstanding SAS shares;
and
WHEREAS, to the best of the parties knowledge, the balance (14%) of the shares
constituting one-hundred-percent (100%) of the issued and outstanding SAS
shares endorsed to NCT are forthcoming to NCT;
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows;
1. PRECEDENCE AND INCORPORATION. This Closing Memorandum forms a part of the
Closing Agreements. The Closing Agreements and this Addendum shall be
considered one document. The terms contained in this Closing Memorandum shall
take precedence over any terms in the Closing Agreements terms that are
inconsistent with this Closing Memorandum. Terms used in this Closing
Memorandum shall have the same meanings as ascribed to them in the Closing
Agreements.
<PAGE> 2
2. COMPLETION/WAIVER OF FINAL CLOSING REQUIREMENTS. NCT's acquisition of SAS
has been completed. The parties have satisfactorily completed the due diligence
and all conditions of the Closing Agreements and/or hereby waive any unperformed
closing conditions required under the Closing Agreements (except for those
conditions that by their nature survive the Closing Documents, namely the
payment and assumption of SAS liabilities, execution of the escrow parameters
set forth for NCT stock, and the completion of the physical exchange of NCT
stock with the holders of one hundred-percent (100%) of the issued and
outstanding stock of SAS).
3. ISSUANCE AND DISTRIBUTION OF NCT SHARES TO SAS SHAREHOLDERS. Attached as
Exhibit A to this Closing Memorandum is the distribution schedule for NCT
shares to be issued to SAS shareholders and litigation settling parties in
lieu of SAS shares (Aaxico) from the SAS Master Certificate of 2,352,942 shares
prior to the escrow retention of 235,295 NCT shares as required in the Second
Addendum. NCT shares shall be released for delivery to individual SAS
shareholders who have not yet presented their shares for exchange, upon the
delivery of their endorsed SAS shares to NCT.
4. CONTINUATION OF EXISTING SAS EMPLOYMENT AGREEMENTS; EXECUTION OF NCT
EMPLOYMENT AGREEMENTS AND NON-COMPETITION AGREEMENTS. NCT shall assume and
continue the SAS employment agreements in effect on the date of this Closing
Memorandum. Such contract employees shall be bound by all obligations and
conditions of employment attributed to them as employees and now flowing to NCT
as employer under the assigned SAS employment agreement. Employee obligations
and commitments to SAS, contractual or otherwise, with respect to
confidentiality, works-made-for-hire, and inventions shall now inure to the
benefit of NCT and be in favor of NCT starting on the date of the SAS
employment agreements. The parties shall expeditiously finalize and execute NCT
employment agreements and noncompetition agreements.
5. COUNTERPARTS. This Addendum may be executed in counterparts, each of which
shall be deemed an original. All such counterparts together shall constitute
one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above.
Net Command Tech, Inc. Satellite Access Systems, Inc.
By: /s/ Charles C. Bream By: /s/ Glenn A. Kovar
----------------------------- -----------------------------
Charles C. Bream, Glenn A. Kovar,
President and CEO President
2
<PAGE> 3
EXTENSION OF EXECUTION OF FINAL CLOSING MEMORANDUM
THIS EXTENSION OF FINAL CLOSING MEMORANDUM dated June 25, 1999, by and among
Satellite Access Systems, Inc. ("SAS"), a Nevada corporation with a principal
address of 111 Second Avenue N.E., 16th Floor, St. Petersburg, FL and Net
Command Tech, Inc. ("NCT," f/k/a Corsaire, Inc.), a Delaware corporation, with a
principal business address of 62 Indian Trace, Suite 286, Weston, FL 33326, and
provides as follows, in consideration of the mutual promises, covenants, and
representations contained herein:
WHEREAS, the parties entered into that certain Interim Closing Agreement of
April 26, 1999, by and among NCT, SAS, the SAS shareholders, and the SAS
directors, the Addendum to Interim Closing Agreement of May 14, 1999,
the Second Addendum ("Second Addendum") to Interim Closing Agreement of June 2,
1999, and the Third Addendum ("Third Addendum") to the Interim Closing Agreement
of June 10, 1999;
WHEREAS, the president of SAS is empowered by the above-named SAS parties to
execute this Addendum;
WHEREAS, the parties are presently operating under the Interim Closing
Agreement, the First Addendum, the Second Addendum, and the Third Addendum. In
the First Addendum, the parties waived the Definitive Closing Agreement, and
agreed to proceed to a final closing memorandum to be executed on or before the
expiration of the due diligence period described in the Interim Closing
Agreement. The parties extended closure of the due diligence period until June
16, 1999 to complete the copyright due diligence, and extended the Final
Closing memorandum to on or before June 28, 1999.
WHEREAS, the parties have agreed to extend the execution date for the Final
Closing Memorandum from June 18, 1999 until June 28, 1999, to enable the
finalization of the stock exchange ratios for SAS shareholders to account for
the liability escrowed NCT shares described in the Second Addendum, and to
finalize other closing matters.
NOW, THEREFORE, in consideration of the mutual promises contained herein and in
the Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows;
1. PRECEDENCE AND INCORPORATION. This Addendum forms a part of the Closing
Agreements. The Closing Agreements and this Addendum shall be considered one
document. The terms contained in this Addendum shall take precedence over any
terms in the Closing Agreements terms that are inconsistent with this Addendum.
Terms used in this Addendum shall have the same meanings as ascribed to them in
the Closing Agreements.
2. EXTENSION OF FINAL CLOSING MEMORANDUM. The Final Closing Memorandum shall be
executed on or before June 28, 1999, to enable finalization of certain closing
matters described in the recitals.
3. COUNTERPARTS. This Addendum may be executed in counterparts, each of which
shall be deemed an original. All such counterparts together shall constitute
one Agreement.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed
as of the date first written above.
Corsaire, Inc. Satellite Access Systems, Inc.
By: By: /s/ Glenn A. Kovar 6/25/99
----------------------------- -----------------------------
Charles C. Bream, Glenn A. Kovar,
President President
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF NET COMMAND TECH, INC.
Satellite Access Systems, Inc., a Nevada corporation
