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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 33-26109
AMAZON NATURAL TREASURES, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0460880
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4011 West Oquendo Avenue
Suite C
Las Vegas, Nevada 89118
(Address of principal executive offices, including zip code.)
(702) 795-4333
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) YES [ ] NO [ X ] (2) YES [ X ] NO [ ]
Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is contained herein, and no disclosure will be contained, to the best of
Registrant's knowledge, in definitive proxy
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or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year.
December 31, 1996 - $34,975.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of a specified date within the past 60
days.
May 31, 1997 - $12,093,347.25. There are approximately 5,374,821 shares of
common voting stock of the Registrant held by non-affiliates. During the past
five years, there has been non "public market" for the shares of Common Stock of
the Registrant, so the Registrant has arbitrarily valued these shares on the
basis of par value per share.
Issuers involved in Bankruptcy Proceedings during the past Five Years.
Not Applicable.
State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date:
May 31, 1997 - 26,237,934
-----------------------
Documents Incorporated by Reference
1. Form S-18 Registration Statement filed with the Securities and Exchange
Commission on or about December 13, 1988, and all exhibits thereto.
2. Form S-8 Registration Statement, filed with the Securities and Exchange
Commission, which became effective by operation of law on April 1, 1996
and any amendments thereto.
3. Form 8-K dated June 10, 1993 and filed with the Securities and Exchange
Commission on August 20, 1993, and all exhibits thereto.
4. Form 8-K-A-1 dated June 10, 1993 and filed with the Securities and
Exchange Commission together with all exhibits thereto.
5. Form 8-K filed with the Securities and Exchange Commission and dated
April 10, 1996.
6. Form 8-K filed with the Securities and Exchange Commission and dated
August 29, 1996.
7. Form 8-K/A filed with the Securities and Exchange Commission on
September 6, 1996.
8. Form 10-Q for the period ending March 31, 1996 and any amendments
thereto.
9. Form 10-Q for the period ending June 30, 1996 and any amendments
thereto.
10. Form 10-Q for the period ending September 31, 1996 and any
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amendments thereto.
Transitional Small Business Issuer Format
YES [ x ] NO [ ]
TABLE OF CONTENTS
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Market for Common Equity and Related Stockholder Matters
Item 6. Management's Discussion and Analysis or Plan of Operation
Item 7. Financial Statements
Item 8. Changes in and Disagreements with Accounting
and Financial Disclosure
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) Of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
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PART I
ITEM 1. BUSINESS.
Background
Amazon Natural Treasures, Inc. (the "Company") was incorporated under the
laws of the state of Utah on November 23, 1988, as Concord Capital, Inc., to
acquire or merge with an existing business. On March 28, 1996, the Company
acquired all of the issued and outstanding shares of common stock of Amazon
Natural Treasures, Inc., a Nevada corporation and changed its business purpose
to that of importing, developing, manufacturing and selling products derived
from plants grown in the Brazilian Amazon Rain Forest.
General
The Company is engaged in the business of importing phytogenic products
for processing and selling in the United States. The products are developed from
plants which grow in the Amazon Rain Forest of Brazil.
Acquiring the Plants
The Company acquires its plants from Amazon Natural Treasures Commercial
Importadora Exportadora LTDA ("ANTCIE"), a Brazilian corporation which is owned
by Michael Sylver, the Company's President; Rocque Pucci, the Company's Vice
President; Rudine Borgato, the Company's Brazilian Counsel; and, Carlos Franco.
The transactions between the Company and ANTCIE are more favorable to the
Company than can be obtained from independent third parties. ANTCIE acquires its
plants from Brazilian Indians who gather the same in the Brazilian Rain Forest
where the plants grow wild or from Brazilian plantations where specific plants
are grown.
ANTCIE is a Brazilian corporation formed for the purpose of transacting
business in Brazil. Under Brazilian law, only Brazilian corporations can export
or import products from Brazil. Because of the
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complicated nature of the laws in Brazil, it was expeditious for the Company to
have individual shareholders for ANTCIE rather than incorporating ANTCIE as a
wholly owned subsidiary of the Company. No fees or compensation are paid to
ANTCIE for transacting business in Brazil on behalf of the Company. The Company
only reimburses ANTCIE for its out-of-pocket expenses.
The Company also acquires semi-processed products through ANTCIE from
Indian Coboclos and finished products from third party manufacturers. In the
case of the finished products, independent manufacturers are contracted to
produce a finished product specifically formulated for use by the Company. Some
formulas for types of products (in pill or tea form) have been developed and are
owned by Dr. Lorrichio who is the Chairman of the Board of Directors of the
Company. Dr. Loricchio has granted a license to the Company to manufacture and
sell the Products. There are no patents for the formulas and the same are
considered proprietary trade secrets. The Company and Dr. Lorrichio have
executed an agreement which prohibits the divulgence of the formulas for the
products. In the event that the formulas are released to the public, such action
could have an adverse impact upon the financial development of the Company in
that third parties would be able to manufacture the pills and teas, subject to
acquiring plants from Brazil.
Importing and Manufacturing
After the plants are acquired by ANTCIE, they are crushed, sterilized and
shipped to the Company's Las Vegas clean room. Once in the clean room, the
plants and semi-processed products are processed into the final form, such as,
tablets, capsules, globules, caps and teas. The contracted finished products are
inventoried and stored until sold. The Company processes its own products on
site at its facilities in Las Vegas, Nevada. After completion of the foregoing,
the products are sold on a retail and a wholesale basis.
Retail Distribution
The products are to be bottled, boxed and shrink wrapped at the facilities
is Las Vegas, Nevada. The products are then shipped to customers in corrugated
boxes with bubble wrap to protect the contents.
Products and Regulation
The Company currently manufactures, distributes and/or formulates a total
of seventy-one (71) different phytogenic products. The Company claims that its
products are 100% pure (no fillers are added). The products are designed for
human consumption. There is no scientific evidence to establish that the
products are safe or beneficial for human consumption.
The formulation, manufacturing, packaging, storing, labeling, advertising,
distribution and sale of the Company's products are
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subject to regulation by one or more governmental agency, including the Food and
Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer
Product Safety Commission ("CPSC"), the United States Department of Agriculture
("USDA"), the Environmental Protection Agency ("EPA") and the United States
Postal Service. The Company's activities are also regulated by various agencies
of the states, localities and foreign countries in which the Company's products
are manufactured, distributed and sold. The government regulations require the
Company and its suppliers to meet relevant good manufacturing practice ("GMP")
regulations for the preparation, packing and storage of these products. GMP for
dietary supplements have yet to be promulgated but are expected to be proposed.
The 1994 Dietary Supplement Health and Education Act ("DSHEA") revises the
provisions of the Federal Food, Drug and Cosmetic Act ("FFDCA") concerning
composition and labeling of dietary supplements and, the Company believes,
generally favorable to the dietary supplement industry. The legislation created
a new statutory class of "dietary supplements." This new class includes
vitamins, minerals, herbs, amino acids and other dietary substances for human
use to supplement the diet, and the legislation grandfathers, with certain
limitations, dietary ingredients that were on the market before October
15, 1994. A dietary supplement which contains a new dietary ingredient (i.e.,
not on the market before October 15, 1994) will require evidence of a historical
use or other evidence of safety establishing that it is reasonably expected to
be safe. Manufacturers of dietary supplements which make a "statement of
nutritional support" must have substantiation that the statement is truthful and
not misleading.
As a marketer of dietary supplements and other products that are ingested
by consumers, the Company is subject to the risk that one or more of the
ingredients in its products may become the subject of adverse regulatory action.
Certain products sold by the Company may be labeled as over-the-counter
("OTC") drugs as opposed to dietary supplements, conventional foods and personal
care items. Many OTC drug products do not require pre-approval by the FDA, but
must comply with applicable OTC monographs, which prescribe ingredients and
appropriate labeling language. In addition, the Company must register and file
annual drug listing information with the FDA. Because the FDA could take the
position that claims made with respect to any product of the Company fall within
an OTC monograph, the regulatory status of some of the Company's products is or
could become unclear. If any enforcement were undertaken, the Company could be
required to relabel or reformulate such products, which the Company believes
could have a material adverse effect on the Company and the sale of such
products.
The FTC, which exercises jurisdiction over the advertising of all the
Company's products, has in the past several years instituted enforcement actions
against several dietary supplement companies for false and misleading
advertising of certain products. These
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enforcement actions have resulted in consent decrees and monetary payments by
the companies involved. In addition, the FTC has increased its scrutiny of the
use of testimonials, which are utilized by the Company. While the Company has
not been the target of FTC enforcement action for the advertising of its
products, there can be no assurance that the FTC will not question the Company's
advertising or other operations in the future.
The Company is unable to predict the nature of any future laws,
regulations, interpretations or applications, nor can it predict what effect
additional governmental regulations or administrative order, when and if
promulgated would have on its business in the future. They could, however,
require the reformulation of certain products which the Company may not be able
to reformulate, imposition of additional record keeping requirements, expanded
documentation of the properties of certain products, expanded or different
labeling and scientific substantiation regarding product ingredients, safety or
usefulness. Any or all of these requirements would have a material adverse
effect on the Company's results of operations and financial condition.
Product Liability
The Company maintains product liability insurance. Because the Company's
products are ingested and are/or applied to the customer's body, the potential
for injury exists.
Compliance Procedures
The Company has no compliance procedures.
Marketing
The Company's marketing plan will include the sale of its products through
health magazines. The magazines will furnish the Company with a lists of their
subscribers which will allow the Company to personally contact the foregoing
individuals. The Company will also market its products through its own catalog.
From March 28, 1996 to December 31, 1996, the Company has revenues of
$34,975.00.
Competition
The Company competes with other health and food providers, many of which
have greater resources than the Company.
Material Contracts
On May 28, 1996, the Company entered into a licensing agreement, as
amended, wherein, Lorepar, LTD and its controlling persons, Domingos Loricchio,
the Company's Chairman of the Board of Directors, Irena Loricchio, his wife,
Domingos Loricchio, Jr., his son and Denise Loricchio, his daughter granted an
exclusive license to the Company to
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use certain formulas to manufacture the products being sold by the Company. The
license was issued in consideration of 5,610,000 shares of "restricted" common
stock and $8,000 per month for a period of five (5) years. As of the date
hereof, the Company has paid $29,000.00
On October 4, 1996, the Company entered into an Agreement For Consulting
Services with Domingos Loricchio on one hand and RPD, LCC, ("RPD") a California
Limited Liability Company owned and controlled by one Dick Dubrule, on the other
hand, wherein RPD would be compensated with $200,000 or 10% of the gross monies
paid to the Company which ever is greater if RPD raised money for the Company in
excess of $1,000,000. Further, RPD would receive 15% of the gross receipts paid
to the Company as a result of RPD locating buyers for the products. Further, in
the event that the Company seeks assistance from RPD, for any reason, the
Company will pay RPD $2,000 per day for such services. Further, the Company
agreed to sell 500,000 shares of common stock to RPD at a purchase price of
$0.05 per share. RPD assigned it rights to the sale of stock to Dubrule and
James Palecek ("Palecek"), an attorney representing Dubrule. Dubrule and Palecek
paid the $25,000 and the Company issued 250,000 shares each to Dubrule and
Palecek.
On October 31, 1996, the Company entered into an employment agreement with
Rudine Borgato ("Borgato") wherein Borgato was employed by the Company
commencing on November 1, 1996 and ending October 31, 1998. Under the terms of
the employment contract, Borgato would be paid a salary of $36,400.00 per year
as Vice President of International Affairs. As of the date hereof, the Company
has paid Mr. Borgato the sum of $19,000.00. On December 28, 1996, Mr. Borgato
was terminated as Vice President of International Affairs. Mr. Borgato continues
to furnish services to the Company.
On December 10, 1996, the Company entered into an agreement with Dr.
Randall W. Robirds, Chiropractic Physician and d/b/a Applied Health Dynamics
("Robirds") wherein the Company agreed to sell products to Robirds at 20% below
its suggested retail price. By the terms of the agreement, Robirds cannot resell
the products below the Company's suggested retail price.
On May 5, 1997, the Company entered into a five year agreement with C.A.
Gama Franco ("Franco") wherein Franco was retained by the Company to open an
office and/or lab in Manaus, Brazil; obtain all necessary certificates and act
as the Company's representative in Manaus, Brazil; hire and supervise all
necessary employees; administer operational funds provided by the Company; be
responsible the exportation of the Company's products to Las Vegas, Nevada; and,
inform the Company of his activities in Brazil. In consideration of the
foregoing, the Company agreed to pay Franco the sum of $4,000.00 per month;
issued Franco 9,000 "restricted" shares of common stock; pay additional
compensation as the Company deems appropriate; issue two round trip airfare
tickets between the city of Manaus and Sao Paulo, Brazil; and, pay all of
Franco's preapproved expenses. As of the date hereof, the Company has paid
Franco $8,000.00.
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Offices
The Company's Las Vegas warehouse, laboratory and offices are located at
4011 West Oquendo Avenue, Suite C, Las Vegas, Nevada 89118 which are leased from
David Sawyer for three years, beginning September 24, 1996, pursuant to a
written lease. The monthly rental payments are $2,835.00. The Company's leases
additional warehouse, laboratory and offices at 3977 West Oquendo Avenue, Suite
C, Las Vegas, Nevada 89118 which are leased from Henry Sanchez for three years,
beginning September 24, 1996, pursuant to a written lease. The monthly rental
payments are $1,860.00.
ANTCIE's maintains a Manaus warehouse, laboratory and office at Rua Belem,
1036 Facing Rue Recife, Adrianoplis Manaus, Brazil, which are leased from Lucio
Sampaio de Souza for one year with a ten year option pursuant to a written
lease. The monthly rental payments are US$800.00.
The Company also maintains an office at 470 No. Rivermeade Dr., Unit #7,
Concord, Ontario, Canada L4K 3R8. The Company has leased the foregoing premises
from Les Freedman in consideration of 15,250 shares of common stock. The lease
is oral and is for a period of sixty months.
Employees
In addition to the Company's officers, the Company employees four
full-time employees and one part-time employee. The Company intends to add
additional employees as needed.
Risk Factors
1. Lack of Compliance with Federal Laws and Regulations. The Company
believes that its products may be exempt from many of the regulations of one or
more governmental agency, including the Food and Drug Administration ("FDA"),
the Federal Trade Commission, the Consumer Product Safety Commission, the United
States Department of Agriculture, the Environmental Protection Agency, United
States Department of Customs and the United States Postal Service. The Company's
further believes it does not have to comply with some, but not all of the
regulations of various agencies of the states, localities and foreign countries
in which the Company's products are manufactured, distributed and sold. The FDA,
in particular may regulate the formulation, manufacture and labeling of foods
and dietary supplements, such as those distributed by the Company if applicable
unless exempted pursuant to the Dietary Supplement Health and Education Act of
1944 (DSHEA). The Company's legal basis for such is the DSHEA and accordingly,
if the Company is incorrect in its position, the Company could be subjected to
civil suits, which could result in the termination of the Company's operations.
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2. Going Concern Qualification. The auditors of the consolidated financial
statements of the Company have stated that the financial statements have been
prepared on a going-concern basis for the year ended December 31, 1996. That
basis of accounting contemplates the realization of assets and the satisfaction
of liabilities in the normal course of conducting business operations. As shown
in the consolidated financial statements, operations for the year ended December
31, 1995 resulted in a net loss of $238,687, and as of that date the Company had
a shareholders' deficit of $2,935. The Company's future is dependent on its
ability to continue to obtain additional capital or adequate financing in order
to achieve a level of sales adequate to support its operations.
3. No Patents. The Company has not applied for a patent for any of its
products. Even if it does however, there can be no assurance that the patent
application will be issued as a patent, or the issued patent will provide the
Company with significant competitive advantages, or that challenges will not be
instituted against the validity or enforceability of any patents owned by the
Company or, if instituted, that such challenges will not be successful. See
"Item 1. Business."
4. Additional Financing will be Necessary. The adequacy of funds will
depend upon (a) the ability of the Company to successfully market its products,
(b) the ability of the Company to attain profitable operations, and (c)
additional capital needs that may arise to satisfy product demand. There can be
no assurance that the Company will be successful in obtaining any additional
required financing or that, if such financing is obtained, its terms and
conditions will be favorable.
5. Dependence Upon Management. The success of the Company is dependent
upon the efforts of the Company's directors and executive officers. The Company
has not obtained key-man life insurance coverage on any of its officers or
employees. The Company's business could be adversely affected if Dr. Lorrichio,
Mr. Sylver or Mr. Pucci, the Chairman of the Board, President and Vice
President, respectively, became unable or unwilling to continue to serve in
their respective capacities. See "Management" and "Conflicts of Interest."
6. No Dividends Anticipated. At the present time the Company does not
anticipate paying dividends, cash or otherwise, on its shares of Common Stock in
the foreseeable future. Future dividends will depend on earnings, if any, of the
Company, its financial requirements and other factors.
7. Conflicts of Interest. The Directors are associated with Amazon Natural
Treasures Commercial Importadora Exportadora LTDA ("ANTCIE"), a Brazilian
corporation which is owned by Michael Sylver, the Company's President; Rocque
Pucci, the Company's Vice President; Rudine Borgato and Carlos Franco. Further,
Domingos Loricchio and Michael Sylver are associated with Abracel USA Ltd. Which
has loaned money to the Company. See "Item 1. Business."
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8. Suitability Standards. The Company recommends that its shares of Common
Stock be purchased only by persons who have the knowledge, experience and
capacity to evaluate the merits of such a purchase, and who can afford the loss
of their entire investment in the shares of Common Stock.
9. Limited of Public Market for Securities. At present, only a limited
public market exists for the Company's securities and there is no assurance that
a regular trading market will develop. A Shareholder may, therefore, be unable
to resell the shares of Common Stock should he or she desire to do so.
Furthermore, it is unlikely that a lending institution will accept the Company's
shares of Common Stock as pledged collateral for loans unless a regular trading
market develops.
10. No Cumulative Voting and Preemptive Rights and Control. There are no
preemptive rights in connection with the Company's shares of Common Stock.
Shareholders may be further diluted in their percentage ownership of the
Company's shares of Common Stock in the event additional shares are issued by
the Company in the future. Cumulative voting in the election of Directors is not
allowed. Accordingly, the holders of a majority of the shares of Common Stock,
present in person or by proxy, will be able to elect all of the Company's Board
of Directors.
11. Possible Contingent Liability for Prior Securities Sales of
Unregistered Securities. The shares of Common Stock sold to certain of the
Company's present shareholders were not registered under the Act or any state
securities' laws. The Company believes that such sales did not involve a public
offering within the meaning of Section 4(2) of the Act. In the event that an
exemption for such sales is later determined not to be available to the Company
or that such offerings should be integrated with the public offering, the
Company may be required to rescind such sales as are not entitled to any
exemption or take such other steps as may be necessary to comply with federal
and state securities laws for such sales. The Company does not intend to rescind
such sales.
12. Control by Management. Management of the Company controls 79.62% of
the Company's outstanding shares of Common Stock and accordingly, will be able
to elect all of the directors and thereby direct the policies of the Company.
See "Principal Shareholders."
ITEM 2. DESCRIPTION OF PROPERTIES.
The Company owns no real property. It leases its office space, warehouse
space and laboratory facilities from third parties at 4011 West Oquendo Avenue
and 3977 West Oquendo Avenue, Las Vegas, Nevada 89118. The Company also leases
office space at 470 No. Rivermeade Dr., Unit #7, Concord, Ontario, Canada L4K
3R8.
The Company owns the equipment which it uses to manufacture,
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package and ship products.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not the subject of any pending legal proceedings; and to
the knowledge of management, no proceedings are presently contemplated against
the Company by any federal, state or local governmental agency.
Further, to the knowledge of management, no director or executive officer
is party to any action in which any has an interest adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
One matter was submitted to a vote of shareholders on April 9, 1996,
wherein shareholders of the Company approved an amendment to the Company's
Articles of Incorporation changing the name of the Company from Concord Capital,
Inc. to Amazon Natural Treasures, Inc. The Company intends to re-domicile as a
corporation in the State of Nevada.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS.
(a) Market Information.
The Registrant's securities are traded over-the-counter on the Bulletin
Board operated by the National Association of Securities Dealers, Inc. under the
symbol AZNT. The table shows the high and low bid of Registrant's Common Stock
during the last two fiscal years. Quotations reflect interdealer prices without
retail mark-up, mark-down or commissions and may not necessarily represent
actual transactions. The Registrant's securities began trading actively in April
1996. Since the foregoing date, the high bid has been $2.75 and the low bid has
been $2.125.
<TABLE>
<CAPTION>
Bid
Quarter Ended High Low
<S> <C> <C>
March 31, 1997 $2.50 $1.875
December 31, 1996 $1.00 $0.625
September 30, 1996 $1.00 $0.625
June 30, 1996 $1.50 $1.375
March 31, 1996 $-0- $-0-
December 31, 1995 $-0- $-0-
September 30, 1995 $-0- $-0-
June 30, 1995 $-0- $-0-
March 31, 1995 $-0- $-0-
</TABLE>
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(b) Holders.
As of May 31, 1997, there were approximately 205 holders of the
Registrant's Common Stock. This number does not include those beneficial owners
whose securities are held in street name.
(c) Dividends.
The Registrant has never paid a cash dividend on its Common Stock and has
no present intention to declare or pay cash dividends on the Common Stock in the
foreseeable future. The Registrant intends to retain any earnings which it may
realize in the foreseeable future to finance its operations. Future dividends,
if any, will depend on earnings, financing requirements and other factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General
The Company acquired all of the issued and outstanding shares of common
stock of Amazon Natural Treasures, Inc., a Nevada corporation, on March 28, 1996
in exchange for 6,100,000 shares of the Company's common stock. The acquisition
effectively changed the Company's operation from a blank check entity to a
corporation engaged in the business of importing, developing, manufacturing and
selling products derived from plants grown in the Brazilian Amazon Rain Forest.
Liquidity and Capital Resources.
For the year ended December 31, 1996, operating and financing activities
provided(used) $(156,844) and $159,268, respectively. Working capital decreased
to $(27,589) primarily due to the lack of adequate revenues generated from the
sale of the Company's products. During the 1996 fiscal year, the Company
borrowed $109,245 from its officers, directors and others and repaid $67,302
through the issuance of common stock, with a balance of $41,943 remains unpaid.
The Company intends to raise additional capital which is needed through
the sale of common stock. There can be no assurance that the Company will be
successful in the sale of its common stock. In the event that the Company does
not generate sufficient sales or raise additional capital, it will have to
curtail operations.
The Company has no outside line of credit available and is dependent on
cash from operations (which it anticipates to be negative for the coming year),
contributions by officers and directors, and other financing arrangements to
meet its obligations; however, there is no assurance such financing will be
available when needed.
As of December 31, 1996, the Company did not have any commitments for
significant capital expenditures.
<PAGE> 14
Results of Operations
The Company was a dormant blank check entity on December 31, 1995, and
accordingly had limited revenues from brief operations. The Company began
operations on March 28, 1996. The Company had a net operation loss in 1996 of
$220,710. The major factors contributing to the foregoing loss were: 1)
Insufficient revenues; 2) Substantial operation expenses; 3) Cost of goods sold;
and, 4) Lack of adequate sales and marketing.
Revenues were $34,975 and cost of good sold were $16,727 and operating
expenses were $239,052 accounting for a loss from operations of $220,804.
Cost of goods sold was $16,727 which was approximately 50% of revenues.
Total operating expenses were $239,052 consisting of amortization of existing
assets was $1,740; consulting fees $68,950; depreciation $22,475; rent $31,364;
travel $41,594; and administrative and general operating expenses $72,929.
In order to break even for the calendar year ending December 31, 1997, the
Company believes that it will have to increase sales to $1,490,788. The
foregoing is only an estimate and is subject to market conditions. The Company
does anticipate achieving the foregoing sales. Further, the Company believes
that it will have to start paying salaries to existing officers who have to
date, worked without receiving compensation.
Comparison of year ended December 31, 1995.
As stated previously, the Company was a dormant blank check entity for the
year ending December 31, 1995, however, earlier in the calendar year 1995, the
Company did generate revenues of $6,060 from sample sales. Cost of goods sold
was $2,883 and total operation expenses were $21,154 with a loss from operations
of $17,977. The foregoing figures should not be used as a comparison with
existing figures.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial Statements and Supplementary Data begin on the following page.
<PAGE> 15
Amazon Natural Treasures, Inc.
(A Development Stage Company)
Financial Statements
December 31, 1996 & 1995
<PAGE> 16
Independent Auditors Report
Board of Directors
Amazon Natural Treasures, Inc.
(A Development Stage Company)
I have audited the accompanying balance sheets of Amazon Natural
Treasures, Inc., as of December 31, 1996 and 1995, and the related statements of
operations, stockholders' equity, and cash flows for the accumulated period June
27, 1995 to December 31, 1996 and the period June 27, 1995 to December 31, 1995,
and the year ended December 31, 1996. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 the significant estimates made by
management, as well as evaluating the overall financial statements presentation.
I believe that my audit provides a reasonable basis for my opinion.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #12 to the
financial statements, the Company has an accumulated deficit and a negative net
worth at December 31, 1996. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note #12. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
In my opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Amazon Natural Treasures, Inc.,
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the accumulated period June 27, 1995 to December 31, 1996 and the
period June 27, 1995 to December 31, 1995, and the year ended December 31, 1996,
in conformity with generally accepted accounting principles.
Salt Lake City, Utah
April 26, 1997
F-1
<PAGE> 17
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Current Assets
Cash In Bank $ 1,390 $ 8,122
Stock Subscription Receivable 2,000 -0-
Inventory 38,149 7,681
--------- ---------
Total Current Assets 41,539 15,803
Property & Equipment
Furniture & Equipment 69,435 61,222
Less Accumulated Depreciation (22,475) -0-
--------- ---------
Total Property & Equipment 46,960 61,222
Other Assets
Deposits 5,670 1,694
Organization Costs 7,024 7,844
License & Trademarks 5,000 -0-
Deferred Debit -0- 9,521
--------- ---------
Total Other Assets 17,694 19,059
--------- ---------
Total Assets $ 106,193 $ 96,084
========= =========
</TABLE>
The accompanying notes are an integral part of these
financial statements
F-2
<PAGE> 18
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
BALANCE SHEETS -CONTINUED-
December 31, 1996 and 1995
LIABILITIES & STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Current Liabilities
Accounts Payable $ 59,549 $ 13,211
Accrued Expenses 1,475 -0-
Payroll Taxes 1,161 -0-
Customer Deposits 5,000 -0-
Short Term
Notes Payable 1,943 -0-
--------- ---------
Total Current
Liabilities 69,128 13,211
Long Term Liabilities 40,000 -0-
--------- ---------
Total Liabilities 109,128 13,211
Stockholders Equity
500,000,000 Common Shares
Authorized at $0.001
Par Value 24,664,300
Shares and Shares Issued
and Outstanding 24,664 6,400
Paid In Capital 211,088 94,450
Accumulated Deficit in the
Development Stage (238,687) (17,977)
--------- ---------
Total Stockholders'
Equity (Deficit) (2,935) 82,873
--------- ---------
Total Liabilities &
Stockholders' Equity $ 106,193 $ 96,084
========= =========
</TABLE>
The accompanying notes are an integral part of these
financial statements
F-3
<PAGE> 19
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Accumulated from June 27, 1995 (Inception) to December 31, 1996
and the Year Ended December 31, 1996
and the Period June 27, 1995 to December 31, 1995
<TABLE>
<CAPTION>
Accumulated 1996 1995
<S> <C> <C> <C>
Revenues
Sales $ 41,035 $ 34,975 $ 6,060
Cost of Goods Sold
Beginning Inventory $ -0- $ 7,689 $ -0-
Purchases 57,759 47,187 10,572
Ending Inventory 38,149 38,149 7,689
----------- ----------- -----------
Total Costs of
Goods Sold 19,610 16,727 2,883
Operating Expenses
Amortization 3,598 1,740 1,827
Consulting Fees 68,950 68,950 -0-
Depreciation 22,475 22,475 -0-
Rent 36,471 31,364 5,107
Travel 47,727 41,594 6,133
Administrative & General
Operating Expenses 80,985 72,929 8,087
----------- ----------- -----------
Total Operating
Expenses 260,206 239,052 21,154
----------- ----------- -----------
Loss from
Operations (238,781) (220,804) (17,977)
Other Income
Interest Income 94 94 -0-
Net Loss $ (238,687) $ (220,710) $ (17,977)
=========== =========== ===========
Loss Per Share $ (.03) $ (.00)
Weighted Average Shares Outstanding 7,583,410 6,400,000
</TABLE>
The accompanying notes are an integral part of these
financial statements
F-4
<PAGE> 20
AMAZON NATURAL TREASURES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(A Development Stage Company)
From June 27, 1995 (Inception) to December 31, 1996
<TABLE>
<CAPTION>
Common Stock Paid In Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance,
June 27, 1994 97,151 97 71,743 (82,800)
Shares Issued for
Accounts Payable 1,760 2 48
Capital Contributed by
Shareholders 626
Net Loss for Year Ended
December 31, 1995 (16,337)
Shares Issued for Cash Retro-
Actively Restated 116,161 116 16,384
Shares Issued for Services Retro-
Actively Restated 10,913 11 299
Shares Issued for Rescission
Agreement Retro-Actively
Restated 21,121 21 579
Shares Issued for Consulting
Fees Retro-Actively
Restated 52,894 53 1,450
Shares Issued to Effect Reverse
Acquisition of Amazon Natural
Treasures, Inc. 6,100,000 6,100 99,850 (17,977)
Reverse Purchase Acquisition
Note #10 (96,529) 99,137
---------- ---------- ---------- ----------
Balance,
December 31, 1995 6,400,000 6,400 94,450 (17,977)
Shares Issued for Cash at
$.05 Per Share 500,000 500 24,500
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-5
<PAGE> 21
AMAZON NATURAL TREASURES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY -Continued-
(A Development Stage Company)
From June 27, 1995 (Inception) to December 31, 1996
<TABLE>
<CAPTION>
Common Stock Paid In Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Shares Issued for Cash at
$0.50 per Share 54,000 54 26,946
Shares Issued to
Acquire License
& Trademarks 5,000,000 5,000 -0-
Shares Issued in
Satisfaction
of Debt 1,260,360 1,260 5,042
Shares Issued in
Satisfaction
of Debt 800,000 800 7,200
Shares Issued in
Satisfaction
of Debt 10,000,000 10,000 43,000
Shares Issued
for Services 600,000 600
Shares Issued
for Services 50,000 50 9,950
Net Loss for Year Ended
December 31, 1996 (220,710)
----------- ----------- ----------- -----------
Balance,
December 31, 1996 24,664,360 $ 24,664 $ 211,088 $ (238,687)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements
F-6
<PAGE> 22
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Accumulated from June 27, 1995 (Inception) to December 31, 1996
and the Year Ended December 31, 1996
and the Period June 27, 1995 to December 31, 1995
<TABLE>
<CAPTION>
Accumulated 1996 1995
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Loss $(238,687) $(220,710) $ (17,977)
Adjustments to Reconcile Net Loss
To Cash Used by Operating Activities:
Amortization 3,598 1,740 1,827
Depreciation 22,475 22,475 -0-
Services Paid for by Issuing Stock
in Lieu of Cash 13,013 10,600 2,413
Write Off - Deferred Debt 9,521 9,521 -0-
Changes in Operating Assets& Liabilities
Increase in Inventory (38,149) (30,468) (7,681)
Increase - Accounts Payable 59,549 46,338 13,211
Increase - Accrued Expenses 1,475 1,475 -0-
Increase in Payroll Taxes 1,161 1,161 -0-
Increase in
Customer Deposits 5,000 5,000 -0-
Increase in Deposit (5,670) (3,976) (1,694)
--------- --------- ---------
Net Cash Used by
Operating Activities (166,776) (156,844) (9,901)
Cash Flows from Investing Activities
Organization Costs (10,484) (943) (9,564)
Purchase of Equipment (69,435) (8,213) (61,222)
--------- --------- ---------
Net Cash (Used) Provided by
Investing Activities (79,919) (9,156) (70,786)
</TABLE>
The accompanying notes are an integral part of these
financial statements
F-7
<PAGE> 23
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS -Continued-
Accumulated from June 27, 1995 (Inception) to December 31, 1996
and the Year Ended December 31, 1996
and the Period June 27, 1995 to December 31, 1995
<TABLE>
<CAPTION>
Accumulated 1996 1995
<S> <C> <C> <C>
Cash Flows from Financing Activities
Increase - Stock Investment (2,000) (2,000) -0-
Increase - Long Term Debt 40,000 40,000 -0-
Increase in Short
Term Notes Payable 1,943 1,943 -0-
Sales of Common Stock 140,817 52,000 88,809
Cash From Notes Payable Paid with
Stock in Lieu of Cash 67,302 67,302 -0-
Shares Adjusted for
Rounding 23 23 -0-
--------- --------- -------
Net Cash (Used) Provided by
Financing Activities 248,085 159,268 88,809
--------- --------- -------
Increase (Decrease) in Cash 1,390 (6,732) 8,122
Cash at Beginning of Period -0- 8,122 -0-
--------- --------- -------
Cash at End of Period $ 1,390 $ 1,390 $ 8,122
========= ========= =======
Disclosures from Operating Activities:
Interest $ 1,475 $ 1,475 $ -0-
Taxes -0- -0- -0-
Significant Non Cash Disclosures
Issued 6,100,000 Shares of Common
Stock in Exchange for Amazon
Natural Treasures, Inc.
Issued 5,000,000 Shares of Common Stock
for License & Trademarks 5,000 5,000 -0-
Issued 12,060,360 Shares of Common
Stock In Satisfaction of Debt
</TABLE>
The accompanying notes are an integral part of these
financial statements
F-8
<PAGE> 24
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
NOTE #1 - Corporate History
The Company was organized under the laws of the state of Nevada on June
27, 1995, using the name Amazon Natural Treasures, Inc. The Articles of
Incorporation authorize the Company to engage in any lawful activity. The
Company is currently engaged in the Homeopathic Medicine and Phototherapy
Natural Supplements from sources within the Amazon Rain Forest.
In March 1996, the Company exchanged all of its issued and outstanding
shares for shares of a public company known as Concord Capital, Inc., a Utah
Corporation. The exchange was accounted for using the purchase method of
accounting. The Stockholders' of Amazon Natural Treasures, Inc., controlled the
entity after the purchase. Concord Capital, Inc., was incorporated in 1988, in
the state of Utah and was a public entity reporting to the Securities and
Exchange Commission.
In December 1996, the Company amended its Articles of Incorporation in the
State of Nevada.
The Company is in the early stages of planned business operations and has
not produced revenues deemed to be significant and therefore remains a
development stage company.
NOTE #2 - Significant Accounting Policies
(A) The Company uses the accrual method of accounting.
(B) Revenues and directly related expenses are recognized in the period when
the goods are shipped to the customer.
(C) The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
(D) Primary Earnings Per Share amounts are based on the weighted average
number of shares outstanding at the dates of the financial statements.
Fully Diluted Earnings Per Shares shall be shown on stock options and
other convertible issues that may be exercised within ten years of the
financial statement dates.
(E) Inventories: Inventories are stated at the lower of cost, determined by
the FIFO method or market.
(F) Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is depreciated (amortized) over the lesser of the length of
the related assets or the estimated lives of the assets. Depreciation is
computed on the straight line method for reporting purposes and for tax
purposes.
(I) Estimates: The preparation of the 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.
F-9
<PAGE> 25
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT - Continued-
NOTE #3 - Income Taxes & Net Operating Loss Carryforwards for Income Tax
Purposes
The Company has incurred losses that can be carried forward to offset
future earnings if conditions of the Internal revenue Codes are met. These
losses are as follows:
<TABLE>
<CAPTION>
Year Expiration
of Loss Amount Date
<S> <C> <C>
1995 $ 17,977 2010
1996 220,804 2011
</TABLE>
The Company has adopted FASB 109 to account for income taxes. The Company
currently has no issues that create timing differences that would mandate
deferred tax expense. Net operating losses would create possible tax assets in
future years. Due to the uncertainty as to the utilization of net operating loss
carryforwards an evaluation allowance has been made to the extent of any tax
benefit that net operating losses may generate.
<TABLE>
<CAPTION>
1996 1995
Current Tax Asset Value of Net Operating Loss
Carryforwards at Current
<S> <C> <C>
Prevailing Federal Tax Rate $ 81,154 $ 2,697
Evaluation Allowance (81,154) (2,697)
-------- -------
Net Tax Asset -0- -0-
Current Income Tax Expense -0- -0-
Deferred Income Tax Benefit -0- -0-
</TABLE>
NOTE #4 - Depreciation
The Company capitalized the purchase of equipment and fixtures for major
purchases in excess of $1,000 per item. Capitalized amounts are depreciated over
the useful life of the assets using the straight-line method of depreciation.
Scheduled below are the assets, costs, lives, and accumulated
depreciations at December 31, 1996 and 1995.
<TABLE>
<CAPTION>
December 31, Depreciation Accumulated
1996 1995 Expenses Depreciation
Assets Cost Cost Life 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Equipment $17,800 $17,500 5 $ 8,485 $ -0- $ 8,485 $ -0-
Clean
Room 51,635 43,722 7 13,990 -0- 13,990 -0-
------- ------- ------- ------- ----- ------- -----
Total $ 69,435 $61,222 $22,475 $ -0- $22,475 $ -0-
</TABLE>
F-10
<PAGE> 26
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT -Continued-
NOTE #5 - Lease Commitments
On September 24, 1996, the Company leased an office in Las Vegas, Nevada.
The lease requires a security deposit of $5,670, monthly payments of $2,835 and
expires on September 30, 1999.
Lease payments for the term of the lease are scheduled below.
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1996 $ 8,505
1997 34,446
1998 36,168
1999 28,125
---------
Total Obligations $ 107,244
=========
</TABLE>
NOTE #6 - Employment Agreement and Consultant Agreement
Employment Agreement
The Company has an Employment Agreement for the period November 1, 1996,
to October 31, 1998. The employee will function as Vice-President of
International Affairs. The Agreement obligates the Company for a salary of
$36,400 annually and commits the Company to provide the Employee health
insurance. The Employee has signed an Agreement of Confidentiality and a
Non-Complete Agreement with the Company.
Consultant Agreement
In May of 1996, the Company issued 5,000,000 shares of its common stock,
restricted, to a Nevada Corporation for a license to market and manufacture
homeopathic medicine and pythotherapy natural supplements. The Agreement
requires an annual payment of $96,000 for five years.
Employment and Consultant Agreement obligations are scheduled below.
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1996 $ 62,068
1997 132,400
1998 126,362
1999 96,000
2000 96,000
2001 40,000
---------
Total Obligations $ 552,830
=========
</TABLE>
F-11
<PAGE> 27
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT -Continued-
NOTE #7 - Notes Payable - Related Party
Long Term Notes
The Company has ten individual long term notes, totaling $40,000, each
bearing interest at 8% and maturing between April 1, 1998 to October 1, 1998.
The notes are payable to a Corporation controlled by Company Officers.
Short Term Notes
The Company has notes to three related parties for short terms, or due on
demand of $1,943.
NOTE #8 - Customer Deposits
In November 1996, the Company received a deposit with a Letter of Intent
from a Canadian Corporation who seeks to purchase a distributor license from the
Company. The total of the license sale is $1,000,000 to be paid in four
installments of $250,000 each within one year after the agreement is finalized.
The Distributor shall have exclusive rights to Canada and the Caribbean
Countries. The Letter of Intent may be finalized at any time within one year of
its original date.
NOTE #9 - License Agreement
The Company has a License to use the trademarks and technologies owned by
Lorepar, LTD., a closely held Private Nevada Corporation. The License grants the
Company an exclusive license, without the right to sub license, the unique
products, licensed patents, and all know how, in the manufacture and sell of all
products internationally. The Company issued Lorepar, LTD., and its Officers
5,000,000 shares of its common stock valued at $5,000 (par value of the shares
issued). In addition the Company will pay $8,000 monthly for Consultant Fees in
Compensation with the products to be manufactured and sold.
NOTE #10 - Business Combination
In March 1996, the shareholders of Amazon Natural Treasures, Inc.
(Amazon), exchanged 100% of the issued an outstanding common stock for 6,100,000
shares of common of Concord Capital, Inc. (Concord), a publicly held Utah
Corporation. The exchange gave the shareholders of Amazon 95.31% control of
Concord. Concord was incorporated in November 23, 1988 and was a development
stage company. Concord had had no operations but during the term of its
existence it had expended $99,137.00 in various attempts to find a business
operation in which to engage.
Because Amazon is the surviving entity after the stock exchange the
exchange has been accounted for as a "Reverse Purchase Acquisition."
F-12
<PAGE> 28
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT -Continued-
NOTE #10 - Business Combination -Continued-
Concord had no assets or liabilities immediately prior to the acquisition
using the purchase method of accounting the accumulated deficit and paid in
capital have been offset and removed from the balance sheets of Amazon. To
present fairly the operations of Amazon the financial statements for 1995 have
been presented giving retro-active presentation of the acquisition.
NOTE #11 - Stock Transaction
The Company has issued shares of its common stock for the following
business purposes.
(A) Issued 600,000 Shares of Restricted Common Stock, to an Officer for
services valued at $600 ($.001 per share).
(B) Issued 50,000 Shares of Tradeable Stock to Legal Counsel for
services valued at $10,000 ($.20 per share).
(C) Issued 5,000,000 Shares of Restricted Common Stock to a privately
held Nevada Corporation to obtain license and trademarks for
products produced from materials found in the Amazon Rain Forest
($.001 per share).
(D) Issued 1,260,360 Shares of Restricted Stock to an Officer in
satisfaction of $6,302 in debt ($.005 per share).
(E) Issued 800,000 Shares of Restricted Common Stock to an Officer in
satisfaction of debt of $8,000 ($.01 per share).
(F) Issued 10,000,000 Shares of Restricted Common Stock to an Officer in
satisfaction of $53,000 in debt ($.0053 per share).
(G) Issued 500,000 Shares of Restricted Common Stock for cash of $25,000
($.05 per share).
(H) Issued 54,000 shares of its Restricted Common Stock to an Officer
for cash of $27,000 ($.50 per share).
NOTE #12 - Going Concern
The Company has sustained losses of $238,687 in the term of its existence
and currently has a deficit stockholders' equity. The Company currently seeks
additional investment capital to provide working capital to fund its planned
operations.
The Company believes it is not required to comply with regulations
promulgated by the Food & Drug Administration and other U.S. Government
agencies, that regulate food products, their sale and distribution. It the
Company's position is not correct such non compliance could seriously effect the
Company's ability to continue as a going concern.
F-13
<PAGE> 29
AMAZON NATURAL TREASURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT -Continued-
NOTE #13 - Related Party Transactions
Officers of the Company are also officers in a Brazilian Corporation. The
Company acquires plants and plant products from the Brazilian Corporation are
more favorable to the Company than could be obtained from independent third
parties.
NOTE #14 - Possible Contingent Liability for Prior Securities Sales of
Unregistered Securities
The shares of common stock sold to certain of the Company's present
shareholders were not registered under the Act of any state securities' laws.
The Company believes that such sales did not involve a public offering within
the meaning of Section 4(2) of the Act. In the event that an exemption for such
sales is later determined not to be available to the Company or that such
offerings should be integrated with the public offering, the Company may be
required to rescind such sales as are not entitled to any exemption or take such
other steps as may be necessary to comply with federal and state securities laws
for such sales. The Company doe snot intend to rescind such sales, but if
required to rescind, the Company will be required to refund $714,914 in cash in
certain of its present shareholders.
F-14
<PAGE> 30
AMAZON NATURAL TREASURES, INC.
SUPPLEMENTAL INFORMATION
For the Years Ended December 31, 1996 and 1995
FS-1
<PAGE> 31
ACCOUNTANT'S OPINION ON SUPPLEMENTARY INFORMATION
My audit of the basic financial statements presented in the preceding
section of this report was made primarily to form an opinion on such financial
statements taken as a whole. Supplementary information, contained in the
following page, is not considered essential for the fair presentation of the
financial position of the Company, the results of its operations or the
statements of cash flows in conformity with generally accepted accounting
principles. However, the following data was subjected to the audit procedures
applied in the examination of the basic financial statements, and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Schvaneveldt & Company
Schvaneveldt & Company
April 26, 1997
FS-2
<PAGE> 32
AMAZON NATURAL TREASURES, INC.
SCHEDULE OF ADMINISTRATIVE & GENERAL EXPENSES For the Years
Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Accounting & Legal $16,592 $ -0-
Advertising 2,622 2,732
Auto Expenses 3,634 -0-
Bank Charges 1,792 -0-
Contract Labor 5,389 -0-
Dues & Subscriptions 650 -0-
Entertainment 5,748 -0-
Interest Expenses 1,475 -0-
Insurance 828 -0-
Office Expenses 7,637 -0-
Postage 1,454 -0-
Repairs & Maintenance 4,100 -0-
Wages 5,000 -0-
Taxes - Payroll 573 -0-
Telephone 12,997 3,768
Utilities 1,053 -0-
Miscellaneous 1,385 1,587
------- -------
Total Administrative &
General Expenses $72,929 $ 8,087
======= =======
</TABLE>
FS-4
<PAGE> 33
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None; not applicable.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Identification of Directors and Executive Officers.
The following table sets forth the names and nature of all positions and
offices held by all directors and executive officers of the Company for the
calendar year ending December 31, 1996, and tot he date hereof, and the period
or periods during which each such director or executive officer served in his or
her respective positions.
<TABLE>
<CAPTION>
Date of Date of
Position Election of Termination
Name Held Designation or Resignation
<S> <C> <C> <C>
Sam Bono President 11/94 3/96
Director 11/94 3/96
Treasurer 8/95 3/96
Sam Hagopin Vice President 8/95 1/96
Corporate Development
Director 8/95 1/96
Sheryl Ross Secretary/Treasurer 11/94 8/95
Director 11/94 8/95
</TABLE>
<PAGE> 34
<TABLE>
<S> <C> <C> <C>
Carol Novick Secretary 8/95 3/96
Director 11/94 3/96
Domingos
Lorrichio Chairman of Board 3/96 1
Vice President 3/96 1
Michael Sylver Presidnet 3/96 1
CEO 3/96 1
Director 3/96 1
Robert Qualey Secretary/Treasurer 3/96 1
CFO & Director 3/96 1
Domingos
Lorrichio II Vice President 3/96 1
Rocque Pucci Vice President 3/96 1
Rudine Borgato Vice President 11/96 12/96
</TABLE>
[1] These person presently serve in the capacities indicated opposite their
respective names.
Term of Office
The terms of office of the current directors continue until the annual
meeting of stockholders, which the Bylaws provide shall be held on the third
Friday of November of each year; officers are elected at the annual meeting of
the board of directors, which immediately follows the annual meeting of
stockholders.
Business Experience
Domingos Loricchio - Chairman of the Board of Directors.
Mr. Loricchio has been Chairman of the Board of Directors of the Company
since March 1996. Since 1975, Mr. Loricchio has been the President of ABRACEL
INDUSTRIA E COMERCIO, LTDA, in Sao Paulo, Brazil. Prior to 1975, Mr. Loricchio
was employed by Carborundum Company, in research and development in their San
Paulo plant. Mr. Loricchio holds a degree in chemistry from the Sorbonne -
University of Paris.
Michael A. Sylver - President, Chief Executive Officer and a member of the Board
of Directors
Mr. Sylver has over 20 years of executive level management, having formed
and operated several innovative management companies in the United States and
Canada. His management expertise created and development Energy Management
Corporation into, what was at one time, the largest independent company in
Nevada.
<PAGE> 35
Robert S. Qualey - Secretary/Treasurer, Chief Financial Officer and a member of
the Board of Directors.
Mr. Qualey has been Secretary/Treasurer, Chief Financial Officer and a
member of the Board of Directors since March 28, 1996. Since September 1988,
Mr. Qualey has been practicing attorney, licensed to practice in the state of
Nevada. Since May 1992, Mr. Qualey has served as a Judge Pro Tem in Las Vegas,
Nevada. Mr. Qualey holds a Masters degree in Business Administration from the
University of Nevada at Las Vegas (1985) and the degree of Juris Doctor from
Pepperdine University (1988).
Domingos Loricchio II - Senior Executive Vice President
In March 1996, Mr. Loricchio became the Senior Executive Vice President of
the Company. Since July 1985, Mr. Loricchio has been the manager of Abracel,
Ltd. of Brazil. Abracel manufactures products primarily designed for road
surface applications. Mr. Loricchio graduated from the University of San Paulo,
Brazil with a degree in Chemical Engineering.
Rocque Pucci - Executive Vice President.
Mr. Pucci served a combination of seven years in the United States Army
and Army Reserve, rising from private to captain after earning an appointment to
Officer Candidate School; his duty assignments included a tour in Vietnam. Mr.
Pucci has eighteen years of bank and financial management experience in addition
to over three years of business consulting background. He graduated magna cum
laude from St. Joseph's College, Philadelphia, Pennsylvania, where he earned a
Bachelor of Science in Business Administration.
Family Relationships
There are currently no family relationships between any directors or
executive officers of the Company, either by blood or happenstance of marriage,
other than Domingos Lorrichio, the Company's Chairman of the Board of Directors,
who is the father of Domingos Lorrichio, II, the Company's Senior Executive Vice
President.
Involvement in Certain Legal Proceedings
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Company has been the subject matter of any legal proceedings, including
bankruptcy, criminal proceedings, or civil proceedings. Further, no legal
proceedings are known to be contemplated by governmental authorities against any
director, executive officer and person nominated to become a director.
Compliance with Section 16(a) of the Exchange Act.
<PAGE> 36
No securities of the Company are registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, and the Company files reports under Section
15(d) of the Securities Exchange Act of 1934; accordingly, directors, executive
officers and ten percent stockholders are not required to make filings under
Section 16 of the Securities Exchange Act of 1934.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the period indicated:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual LTIP
and Stock Restricted Other All
Principal $ $ Compen Awards Options/ Payouts Compen-
Position Year Salary Bonus sation($) $ SAR's(#) ($) sation $
December 31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sam Bono 1996 $ -0- $0 $0 $ 0 0 $0 $0
President 1995 $ -0- $0 $0 $ 0 0 $0 $0
Treasurer & 1994 $ -0- $0 $0 $ 0 0 $0 $0
Director [1]
Sam December 31
Hagopian 1996 $ -0- $0 $0 $ 0 0 $0 $0
VP & 1995 $ -0- $0 $0 $ 0 0 $0 $0
Director 1994 $ -0- $0 $0 $ 0 0 $0 $0
[1]
December 31
Sheryl Ross 1996 $ -0- $0 $0 $ 0 0 $0 $0
Sec/Treas 1995 $ -0- $0 $0 $ 0 0 $0 $0
Director 1994 $ -0- $0 $0 $ 0 0 $0 $0
[1]
Carol December 31
Novick 1996 $ -0- $0 $0 $ 0 0 $0 $0
Director 1995 $ -0- $0 $0 $ 0 0 $0 $0
[1] 1994 $ -0- $0 $0 $ 0 0 $0 $0
Domingos December 31
Lorrichio 1996 $ -0- $0 $0 $ 0 0 $0 $0
Chairman
& VP
Michael December 31
Sylver 1996 $ -0- $0 $0 $ 0 0 $0 $0
President
CEO & Director
Robert December 31
Qualey 1996 $ -0- $0 $0 $ 0 0 $0 $0
</TABLE>
<PAGE> 37
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sec/Treas &
Director
Domingos December 31
Lorrichio
II 1996 $ -0- $0 $0 $ 0 0 $0 $0
Vice President
Rocque December 31
Pucci 1996 $ -0- $0 $0 $ 0 0 $0 $0
Vice President
Rudine December 31
Borgato 1996 $5,000 $0 $0 $ 0 0 $0 $0
VP [1]
Named
Executive
Officers
None n/a $5,000 n/a n/a n/a n/a n/a n/a
</TABLE>
[1] These officers and directors have resigned.
Cash Compensation.
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the calendar
years ended December 31, 1996, 1995 or 1994, or the period ending on the date of
this Report. Further, no member of the Company's management has been granted any
option or stock appreciation right; accordingly, no tables relating to such
items have been included within this Item. See the "Summary Compensation Table"
of this Item.
Compensation of Directors.
The Company's Board of Directors unanimously resolved that directors
receive no compensation for their services; however, they are reimbursed for
travel expenses incurred in serving on the Board of Directors.
No additional amounts are payable to the Company's directors for committee
participation or special assignments.
Termination of Employment and Change of Control Arrangements.
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named in the Summary
Compensation Table set out above which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of such person's employment with the Company or its subsidiaries, or
any change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
<PAGE> 38
Security Ownership of Certain Beneficial Owners
The following table sets forth the shareholdings of those persons who own
more than five percent of the Company's Common Stock as of December 31, 1994,
1995 and 1996:
<TABLE>
<CAPTION>
Name and address
of owner 12/31/94 [1] 12/31/95 [1] 12/31/96 [2]
<S> <C> <C> <C>
Falcon Group[3] 3,600,000 - 53.3% 200,000 - 2.9% [4]
c/o Bnorman Watt
2031 Quincy Avenue
Gloucester, Ontario
Canada K1J 6B2
Sam Hagopian 225,000 - 3.3% 1,554,820 - 22.0% [4]
815 Sugar Crk Blvd
Sugar Land, TX
Rockport Trading 42,000 - 0.62% 463,172 - 6.6% [4]
P. O. Box 2097
Grand Cayman, B.W.I.
Domingos
Loricchio -0- -0- 2,610,000 - 9.95%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Michael Sylver -0- -0- 12,164,813 - 46.36%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Robert Qualey -0- -0- 1,220,000 - 4.65%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Domingos
Loricchio II -0- -0- 1,500,000 - 5.72%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Rocque Pucci -0- -0- 1,868,300 - 7.12%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Gary Sylver -0- -0- 2,039,000 - 7.77%
P. O. Box 96083
Las Vegas, NV 89183
Denise
Loricchio -0- -0- 1,500,000 - 5.72%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
TOTAL 3,867,000 - 57.3% 2,217,992 - 57.3% 22,902,113 - 87.29%
</TABLE>
<PAGE> 39
[1] Does not reflect 1 for 28.4087 reverse stock split which occurred on March
27, 1996.
[2] Reflects 1 for 28.4087 reverse stock split which occurred on March 27,
1996.
[3] The number and percentage of ownership for the year ended December 31,
1995, assumes that the Falcon Plan had been rescinded pursuant to the
Rescission Agreement; that all shares to be issued or cancelled pursuant
to the Recession Agreement had been issued or cancelled, with an
additional 600,000 "unregistered" and "restricted" shares being required
to be issued under the Rescission Agreement being deemed to be
outstanding; that 3,300,000 "unregistered" and "restricted" shares had
been issued pursuant to a private placement; and that 310,000
"unregistered" and "restricted" shares had been issued to directors and
executive officers, for a total outstanding of 7,019,933. See Item 1 of
Form 10-KSB, for the year ending December 31, 1995, filed with the
Commission which is incorporated herein be reference.
[4] No longer owner of 5% or more of the shares of Common Stock.
Security Ownership of Management
The following table sets forth the shareholdings of the Company's
directors and executive officer as of December 31, 1994, 1995 and 1996.
<TABLE>
<CAPTION>
Number and Percentage
of Shares Beneficially Owned
Name & address 12/31/94 [1] 12/31/95 [1] 12/31/96 [2]
<S> <C> <C> <C>
Sam Bono -0- 100,000 - 1.4% [4]
11949 FM 3005
Suite 403
Galveston, TX 77554
Brent Burningham -0- -0- [4]
1752 E. Sunrise
Park Circle
Salt Lake City, UT 84093
Sharleen
Burningham -0- -0- [4]
1752 E. Sunrise
Park Circle
Salt Lake City, UT 84093
William Cooper 9,138 - 0.01% 9,138 - 0.01% [4]
1752 E. Sunrise
Park Circle
Salt Lake City, UT 84093
Sam Hagopian 225,000 - 3.3% 1,554,820 - 22.0% [4]
815 Sugar Crk Blvd
Sugar Land, TX 77478
</TABLE>
<PAGE> 40
<TABLE>
<S> <C> <C> <C>
Carol Novick -0- 100,000 - 1.4% [4]
12633 Memorial Dr
Suite 123
Houston, TX 77024
Sheryl Ross -0- 100,000 - 1.4% [4]
455 E. 500 South
Suite 205
Salt Lake City, UT 84111
Domingos
Loricchio -0- -0- 2,610,000 - 9.95%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Michael Sylver -0- -0- 12,164,813 - 46.35%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Robert Qualey -0- -0- 1,220,000 - 4.65%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Domingos
Loricchio II -0- -0- 1,500,000 - 5.72%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Rocque Pucci -0- -0- 1,868,300 - 7.12%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
Rudine Borgato -0- -0- 1,000 - 6.00%
4011 W. Oquendo Ave.
Suite C
Las Vegas, NV 89118
TOTALS 234,138 - 3.5% 1,863,958 - 27.0% 19,364,113 - 73.72%
</TABLE>
[1] Does not reflect 1 for 28.4087 reverse stock split which occurred on March
27, 1996.
[2] Reflects 1 for 28.4087 reverse stock split which occurred on March 27,
1996.
[3] The number and percentage of ownership for the year ended December 31,
1995, assumes that the Falcon Plan had been rescinded pursuant to the
Rescission Agreement; that all shares to be issued or cancelled pursuant
to the Recession Agreement had been issued or cancelled, with an
additional 600,000 "unregistered" and "restricted" shares being required
to be issued under the Rescission Agreement being deemed to be
outstanding; that 3,300,000 "unregistered" and "restricted" shares had
been issued
<PAGE> 41
pursuant to a private placement; and that 310,000 "unregistered" and
"restricted" shares had been issued to directors and executive officers,
for a total outstanding of 7,019,933. See Item 1 of Form 10-KSB, for the
year ending December 31, 1995, filed with the Commission which is
incorporated herein be reference
[4] No longer current management.
Changes in Control
To the knowledge of management, there are no present arrangements or
pledges of securities of the Company which may result in a change in control of
the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Registrant has engaged in no transactions with management or others in
which the amount involved exceeds $60,000 other than the following:
a. On March 28, 1996, the Company issued 6,100,000 shares of "restricted"
common stock to thirteen (13) persons in exchange for all of the issued and
outstanding shares of common stock (40,000,000) of Amazon Natural Treasures,
Inc., a Nevada corporation. Domingos Loricchio, the Company's Chairman of the
Board of Directors received 4,000,000 shares thereof; Michael Sylver, the
Company's President was issued 13,967,110 shares thereof; and, Robert Qualey,
the Company's secretary received 8,000,000 shares thereof.
b. On March 29, 1996, Rocque Pucci purchased 54,000 "restricted" shares of
the Company's common stock in consideration of $27,000.
c. On March 29, 1996, the Company issued 1,260,360 shares of
"restricted" common stock to Rocque Pucci as full payment of a debt owed by the
Company to Mr. Pucci. The debt owed to Mr. Pucci was $6,302 and the debt was
incurred as a result of a loan to the Company.
d. On April 1, 1996, the Company filed a Form S-8 registration statement
with the Securities and Exchange Commission (the "Commission") which became
effective by operation of law on the same date. The Form S-8 registered a
non-qualified incentive stock option plan. On April 1, 1996, the Company granted
Gary Sylver, the father of Michael Sylver, the Company's President, an option to
acquire 400,000 shares of common stock at an exercise price of $0.0001 per
share. Mr. Sylver's options were issued in connection with his consulting
agreement wherein Mr. Sylver, a U.S. Customs Agent, renders advice to the
Company regarding compliance with U.S. customs laws. Gary Sylver has exercised
all of the options and has been issued 400,000 shares of common stock without
restrictions.
e. On May 28, 1996, the Company issued 5,000,000 "restricted" shares of
common stock to Domingos Lorrichio, the Company's Chairman of
<PAGE> 42
the Board of Directors in consideration of the acquisition of the certain
formulas relating to the Company's products. Dr. Loricchio transferred 1,500,000
shares thereof to Domingos Loricchio II, a Vice President of the Company; and
1,500,000 shares to Denise Loricchio.
f. On December 6, 1996, the Company issued to Conrad C. Lysiak, an
option to purchase 50,000 shares of the Company's common stock at an exercise
price of $0.001 per share. The foregoing option was granted to Mr. Lysiak in
consideration of legal services rendered to the Company valued at $10,000. Mr.
Lysiak exercised the option and was issued 50,000 shares of common stock.
g. On December 10, 1996, the Company issued 10,000,000 "restricted" shares
of common stock to Michael Sylver, the Company's President, in payment of a debt
owed by the Company to Mr. Sylver. The amount of the debt was $53,000 and the
debt was incurred as a result of a loan by Michael Sylver to the Company.
h. On December 10, 1996, the Company issued 250,000 "restricted" shares
of common stock to Dick Dubrule and 250,000 "restricted" shares of common stock
to James Palecek as partial performance of an agreement between the Company, Dr.
Domingos Loricchio and RPD, LLC, a California Limited Partnership. See "Item
1 - Business."
i. On April 21, 1997, the Company issued 600,000 "restricted" shares of
common stock to Gary Sylver in payment of a debt owed by the Company to Gary
Sylver. The amount of the debt was $6,000.00 as a result of a loan by Gary
Sylver to the Company.
j. From April 1996 through October 1996, Abracel USA Ltd., a corporation
owned and controlled by Domingos Loricchio and Michael Sylver, loaned the
Company $39,000.00.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the period
covered by this report.
Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
<S> <C>
3.1 Articles of Incorporation of the Company (incorporated by reference to
Exhibit 1.1 to the Registrant's Registration Statement on S-18 and Form
10-KSB, SEC File No. 33-26109).
</TABLE>
<PAGE> 43
<TABLE>
<S> <C>
3.2 Bylaws of the Company (incorporated by reference to Exhibit 1.1 to the
Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No.
33-26109).
4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 1.1 to
the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File
No. 33-26109).
10.1 Agreement and Plan of Reorganization (incorporated by reference to Exhibit
10.1 of the Registrant's Form 8-K, dated April 10, 1996).
10.2 Lease Contract between David L. Sawyer and Sally Sawyer and the Company,
dated September 24, 1996.
10.3 Lease Contract between Lucio Sampaio de Souza and Amazon Natural Treasures
Commercial Importadora Exportadora LTDA, dated September 20, 1996.
10.4 Lease Contract between Henry and Shirley Sanchez and the Company, dated
January 8, 1997.
10.5 Agreement between C.A. GAMA FRANCO and the Company, dated May 5, 1996.
10.6 Agreement between Loripar, Ltd. and the Company, dated May 28, 1996.
10.7 Amendment to Agreement between Loripar, Ltd. and the Company, dated May
28, 1996.
10.8 Consulting Agreement between the Company and Dr. Domingos Loricchio, dated
September 16, 1996.
10.9 Employment Agreement between the Company and Rudine Borgato, dated
November 1, 1998.
10.10 Retail Merchandise Purchase and Sales Agreement between the Company and
Dr. Randall W. Robirds, dated December 10, 1996.
24.1 Consent of Independent Auditor
27 Financial Data Schedule
</TABLE>
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this ____ day of
June, 1997.
AMAZON NATURAL TREASURES, INC.
(Registrant)
BY:_____________________________________
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Registrant
and in the capacities and on this _____ day of June, 1997.
SIGNATURES TITLE
- ----------------------------- Chairman of the Board of
Domingos Loricchio Directors.
- ----------------------------- President, Chief Executive
Michael A. Sylver Officer and a member of the Board
of Directors
- ----------------------------- Secretary/Treasurer, Chief
Robert S. Qualey Financial Officer and a member of the Board
of Directors.
- ----------------------------- Senior Executive Vice President
Domingos Loricchio II
<PAGE> 45
- ----------------------------- Executive Vice President.
Rocque Pucci
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report material has been forwarded to securities holders of the
Registrant during the period covered by this report or for the previous five
calendar years ended December 31; however, if any annual report or proxy
material is furnished to security holders in connection with the annual meeting
stockholders to be held in 1997, a copy of any such annual report or proxy
materials shall be forwarded to the Commission when it is forwarded to security
holders.
<PAGE> 46
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
<S> <C> <C>
3.2 Bylaws of the Company (incorporated by reference to Exhibit 1.1 to the
Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No.
33-26109).
4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 1.1 to
the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File
No. 33-26109).
10.1 Agreement and Plan of Reorganization (incorporated by reference to Exhibit
10.1 of the Registrant's Form 8-K, dated April 10, 1996).
10.2 Lease Contract between David L. Sawyer and Sally Sawyer and the Company,
dated September 24, 1996.
10.3 Lease Contract between Lucio Sampaio de Souza and Amazon Natural Treasures
Commercial Importadora Exportadora LTDA, dated September 20, 1996.
10.4 Lease Contract between Henry and Shirley Sanchez and the Company, dated
January 8, 1997.
10.5 Agreement between C.A. GAMA FRANCO and the Company, dated May 5, 1996.
10.6 Agreement between Loripar, Ltd. and the Company, dated May 28, 1996.
10.7 Amendment to Agreement between Loripar, Ltd. and the Company, dated May
28, 1996.
10.8 Consulting Agreement between the Company and Dr. Domingos Loricchio, dated
September 16, 1996.
10.9 Employment Agreement between the Company and Rudine Borgato, dated
November 1, 1998.
10.10 Retail Merchandise Purchase and Sales Agreement between the Company and
Dr. Randall W. Robirds, dated December 10, 1996.
24.1 Consent of Independent Auditor
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.2
INDUSTRIAL REAL ESTATE LEASE
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and
are to be read in conjunction with the Basic Terms.
Section 1.01. Date of Lease: September 24, 1996
Section 1.02. Landlord (include legal entity): David L. Sawyer and Sally A.
Sawyer
Address of Landlord: 3272 Crystal Palm Court, Las Vegas, Nevada 89117
Section 1.03. Tenant(include legal entity): Amazon Natural Treasures,
Inc.
Address of Tenant: 4011 W. Oquendo Road Unit C. Las Vegas, Nevada
Section 1.04. Property: The Property is part of Landlord's
multi-tenant real property development known as Oquendo Center and described or
depicted in Exhibit "A" (the "Project"). The Project includes the land, the
buildings and all other improvements located on the land, and the common areas
described in Paragraph 4.05(a). The Property is (include street address,
approximate square footage and description) 4011 W. Oquendo Road is a + 15,746
square foot multi tenant industrial complex. Suite C consists of 5,154 sq. ft.
of space with 1,596 sq. ft. of finished office.
Section 1.05. Lease Term: -3- years -0- months beginning on October 1,
1996 or such other date as is specified in this Lease, and ending on September
30, 1999.
Section 1.06. Permitted Uses: (See Article Five) Sales, storage and
distribution of vitamin products.
Section 1.07. Tenant's Guarantor: (If none, so state) None
Section 1.08. See Duties Owed By A Nevada Real Estate Licensee
Section 1.09. Commission Payable to Landlord's Broker: (See Article
Fourteen) Per separate agreement dated May 6, 1996.
Section 1.10. Initial Security Deposit: (See Section 3.03) $5,670.00.
<PAGE> 2
2
Section 1.11. Vehicle Parking Spaces Allocated to Tenant: (See Section
4.05) ten (10).
Section 1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: Two Thousand Eight Hundred Thirty-Five and no/100
Dollars ($2,835.00) per month for the first twelve months, as provided in
Section 3.01, and shall be increased on the first day of the month(s) after the
Commencement Date, either (i) as provided in Section 3.02, or (ii) 13th - 24th
month rent: $2.977.00 25th - 36th month rent: $3,125.00 (If (ii) is completed,
then (i)and Section 3.02 are inapplicable.)
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above the "Base
Real Property Taxes" (See Section 4.02); (ii) Utilities (See Section 4.03);
(iii) Increased Insurance Premiums above "Base Premiums" (See Section 4.04);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses .33 % (See Section
4.05); (v) Impounds for Tenant's Share of Insurance Premiums and Property Taxes
(See Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article
Six).
Section 1.13. Costs and Charges Payable by Landlord: (a) Base Real
Property Taxes (See Section 4.02); (b) Base Insurance Premiums (See Section
4.04(c)); (c) Maintenance and Repair (See Article Six).
Section 1.14. Landlord's Share of Profit on Assignment or Sublease:
(See Section 9.05) One Hundred Percent (100%) of the Profit (the "Landlord's
Share").
Section 1.15. Riders: The following Riders are attached to and made
a part of this Lease: (If none, so state).
ARTICLE TWO: LEASE TERM
Section 2.01. Lease of Property For Lease Term. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.
Section 2.02. Delay in Commencement. Landlord shall not be liable to
Tenant if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord's non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord
<PAGE> 3
3
delivers possession of the Property to Tenant and the Lease Term shall be
extended for a period equal to the delay in delivery of possession of the
Property to Tenant, plus the number of days necessary to end the Lease Term on
the last day of a month. If Landlord does not deliver possession of the
Property to Tenant within sixty (60) days after the Commencement Date, Tenant
may elect to cancel this Lease by giving written notice to Landlord within ten
(10) days after the sixty (60) -day period ends. If Tenant gives such notice,
the Lease shall be cancelled and neither Landlord nor Tenant shall have any
further obligations to the other. If Tenant does not give such notice, Tenant's
right to cancel the Lease shall expire and the Lease Term shall commence upon
the delivery of possession of the Property to Tenant. If delivery of possession
of the Property to Tenant is delayed, Landlord and Tenant shall, upon such
delivery, execute an amendment to this Lease setting forth the actual
Commencement Date and expiration date of the Lease. Failure to execute such
amendment shall not affect the actual Commencement Date and expiration date of
the Lease.
Section 2.03. Early Occupancy. If Tenant occupies the Property prior
to the Commencement Date, Tenant's occupancy of the Property shall be subject
to all of the provisions of this Lease. Early occupancy of the Property shall
not advance the expiration date of this Lease. Tenant shall pay Base Rent and
all other charges specified in this Lease for the early occupancy period.
Section 2.04. Holding Over. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord incurs
from Tenant's delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall
be a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in
effect shall be increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01. Time and Manner of Payment. Upon execution of this
Lease, Tenant shall pay Landlord the Base Rent in the amount stated in
Paragraph 1.12(a) above for the first month of the Lease Term. On the first day
of the second month of the Lease Term and each month thereafter, Tenant shall
pay Landlord the Base Rent, in advance, without offset, deduction or prior
demand. The Base Rent shall be payable at Landlord's address or at such other
place as Landlord may designate in writing.
<PAGE> 4
4
Section 3.02. Cost of Living Increases. The Base Rent shall be
increased on each date (the "Rental Adjustment Date") stated in Paragraph
1.12(a) above in accordance with the increase in the United States Department
of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban
Consumers (all items for the geographical Statistical Area in which the
Property is located on the basis of 1982-1984 = 100) (the "Index") as follows:
(a) The Base Rent (the "Comparison Base Rent") in effect immediately
before each Rental Adjustment Date shall be increased by the percentage that
the Index has increased from the date (the "Comparison Date") on which payment
of the Comparison Base Rent began through the month in which the applicable
Rental Adjustment Date occurs. The Base Rent shall not be reduced by reason of
such computation. Landlord shall notify Tenant of each increase by a written
statement which shall include the Index for the applicable Comparison Date, the
Index for the applicable Rental Adjustment Date, the percentage increase
between those two Indices, and the new Base Rent. Any increase in the Base Rent
provided for in this Section 3.02 shall be subject to any minimum or maximum
increase, if provided for in Paragraph 1.12(a).
(b) Tenant shall pay the new Base Rent from the applicable Rental
Adjustment Date until the next Rental Adjustment Date. Landlord's notice may be
given after the applicable Rental Adjustment Date of the increase, and Tenant
shall pay Landlord the accrued rental adjustment for the months elapsed between
the effective date of the increase and Landlord's notice of such increase
within ten (10) days after Landlord's notice. If the format or components of
the Index are materially changed after the Commencement Date, Landlord shall
substitute an index which is published by the Bureau of Labor Statistics or
similar agency and which is most nearly equivalent to the Index in effect on
the Commencement Date. The substitute index shall be used to calculate the
increase in the Base Rent unless Tenant objects to such index in writing within
fifteen (15) days after receipt of Landlord's notice. If Tenant objects,
Landlord and Tenant shall submit the selection of the substitute index for
binding arbitration in accordance with the rules and regulations of the
American Arbitration Association at its office closest to the Property. The
costs of arbitration shall be borne equally by Landlord and Tenant.
Section 3.03. Security Deposit; Increases.
(a) Upon the execution of this Lease, Tenant shall deposit with
Landlord a cash Security Deposit in the amount set forth in Section 1.10 above.
Landlord may apply all or part of the Security Deposit to any unpaid rent or
other charges due from Tenant or to cure any other defaults of Tenant. If
Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after
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Landlord's written request. Tenant's failure to do so shall be a material
default under this Lease. No interest shall be paid on the Security Deposit.
Landlord shall not be required to keep the Security Deposit separate from its
other accounts and no trust relationship is created with respect to the
Security Deposit.
(b) Each time the Base Rent is increased, Tenant shall deposit
additional funds with Landlord sufficient to increase the Security Deposit to
an amount which bears the same relationship to the adjusted Base Rent as the
initial Security Deposit bore to the initial Base Rent.
Section 3.04. Termination; Advance Payments. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. Additional Rent. All charges payable by Tenant other
than Base Rent are called "Additional Rent". Unless this Lease provides
otherwise, Tenant shall pay all Additional Rent then due with the next monthly
installment of Base Rent. The term "rent" shall mean Base Rent and Additional
Rent.
Section 4.02. Property Taxes.
(a) Real Property Taxes. Landlord shall pay the "Base Real Property
Taxes" on the Property during the Lease Term. Base Real Property Taxes are real
property taxes applicable to the Property as shown on the tax bill for the most
recent tax fiscal year ending prior to the Commencement Date. However, if the
structures on the Property are not completed by the tax lien date of such tax
fiscal year, the Base Real Property Taxes are the taxes shown on the first tax
bill showing the full assessed value of the Property after completion of the
structures. Tenant shall pay Landlord the amount, if any, by which the real
property taxes during the Lease Term exceed the Base Real Property Taxes.
Subject to Paragraph 4.02(c), Tenant shall make such payments within fifteen
(15) days after receipt of Landlord's statement showing the amount and
computation of such increase. Landlord shall reimburse Tenant for any real
property taxes paid by Tenant covering any period of time prior to or after the
Lease Term.
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(b) Definition of "Real Property Tax." "Real property tax" means: (i)
any fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord's right to receive, or the
receipt of, rent or income from the Property or against Landlord's business of
leasing the Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (iv) any tax imposed upon this transaction or based
upon a re-assessment of the Property due to a change of ownership, as defined
by applicable law, or other transfer of all or part of Landlord's interest in
the Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. "Real property tax" does not,
however, include Landlord's federal or state income, franchise, inheritance or
estate taxes.
(c) Joint Assessment. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or
other reasonably available information. Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord's written statement.
(d) Personal Property Taxes.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from the Property.
(ii) If any of Tenant's personal property is taxed with the
Property, Tenant shall pay Landlord the taxes for the personal property within
fifteen (15) days after Tenant receives a written statement from Landlord for
such personal property taxes.
Section 4.03. Utilities. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.
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Section 4.04. Insurance Policies.
(a) Liability Insurance. During the Lease Term, Tenant shall maintain
a policy of commercial general liability insurance (sometimes known as broad
form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or occupancy of
the Property. Tenant shall name Landlord as an additional insured under such
policy. The initial amount of such insurance shall be One Million Dollars
($1,000,000) per occurrence and shall be subject to periodic increase based
upon inflation, increased liability awards, recommendation of Landlord's
professional insurance advisers and other relevant factors. The liability
insurance obtained by Tenant under this Paragraph 4.04(a) shall (i) be primary
and non-contributing; (ii) contain cross-liability endorsements; and (iii)
insure Landlord against Tenant's performance under Section 5.05, if the matters
giving rise to the indemnity under Section 5.05 result from the negligence of
Tenant. The amount and coverage of such insurance shall not limit Tenant's
liability nor relieve Tenant of any other obligation under this Lease. Landlord
may also obtain comprehensive public liability insurance in an amount and with
coverage determined by Landlord insuring Landlord against liability arising out
of ownership, operation, use or occupancy of the Property. The policy obtained
by Landlord shall not be contributory and shall not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease Term,
Landlord shall maintain policies of insurance covering loss of or damage to the
Property in the full amount of its replacement value. Such policy shall contain
an Inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall
have the right to obtain flood and earthquake insurance if required by lender
holding a security interest in the Property. Landlord shall not obtain
insurance for Tenant's fixtures or equipment or building improvements installed
by Tenant on the Property. During the Lease Term, Landlord shall also maintain
a rental income insurance policy, with loss payable to Landlord, in an amount
equal to one year's Base Rent, plus estimated real property taxes and insurance
premiums. Tenant shall be liable for the payment of any deductible amount
under Landlord's or Tenant's insurance policies maintained pursuant to this
Section 4.04, in an amount not to exceed Ten Thousand Dollars ($10,000.00).
Tenant shall not do or permit anything to be done which invalidates any such
insurance policies.
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(c) Payment of Premiums.
(i) Landlord shall pay the "Base Premiums" for the insurance
policies maintained by Landlord under Paragraph 4.04(b). If the Property has
been previously fully occupied, the "Base Premiums" are the insurance premiums
paid during or applicable to the last twelve (12) months of such prior
occupancy. If the Property has not been previously fully occupied or has been
occupied for less than twelve (12) months, the Base Premiums are the lowest
annual premiums reasonably obtainable for the required insurance for the
Property as of the Commencement Date.
(ii) Tenant shall pay Landlord the amount, if any, by which
the insurance premiums for all policies maintained by Landlord under Paragraph
4.04(b) have increased over the Base Premiums, whether such increases result
from the nature of Tenant's occupancy, any act or omission of Tenant, the
requirement of any lender referred to in Article Eleven (Protection of
Lenders), the increased value of the Property or general rate increases.
However, if Landlord substantially increases the amount of insurance carried or
the percentage of insured value after the period during which the Base Premiums
were calculated, Tenant shall only pay Landlord the amount of increased
premiums which would have been charged by the insurance carrier if the amount
of insurance or percentage of insured value had not been substantially
increased by Landlord. This adjustment in the amount due from Tenant shall be
made only once during the Lease Term. Thereafter, Tenant shall be obligated to
pay the full amount of any additional increases in the insurance premiums,
including increases resulting from any further increases in the amount of
insurance or percentage of insured value. Subject to Section 4.05, Tenant shall
pay Landlord the increases over the Base Premiums within fifteen (15) days
after receipt by Tenant of a copy of the premium statement or other evidence of
the amount due. If the insurance policies maintained by Landlord cover
improvements or real property other than the Property, Landlord shall also
deliver to Tenant a statement of the amount of the premiums applicable to the
Property showing, in reasonable detail, how such amount was computed. If the
Lease Term expires before the expiration of the insurance period, Tenant's
liability shall be pro rated on an annual basis.
(d) General Insurance Provisions.
(i) Any insurance which Tenant is required to maintain under
this Lease shall include a provision which requires the insurance carrier to
give Landlord not less than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.
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(ii) If Tenant fails to deliver any policy, certificate or
renewal to Landlord required under this Lease within the prescribed time period
or if any such policy is cancelled or modified during the Lease Term without
Landlord's consent, Landlord may obtain such insurance, in which case Tenant
shall reimburse Landlord for the cost of such insurance within fifteen (15)
days after receipt of a statement that indicates the cost of such insurance.
(iii) Tenant shall maintain all insurance required under this
Lease with companies holding a "General Policy Rating" of A-12 or better, as
set forth in the most current issue of "Best Key Rating Guide". Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04 may not be
available in the future. Tenant acknowledges that the insurance described in
this Section 4.04 is for the primary benefit of Landlord. If at any time during
the Lease Term, Tenant is unable to maintain the insurance required under the
Lease, Tenant shall nevertheless maintain insurance coverage which is customary
and commercially reasonable in the insurance industry for Tenant's type of
business, as that coverage may change from time to time. Landlord makes no
representation as to the adequacy of such insurance to protect Landlord's or
Tenant's interests. Therefore, Tenant shall obtain any such additional property
or liability insurance which Tenant deems necessary to protect Landlord and
Tenant.
(iv) Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all rights of
recovery against the other, or against the officers, employees, agents or
representatives of the other, for loss of or damage to its property or the
property of others under its control, if such loss or damage is covered by any
insurance policy in force (whether or not described in this Lease) at the time
of such loss or damage. Upon obtaining the required policies of insurance,
Landlord and Tenant shall give notice to the insurance carriers of this mutual
waiver of subrogation.
Section 4.05. Common Areas; Use, Maintenance and Costs.
(a) Common Areas. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leasable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or
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facilities. Tenant acknowledges that such activities may result in
inconvenience to Tenant. Such activities and changes are permitted if they do
not materially affect Tenant's use of the Property.
(b) Use of Common Areas. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or may
grant such rights) to use the Common Areas for the purposes intended, subject
to such reasonable rules and regulations as Landlord may establish from time to
time. Tenant shall abide by such rules and regulations and shall use its best
effort to cause others who use the Common Areas with Tenant's express or
implied permission to abide by Landlord's rules and regulations. At any time,
Landlord may close any Common Areas to perform any acts in the Common Areas as,
in Landlord's judgment, are desirable to improve the Project. Tenant shall not
interfere with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.
(c) Specific Provision re: Vehicle Parking. Tenant shall be entitled
to use the number of vehicle parking spaces in the Project allocated to Tenant
in Section 1.11 of the Lease without paying shall not be reserved and shall be
limited to vehicles no larger than standard size automobiles or pickup utility
vehicles. Tenant shall not cause large trucks or other large vehicles to be
parked within the Project or on the adjacent public streets. Temporary parking
of large delivery vehicles in the Project may be permitted by the rules and
regulations established by Landlord. Vehicles shall be parked only in striped
parking spaces and not in driveways, loading areas or other locations not
specifically designated for parking. Handicapped spaces shall only be used by
those legally permitted to use them. If Tenant parks more vehicles in the
parking area than the number set forth in Section 1.11 of this Lease, such
conduct shall be a material breach of this Lease. In addition to Landlord's
other remedies under the Lease, Tenant shall pay a daily charge determined by
Landlord for each additional vehicle.
(d) Maintenance of Common Areas. Landlord shall maintain the Common
Areas in good order, condition and repair and shall operate the Project, in
Landlord's sole discretion, as a first-class industrial/commercial real
property development. Tenant shall pay Tenant's pro rata share (as determined
below) of all costs incurred by Landlord for the operation and maintenance of
the Common Areas. Common Area costs include, but are not limited to, costs and
expenses for the following: gardening and landscaping; utilities, water and
sewage charges; maintenance of signs (other than tenants' signs); premiums for
liability, property damage, fire and other types of casualty insurance on the
Common Areas and worker's compensation insurance; all property taxes and
assessments levied on or attributable to the Common Areas and all Common Area
improvements; all personal
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property taxes levied on or attributable to personal property used in
connection with the Common Areas; straight-line depreciation on personal
property owned by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or
leased personal property used in the operation or maintenance of the Common
Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, security
and similar items; reserves for roof replacement and exterior painting and
other appropriate reserves; and a reasonable allowance to Landlord for
Landlord's supervision of the Common Areas (not to exceed five percent (5%) of
the gross rents of the Project for the calendar year). Landlord may cause any
or all of such services to be provided by third parties and the cost of such
services shall be included in Common Area costs. Common Area costs shall not
include depreciation of real property which forms part of the Common Areas.
(e) Tenant's Share and Payment. Tenant shall pay Tenant's annual pro
rata share of all Common Area costs (prorated for any fractional month) upon
written notice from Landlord that such costs are due and payable, and in any
event prior to delinquency. Tenant's pro rata share shall be calculated by
dividing the square foot area of the Property, as set forth in Section 1.04 of
the Lease, by the aggregate square foot area of the Project which is leased or
held for lease by tenants, as of the date on which the computation is made.
Tenant's initial pro rata share is set out in Paragraph 1.12(b). Any changes in
the Common Area costs and/or the aggregate area of the Project leased or held
for lease during the Lease Term shall be effective on the first day of the
month after such change occurs. Landlord may, at Landlord's election, estimate
in advance and charge to Tenant as Common Area costs, all real property taxes
for which Tenant is liable under Section 4.02 of the Lease, all insurance
premiums for which Tenant is liable under Section 4.04 of the Lease, all
maintenance and repair costs for which Tenant is liable under Section 6.04 of
the Lease, and all other Common Area costs payable by Tenant hereunder. At
Landlord's election, such statements of estimated Common Area costs shall be
delivered monthly, quarterly or at any other periodic intervals to be
designated by Landlord. Landlord may adjust such estimates at any time based
upon Landlord's experience and reasonable anticipation of costs. Such
adjustments shall be effective as of the next rent payment date after notice to
Tenant. Within sixty (60) days after the end of each calendar year of the Lease
Term, Landlord shall deliver to Tenant a statement prepared in accordance with
generally accepted accounting principles setting forth, in reasonable detail,
the Common Area costs paid or incurred by Landlord during the preceding
calendar year and Tenant's pro rata share. Upon receipt of such statement,
there shall be an adjustment between Landlord and Tenant, with payment to or
credit given by Landlord (as the case may be) so that Landlord shall receive
the entire amount of Tenant's share of such costs and expenses for such period.
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Section 4.06. Late Charges. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due, Tenant shall pay Landlord a
late charge equal to ten percent (10%) of the overdue amount. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.
Section 4.07. Interest on Past Due Obligations. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest at the rate
of fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.
Section 4.08. Impounds for Insurance Premiums and Real Property Taxes.
If requested by any ground lessor or lender to whom Landlord has granted a
security interest in the Property, or if Tenant is more than ten (10) days late
in the payment of rent more than once in any consecutive twelve (12)-month
period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the
annual real property taxes and insurance premiums payable by Tenant under this
Lease, together with each payment of Base Rent. Landlord shall hold such
payments in a non- interest bearing impound account. If unknown, Landlord shall
reasonably estimate the amount of real property taxes and insurance premiums
when due. Tenant shall pay any deficiency of funds in the impound account to
Landlord upon written request. If Tenant defaults under this Lease, Landlord
may apply any funds in the impound account to any obligation then due under
this Lease.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. Permitted Uses. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.
Section 5.02. Manner of Use. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or interferes with
the rights of tenants of the Project, or which constitutes a nuisance or waste.
Tenant shall obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant's occupancy of the Property and
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shall promptly take all actions necessary to comply with all applicable
statutes, ordinances, rules, regulations, orders and requirements regulating
the use by Tenant of the Property, including the Occupational Safety and Health
Act.
Section 5.03. Hazardous Materials. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", or "toxic
substances" now or subsequently regulated under any applicable federal, state
or local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous Material to
be generated, produced, brought upon, used, stored, treated or disposed of in
or about the Property by Tenant, its agents, employees, contractors, sublessees
or invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant's proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the installation or
use of any storage tanks on the Property.
Section 5.04. Signs and Auctions. Tenant shall not place any signs on
the Property without Landlord's prior written consent. Tenant shall not conduct
or permit any auctions or sheriff's sales at the Property.
Section 5.05. Indemnity. Tenant shall indemnify Landlord against and
hold Landlord harmless from any and all costs, claims or liability arising
from: (a) Tenant's use of the Property; (b) the conduct of Tenant's business or
anything else done or permitted by Tenant to be done in or about the Property,
including any contamination of the Property or any other property resulting
from the presence or use of Hazardous Material caused or permitted by Tenant;
(c) any breach or default in the performance of Tenant's obligations under this
Lease; (d) any misrepresentation or breach of warranty by Tenant under this
Lease; or (e) other acts or omissions of Tenant. Tenant shall defend Landlord
against any such cost, claim or liability at Tenant's expense with counsel
reasonably acceptable to Landlord or, at Landlord's election, Tenant shall
reimburse Landlord for any legal fees or costs incurred by Landlord in
connection with any such claim. As a material part of the consideration to
Landlord, Tenant assumes all risk of damage to property or injury
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to persons in or about the Property arising from any cause, and Tenant hereby
waives all claims in respect thereof against Landlord, except for any claim
arising out of Landlord's gross negligence or willful misconduct. As used in
this Section, the term "Tenant" shall include Tenant's employees, agents,
contractors and invitees, if applicable.
Section 5.06. Landlord's Access. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior notice of such entry, except in the case of an emergency.
Landlord may place customary "For Sale" or "For Lease" signs on the Property.
Section 5.07. Quiet Possession. If Tenant pays the rent and complies
with all other terms of this Lease, Tenant may occupy and enjoy the Property
for the full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. Existing Conditions. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant's intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of
the Property and is not relying on any representations of Landlord or any
Broker with respect thereto. If Landlord or Landlord's Broker has provided a
Property Information Sheet or other Disclosure Statement regarding the
Property, a copy is attached as an exhibit to the Lease.
Section 6.02. Exemption of Landlord from Liability. Landlord shall not
be liable for any damage or injury to the person, business (or any loss of
income therefrom), goods, wares, merchandise or other property of Tenant,
Tenant's employees, invitees, customers or any other person in or about the
Property, whether such damage or injury is caused by or results from: (a) fire,
steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction
or other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c) conditions arising in
or about the Property or upon other portions of the Project, or from other
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sources or places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant. The provisions of this Section 6.02 shall not, however, exempt
Landlord from liability for Landlord's gross negligence or willful misconduct.
Section 6.03. Landlord's Obligations. Subject to the provisions of
Article Seven (Damage or Destruction) and Article Eight (Condemnation), and
except for damage caused by any act or omission of Tenant, or Tenant's
employees, agents, contractors or invitees, Landlord shall keep the foundation,
roof and structural portions of exterior walls of the improvements on the
Property in good order, condition and repair. However, Landlord shall not be
obligated to maintain or repair windows, doors, plate glass or the surfaces of
walls. Landlord shall not be obligated to make any repairs under this Section
6.03 until a reasonable time after receipt of a written notice from Tenant of
the need for such repairs. Tenant waives the benefit of any present or future
law which might give Tenant the right to repair the Property at Landlord's
expense or to terminate the Lease because of the condition of the Property.
Section 6.04. Tenant's Obligations.
(a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all portions
of the Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior repainting
and refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the
Property or system or equipment in the Property, regardless of whether the
benefit of such replacement extends beyond the Lease Term; but if the benefit
or useful life of such replacement extends beyond the Lease Term (as such term
may be extended by exercise of any options), the useful life of such
replacement shall be prorated over the remaining Lease Term (as extended).
Tenant shall maintain a preventive maintenance contract providing for the
regular inspection and maintenance of the heating and air conditioning system
by a licensed heating and air conditioning contractor. Landlord shall have the
right, upon written notice to Tenant, to undertake the responsibility for
preventive maintenance of the heating and air conditioning system at Tenant's
expense. In addition, Tenant shall, at Tenant's expense, repair any damage to
the roof, foundation or structural portions of walls caused by Tenant's acts or
omissions. It is the intention of Landlord and Tenant that, at all times
during the Lease Term, Tenant shall maintain the Property in an attractive,
first-class and fully operative condition.
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(b) Tenant shall fulfill all of Tenant's obligations under this
Section 6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or
replace the Property as required by this Section 6.04, Landlord may, upon ten
(10) days' prior notice to Tenant (except that no notice shall be required in
the case of an emergency), enter the Property and perform such maintenance or
repair (including replacement, as needed) on behalf of Tenant. In such case,
Tenant shall reimburse Landlord for all costs incurred in performing such
maintenance or repair immediately upon demand.
Section 6.05. Alterations, Additions, and Improvements.
(a) Tenant shall not make any alterations, additions, or improvements
to the Property without Landlord's prior written consent, except for
non-structural alterations which do not exceed Ten Thousand Dollars ($10,000)
in cost cumulatively over the Lease Term and which are not visible from the
outside of any building of which the Property is part. Landlord may require
Tenant to provide demolition and/or lien and completion bonds in form and
amount satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.
(b) Tenant shall pay when due all claims for labor and material
furnished to the Property. Tenant shall give Landlord at least twenty (20)
days' prior written notice of the commencement of any work on the Property,
regardless of whether Landlord's consent to such work is required. Landlord may
elect to record and post notices of non-responsibility on the Property.
Section 6.06. Condition upon Termination. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required
to repair under Article Seven (Damage or Destruction). In addition, Landlord
may require Tenant to remove any alterations, additions or improvements
(whether or not made with Landlord's consent) prior to the expiration of the
Lease and to restore the Property to its prior condition, all at Tenant's
expense. All alterations, additions and improvements which Landlord has not
required Tenant to remove shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or equipment
which
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can be removed without material damage to the Property. Tenant shall repair, at
Tenant's expense, any damage to the Property caused by the removal of any such
machinery or equipment. In no event, however, shall Tenant remove any of the
following materials or equipment (which shall be deemed Landlord's property)
without Landlord's prior written consent: any power wiring or power panels;
lighting or lighting fixtures; wall coverings; drapes, blinds or other window
coverings; carpets or other floor coverings; heaters, air conditioners or any
other heating or air conditioning equipment; fencing or security gates; or
other similar building operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. Partial Damage to Property.
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property is untenantable as
a result of such damage or less than fifty percent (50%) of Tenant's operations
are materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord shall repair
the damage as soon as reasonably possible. Landlord may elect (but is not
required) to repair any damage to Tenant's fixtures, equipment, or
improvements.
(b) If the insurance proceeds received by Landlord are not sufficient
to pay the entire cost of repair, or if the cause of the damage is not covered
by the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, in which case this Lease shall remain in full force and effect, or
(ii) terminate this Lease as of the date the damage occurred. Landlord shall
notify Tenant within thirty (30) days after receipt of notice of the occurrence
of the damage whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall pay Landlord the
"deductible amount" (if any) under Landlord's insurance policies and, if the
damage was due to an act or omission of Tenant, or Tenant's employees, agents,
contractors or invitees, the difference between the actual cost of repair and
any insurance proceeds received by Landlord. If Landlord elects to terminate
the Lease, Tenant may elect to continue this Lease in full force and effect, in
which case Tenant shall repair any damage to the Property and any building in
which the Property is located. Tenant shall pay the cost of such repairs,
except that upon satisfactory completion of such repairs, Landlord shall
deliver to Tenant any insurance proceeds received by Landlord for the damage
repaired by Tenant. Tenant shall give Landlord written notice of such election
within ten (10) days after receiving Landlord's termination notice.
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(c) If the damage to the Property occurs during the last six (6)
months of the Lease Term and such damage will require more than thirty (30)
days to repair, either Landlord or Tenant may elect to terminate this Lease as
of the date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.
Section 7.02. Substantial or Total Destruction. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred. Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within thirty (30) days
after Tenant's notice of the occurrence of total or substantial destruction.
If Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.
Section 7.03. Temporary Reduction of Rent. If the Property is
destroyed or damaged and Landlord or Tenant repairs or restores the Property
pursuant to the provisions of this Article Seven, any rent payable during the
period of such damage, repair and/or restoration shall be reduced according to
the degree, if any, to which Tenant's use of the Property is impaired. However,
the reduction shall not exceed the sum of one year's payment of Base Rent,
insurance premiums and real property taxes. Except for such possible reduction
in Base Rent, insurance premiums and real property taxes, Tenant shall not be
entitled to any compensation, reduction, or reimbursement from Landlord as a
result of any damage, destruction, repair, or restoration of or to the
Property.
Section 7.04. Waiver. Tenant waives the protection of any statute,
code or judicial decision which grants a tenant the right to terminate a lease
in the event of the substantial or total destruction of the leased property.
Tenant agrees that the provisions of Section 7.02 above shall govern the rights
and obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
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ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of
eminent domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs
first. If more than twenty percent (20%) of the floor area of the building in
which the Property is located, or which is located on the Property, is taken,
either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice to
the other within ten (10) days after receipt of written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority takes title or possession). If neither Landlord nor Tenant terminates
this Lease, this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. Landlord's Consent Required. No portion of the Property
or of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent. If Tenant
is a corporation, any change in the ownership of a controlling interest of the
voting stock of the corporation shall require Landlord's consent.
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Section 9.02. Tenant Affiliate. Tenant may assign this Lease or
sublease the Property, without Landlord's consent, to any corporation which
controls, is controlled by or is under common control with Tenant, or to any
corporation resulting from the merger of or consolidation with Tenant
("Tenant's Affiliate"). In such case, any Tenant's Affiliate shall assume in
writing all of Tenant's obligations under this Lease.
Section 9.03. No Release of Tenant. No transfer permitted by this
Article Nine, whether with or without Landlord's consent, shall release Tenant
or change Tenant's primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord may consent
to subsequent assignments or modifications of this Lease by Tenant's
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant's liability under this Lease.
Section 9.04. Offer to Terminate. If Tenant desires to assign the
Lease or sublease the Property, Tenant shall have the right to offer, in
writing, to terminate the Lease as of a date specified in the offer. If
Landlord elects in writing to accept the offer to terminate within twenty (20)
days after notice of the offer, the Lease shall terminate as of the date
specified and all the terms and provisions of the Lease governing termination
shall apply. If Landlord does not so elect, the Lease shall continue in effect
until otherwise terminated and the provisions of Section 9.05 with respect to
any proposed transfer shall continue to apply.
Section 9.05. Landlord's Consent.
(a) Tenant's request for consent to any transfer described in Section
9.01 shall set forth in writing the details of the proposed transfer, including
the name, business and financial condition of the prospective transferee,
financial details of the proposed transfer (e.g., the term of and the rent and
security deposit payable under any proposed assignment or sublease), and any
other information Landlord deems relevant. Landlord shall have the right to
withhold consent, if reasonable, or to grant consent, based on the following
factors: (i) the business of the proposed assignee or subtenant and the
proposed use of the Property; (ii) the net worth and financial reputation of
the proposed assignee or subtenant: (iii) Tenant's compliance with all of its
obligations under the Lease; and (iv) such other factors as Landlord may
reasonably deem relevant. If Landlord objects to a proposed assignment solely
because of the net worth and/or financial reputation of the proposed assignee,
Tenant may
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nonetheless sublease (but not assign), all or a portion of the Property to the
proposed transferee, but only on the other terms of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the
Lease the Landlord's Share (stated in Section 1.14) of the Profit
(defined below) on such transaction as and when received by Tenant,
unless Landlord gives written notice to Tenant and the assignee or
subtenant that Landlord's Share shall be paid by the assignee or
subtenant to Landlord directly. The "Profit" means (A) all amounts
paid to Tenant for such assignment or sublease, including "key" money,
monthly rent in excess of the monthly rent payable under the Lease,
and all fees and other consideration paid for the assignment or
sublease, including fees under any collateral agreements, less (B)
costs and expenses directly incurred by Tenant in connection with the
execution and performance of such assignment or sublease for real
estate broker's commissions and costs of renovation or construction of
tenant improvements required under such assignment or sublease. Tenant
is entitled to recover such costs and expenses before Tenant is
obligated to pay the Landlord's Share to Landlord. The Profit in the
case of a sublease of less than all the Property is the rent allocable
to the subleased space as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or sublease of
the Property within thirty (30) days after the transaction
documentation is signed, and Landlord may inspect Tenant's books and
records to verify the accuracy of such statement. On written request,
Tenant shall promptly furnish to Landlord copies of all the
transaction documentation, all of which shall be certified by Tenant
to be complete, true and correct. Landlord's receipt of Landlord's
Share shall not be a consent to any further assignment or subletting.
The breach of Tenant's obligation under this Paragraph 9.05(b) shall
be a material default of the Lease.
Section 9.06. No Merger. No merger shall result from Tenant's sublease
of the Property under this Article Nine, Tenant's surrender of this Lease or
the termination of this Lease in any other manner. In any such event, Landlord
may terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
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ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. Tenant's performance
of each of Tenant's obligations under this Lease is a condition as
well as a covenant. Tenant's right to continue in possession of the
Property is conditioned upon such performance. Time is of the essence
in the performance of all covenants and conditions.
Section 10.02. Defaults. Tenant shall be in material default under
this Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the
Property results in the cancellation of any insurance described in Section
4.04;
(b) If Tenant fails to pay rent or any other charge when due;
(c) If Tenant fails to perform any of Tenant's non-monetary
obligations under this Lease for a period of thirty (30) days after written
notice from Landlord; provided that if more than thirty (30) days are required
to complete such performance, Tenant shall not be in default if Tenant
commences such performance within the thirty (30)-day period and thereafter
diligently pursues its completion. However, Landlord shall not be required to
give such notice if Tenant's failure to perform constitutes a non-curable
breach of this Lease. The notice required by this Paragraph is intended to
satisfy any and all notice requirements imposed by law on Landlord and is not
in addition to any such requirement.
(d) (i) If Tenant makes a general assignment or general arrangement
for the benefit of creditors; (ii) if a petition for adjudication of bankruptcy
or for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored
to Tenant within thirty (30) days; or (iv) if substantially all of Tenant's
assets located at the Property or of Tenant's interest in this Lease is
subjected to attachment, execution or other judicial seizure which is not
discharged within thirty (30) days. If a court of competent jurisdiction
determines that any of the acts described in this subparagraph (d) is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession) and such trustee or Tenant transfers
Tenant's interest hereunder, then Landlord shall receive, as Additional Rent,
the excess, if any, of the rent (or any other consideration) paid in connection
with such assignment or sublease over the rent payable by Tenant under this
Lease.
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(e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion
of Tenant's obligations under the Lease. Unless otherwise expressly provided,
no guaranty of the Lease is revocable.
Section 10.03. Remedies. On the occurrence of any material default by
Tenant, Landlord may, 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 have:
(a) Terminate Tenant's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the time
of the award of the amount by which the unpaid Base Rent, Additional Rent and
other charges which Landlord would have earned after termination until the time
of the award exceeds the amount of such rental loss that Tenant proves Landlord
could have reasonably avoided; (iii) the worth at the time of the award of the
amount by which the unpaid Base Rent, Additional Rent and other charges which
Tenant would have paid for the balance of the Lease Term after the time of
award exceeds the amount of such rental loss that Tenant proves Landlord could
have reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under the Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to, any
costs or expenses Landlord incurs in maintaining or preserving the Property
after such default, the cost of recovering possession of the Property, expenses
of reletting, including necessary renovation or alteration of the Property,
Landlord's reasonable attorneys' fees incurred in connection therewith, and any
real estate commission paid or payable. As used in subparts (i) and (ii)
above, the "worth at the time of the award" is computed by allowing interest on
unpaid amounts at the rate of fifteen percent (15%) per annum, or such lesser
amount as may then be the maximum lawful rate. As used in subpart (iii) above,
the "worth at the time of the award" is computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
the award, plus one percent (1%). If Tenant has abandoned the Property,
Landlord shall have the option of (i) retaking possession of the Property and
recovering from Tenant the amount specified in this Paragraph 10.03(a), or (ii)
proceeding under Paragraph 10.03(b);
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(b) Maintain Tenant's right to possession, in which case this Lease
shall come in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it
becomes due;
(c) Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Property is
located.
Section 10.04. Repayment of "Free" Rent. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated
Rent". Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant's obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition
required by this Lease. Tenant acknowledges that its right to receive credit
for the Abated Rent is absolutely conditioned upon Tenant's full, faithful and
punctual performance of its obligations under this Lease. If Tenant defaults
and does not cure within any applicable grace period, the Abated Rent shall
immediately become due and payable in full and this Lease shall be enforced as
if there were no such rent abatement or other rent concession. In such case
Abated Rent shall be calculated based on the full initial rent payable under
this Lease.
Section 10.05. Automatic Termination. Notwithstanding any other term
or provision hereof to the contrary, the Lease shall terminate on the
occurrence of any act which affirms the Landlord's intention to terminate the
Lease as provided in Section 10.03 hereof, including the filing of an unlawful
detainer action against Tenant. On such termination, Landlord's damages for
default shall include all costs and fees, including reasonable attorneys' fees
that Landlord incurs in connection with the filing, commencement, pursuing
and/or defending of any action in any bankruptcy court or other court with
respect to the Lease; the obtaining of relief from any stay in bankruptcy
restraining any action to evict Tenant; or the pursuing of any action with
respect to Landlord's right to possession of the Property. All such damages
suffered (apart from Base Rent and other rent payable hereunder) shall
constitute pecuniary damages which must be reimbursed to Landlord prior to
assumption of the Lease by Tenant or any successor to Tenant in any bankruptcy
or other proceeding.
Section 10.06. Cumulative Remedies. Landlord's exercise of any right
or remedy shall not prevent it from exercising any other right or remedy.
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ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. Subordination. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or mortgage
encumbering the Property, any advances made on the security thereof and any
renewals, modifications, consolidations, replacements or extensions thereof,
whenever made or recorded. Tenant shall cooperate with Landlord and any lender
which is acquiring a security interest in the Property or the Lease. Tenant
shall execute such further documents and assurances as such lender may require,
provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease.
Tenant's right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.
Section 11.02. Attornment. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. Signing of Documents. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. If Tenant fails to do so
within ten (10) days after written request, Tenant hereby makes, constitutes
and irrevocably appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute, acknowledge
and deliver to Landlord a written statement certifying: (i) that none of the
terms or provisions of this Lease have been changed (or if they have been
changed, stating how they have been changed); (ii) that this Lease has not been
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cancelled or terminated; (iii) the last date of payment of the Base Rent and
other charges and the time period covered by such payment; (iv) that Landlord
is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why); and (v) such other representations or information with
respect to Tenant or the Lease as Landlord may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require. Tenant shall
deliver such statement to Landlord within ten (10) days after Landlord's
request. Landlord may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Property. Such purchaser or encumbrancer may
rely conclusively upon such statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord within such
ten (10)-day period, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been cancelled or terminated except
as otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be estopped from
denying the truth of such facts.
Section 11.05. Tenant's Financial Condition. Within ten (10) days
after written request from Landlord, Tenant shall deliver to Landlord such
financial statements as Landlord reasonably requires to verify the net worth of
Tenant or any assignee, subtenant, or guarantor of Tenant. In addition, Tenant
shall deliver to any lender designated by Landlord any financial statements
required by such lender to facilitate the financing or refinancing of the
Property. Tenant represents and warrants to Landlord that each such financial
statement is a true and accurate statement as of the date of such statement.
All financial statements shall be confidential and shall be used only for the
purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. Legal Proceedings. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach
or default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as
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attorneys' fees and costs. The losing party in such action shall pay such
attorneys' fees and costs. Tenant shall also indemnify Landlord against and
hold Landlord harmless from all costs, expenses, demands and liability Landlord
may incur if Landlord becomes or is made a party to any claim or action (a)
instituted by Tenant against any third party, or by any third party against
Tenant, or by or against any person holding any interest under or using the
Property by license of or agreement with Tenant; (b) for foreclosure of any
lien for labor or material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or transaction of Tenant or
such other person; or (d) necessary to protect Landlord's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the
United States Code, as amended. Tenant shall defend Landlord against any such
claim or action at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
legal fees or costs Landlord incurs in any such claim or action.
Section 12.02. Landlord's Consent. Tenant shall pay Landlord's
reasonable attorneys' fees incurred in connection with Tenant's request for
Landlord's consent under Article Nine (Assignment and Subletting), or in
connection with any other act which Tenant proposes to do and which requires
Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimination. Tenant promises, and it is a
condition to the continuance of this Lease, that there will be no
discrimination against, or segregation of, any person or group of persons on
the basis of race, color, sex, creed, national origin or ancestry in the
leasing, subleasing, transferring, occupancy, tenure or use of the Property or
any portion thereof.
Section 13.02. Landlord's Liability; Certain Duties.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet
been applied under the terms of this Lease.
<PAGE> 28
28
(b) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than thirty (30) days to cure,
Landlord shall not be in default if such cure is commenced within such thirty
(30) -day period and thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.
Section 13.03. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.04. Interpretation. The captions of the Articles or
Sections of this Lease are to assist the parties in reading this Lease and are
not a part of the terms or provisions of this Lease. Whenever required by the
context of this Lease, the singular shall include the plural and the plural
shall include the singular. The masculine, feminine and neuter genders shall
each include the other. In any provision relating to the conduct, acts or
omissions of Tenant, the term "Tenant" shall include Tenant's agents,
employees, contractors, invitees, successors or others using the Property with
Tenant's expressed or implied permission.
Section 13.05. Incorporation of Prior Agreements; Modifications. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
Section 13.06. Notices. All notices required or permitted under this
Lease shall be in writing and shall be personally delivered or sent by
certified mail, return receipt requested, postage prepaid. Notices to Tenant
shall be delivered to the address specified in Section 1.03 above, except that
upon Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes. Notices to Landlord shall
<PAGE> 29
29
be delivered to the address specified in Section 1.02 above. All notices shall
be effective upon, delivery. Either party may change its notice address upon
written notice to the other Party.
Section 13.07. Waivers. All waivers must be in writing and signed by
the waiving party. Landlord's failure to enforce any provision of this Lease
or its acceptance of rent shall not be a waiver and shall not prevent Landlord
from enforcing that provision or any other provision of this Lease in the
future. No statement on a payment check from Tenant or in a letter
accompanying a payment check shall be binding on Landlord. Landlord may, with
or without notice to Tenant, negotiate such check without being bound to the
conditions of such statement.
Section 13.08. No Recordation. Tenant shall not record this Lease
without prior written consent from Landlord. However, either Landlord or
Tenant may require that a "Short Form" memorandum of this Lease executed by
both parties be recorded. The party requiring such recording shall pay all
transfer taxes and recording fees.
Section 13.09. Binding Effect; Choice of Law. This Lease binds any
party who legally acquires any rights or interest in this Lease from Landlord
or Tenant. However, Landlord shall have no obligation to Tenant's successor
unless the rights or interests of Tenant's successor are acquired in accordance
with the terms of this Lease. The laws of the state in which the Property is
located shall govern this Lease.
Section 13.10. Corporate Authority; Partnership Authority. If Tenant
is a corporation, each person signing this Lease on behalf of Tenant represents
and warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant's recorded statement of partnership or certificate of limited
partnership.
Section 13.11. Joint and Several Liability. All parties signing this
Lease as Tenant shall be jointly and severally liable for all obligations of
Tenant.
<PAGE> 30
30
Section 13.12. Force Majeure. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
Section 13.13. Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 13.14. Survival. All representations and warranties of
Landlord and Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. Broker's Fee. When this Lease is signed by and
delivered to both Landlord and Tenant, Landlord shall pay a real estate
commission to Landlord's Broker named in Section 1.08 above, if any, as
provided in the written agreement between Landlord and Landlord's Broker, or
the sum stated in Section 1.09 above for services rendered to Landlord by
Landlord's Broker in this transaction. Landlord shall pay Landlord's Broker a
commission if Tenant exercises any option to extend the Lease Term or to buy
the Property, or any similar option or right which Landlord may grant to
Tenant, or if Landlord's Broker is the procuring cause of any other lease or
sale entered into between Landlord and Tenant covering the Property. Such
commission shall be the amount set forth in Landlord's Broker's commission
schedule in effect as of the execution of this Lease. If a Tenant's Broker is
named in Section 1.08 above, Landlord's Broker shall pay an appropriate portion
of its commission to Tenant's Broker if so provided in any agreement between
Landlord's Broker and Tenant's Broker. Nothing contained in this Lease shall
impose any obligation on Landlord to pay a commission or fee to any party other
than Landlord's Broker.
Section 14.02. Protection of Brokers. If Landlord sells the Property,
or assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the
<PAGE> 31
31
losing party. Such attorneys' fees shall be fixed by the court in such action.
This Paragraph is included in this Lease for the benefit of Landlord's Broker.
Section 14.03. See attached Duties Owed By A Nevada Rent Estate
Licensee.
ARTICLE FIFTEEN: COMPLIANCE
The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights Act and all
amendments thereto, the Foreign Investment In Real Property Tax Act, the
Comprehensive Environmental Response Compensation and Liability Act, and The
Americans With Disabilities Act.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR
IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE
DRAW A LINE THROUGH THE SPACE BELOW.
Landlord and Tenant have signers Lease at the place and on the dates
speed adjacent to their signatures below and have initialled all Riders which
are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on September 26, 1996 /s/ David L. Sawyer and
at Las Vegas, Nevada ----------------------------------
Sally A. Sawyer
----------------------------------
Owner
"TENANT"
Amazon Natural Treasures
By: /s/ Michael A. Sylver
--------------------------------
Its President
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT
WITH A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER
PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING
THE POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
<PAGE> 32
32
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE
DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND
OFFICE REALTORS INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS,
INC.@ ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR
EMPLOYEES OR AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX
CONSEQUENCES OF THIS LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD
RETAIN LEGAL COUNSEL TO ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE
ADVICE OF SUCH LEGAL COUNSEL.
<PAGE> 33
33
ADDENDUM I
This is ADDENDUM I to the LEASE by and between DAVID L. SAWYER AND
SALLY A. SAWYER as LANDLORD, and AMAZON NATURAL TREASURES, as TENANT dated
SEPTEMBER 24, 1996.
1. The Tenant shall be prohibited from installing an asphalt tank inside
or outside of the subject property. In the event the Tenant is in
default of this, or any provision of this Lease, the Lease will be
immediately terminated and the Tenant shall be in default and will
forfeit the deposits and required to vacate the suite.
2. If the Tenant is not in default of the Lease and has made timely
monthly payments for eighteen (18) months, then an amount equal to one
month's rent currently being held as additional security deposit
($2,835.00) shall be refunded to the Tenant.
3. The Tenant shall be required to keep fire extinguishers in the unit.
4. The Tenant acknowledges the existence of office partitions in the
upstairs offices of Unit C and that they shall remain for the Tenant's
use, but the property of the Landlord.
5. The Tenant shall be required to pay its pro rata share of the trash
removal currently estimated at $53.00 per month.
6. Pursuant to Section 6.04 Tenant's Obligations: the Tenant shall be
required to reimburse the Landlord for the maintenance contract on the
heating and air conditioning systems.
LANDLORD: TENANT:
David L. Sawyer Amazon Natural Treasures
Sally A. Sawyer
/s/ David L. Sawyer /s/ Michael Sylver, President
/s/ Sally A. Sawyer
DATED: September 26, 1996
<PAGE> 34
34
THE COMMERCIAL REAL ESTATE GROUP, INC.'S DISCLOSURE STATEMENT
This STATEMENT regarding the Lease between David L. Sawyer and Sally A. Sawyer
as LANDLORD, and Amazon Natural Treasures as Tenant, dated September 24, 1996
1. HAZARDOUS WASTE:
Owner agrees to disclose to Broker and to prospective
purchasers/tenants/subtenants any and all information which Owner has
regarding present and future zoning and environmental matters
affecting the Property and regarding the condition of the Property,
including, but not limited to structural, mechanical and soils
conditions, the presence and location of asbestos, PCB transformers,
other toxic, hazardous or contaminated substances, and underground
storage tanks in, on, or about the Property. Broker is authorized to
disclose any such information to prospective
purchasers/tenants/subtenants.
2. AMERICANS WITH DISABILITIES ACT:
Please be advised that an owner or tenant of real property may be
subject to the American With Disabilities Act (the ADA), a Federal law
codified at 42 USC Section 12101 et seq. Among other requirements of
the ADA that could apply to your property, Title III of the ADA
requires owners and tenants of "public accommodations" to remove
barriers to access by disabled persons and provide auxiliary aids and
services for hearing, vision or speech impaired persons by January 26,
1992. The regulations under Title III of the ADA are codified at 28
CFR Part 36.
The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative
orders having jurisdiction over the parties, property or the subject
matter of this agreement, including, but not limited to, the 1964
Civil Rights Act and all amendments thereto, the Foreign Investment In
Real Property Tax Act, the Comprehensive Environmental Response
Compensation and Liability Act and The Americans With Disabilities
Act.
We recommend that you and your attorney review the ADA and the
regulations, and, if appropriate, your proposed lease or purchase
agreement to determine if this law would apply to you, and the nature
of the requirements. These are legal issues. You are responsible for
conducting your own independent investigation of these issues. CB
Commercial cannot give you legal advice on these issues.
<PAGE> 35
35
SIGNED IN COUNTERPART:
This Agreement may be executed in any number of counterparts and any
counterpart may be executed by any one or more of the parties hereto as if all
had executed the counterpart and each such counterpart so executed shall be
deemed to be an original document, but such counterparts shall together
constitute but one and the same instrument.
THE UNDERSIGNED WARRANT AND REPRESENT THAT THEY ARE AUTHORIZED TO ENTER INTO
THIS AGREEMENT.
ACCEPTED AND AGREED:
LANDLORD: TENANT:
David L. Sawyer and Amazon Natural Treasures
Sally A. Sawyer,
Owners
/s/ David L. Sawyer /s/ Michael A. Sylver
/s/ Sally A. Sawyer President
Dated September 26, 1996
<PAGE> 36
36
DUTIES OWED BY A NEVADA REAL ESTATE LICENSEE
In Nevada, a real estate licensee can (1) act for only one party to a real
estate transaction, (2) act for more than one party to a real estate
transaction with written consent of each party, or (3) if licensed as a broker,
assign different licensees affiliated with the broker's company to separate
parties to a real estate transaction. A licensee, acting as an agent, must act
in one of the above capacities in every real estate transaction.
LICENSEE(S): The licensee(s) in the real estate transaction is/are Lori A.
Ferrario ("Licensee") whose license number(s) is/are 32361. The Licensee is
acting for Landlord.
BROKER: The broker in the real estate transaction is John W. Records
("Broker"), whose company is CB Commercial Real Estate Group, Inc.
("Company").
A Nevada Real Estate licensee in a real estate transaction shall:
1. Disclose to each party to the real estate transaction as soon as is
practicable:
a) Any material and relevant facts, data or information
which Licensee knows, or which by the exercise of
reasonable care and diligence licensee should have
known, relating to the property which is the subject
of the real estate transaction.
b) Each source from which Licensee will receive
compensation as a result of the transaction.
c) That Licensee is a principal to the transaction or
has an interest in a principal to the transaction.
d) Any changes in Licensee's relationship to a party to
the real estate transaction.
2. Disclose, if applicable, that Licensee is acting for more than one
party to the transaction. Upon making such a disclosure the Licensee
must obtain the written consent of each party to the transaction for
whom Licensee is acting before Licensee may continue to act in
Licensee's capacity as an agent.
3. Exercise reasonable skill and care with respect to all parties to the
real estate transaction.
4. Provide to each party to the real estate transaction this form.
5. Not disclose, except to the Broker, confidential information relating
to a client.
6. Exercise reasonable skill and care to carry out the terms of the
brokerage agreement and to carry out Licensee's duties pursuant to the
terms of the brokerage agreement.
<PAGE> 37
37
7. Not disclose confidential information relating to a client for 1 year
after the revocation or termination of the brokerage agreement, unless
Licensee is required to do so by order of the court. Confidential
information includes, but is not limited to the client's motivation to
purchase, sell or trade and other information of a personal nature.
8. Promote the interest of his client by:
a) Seeking a sale, lease or property at the price and terms
stated in the brokerage agreement or at a price acceptable to
the client.
b) Presenting all offers made to or by the client as soon as is
practicable.
c) Disclosing to the client material facts of which the licensee
has knowledge concerning the transaction.
d) Advising the client to obtain advice from an expert relating
to matters which are beyond the expertise of the licensee.
e) Accounting for all money and property Licensee receives in
which the client may have an interest as soon as is
practicable.
9. Not deal with any party to a real estate transaction in a manner which
is deceitful, fraudulent or dishonest.
10. Abide by all duties, responsibilities and obligations required of
Licensee in chapters 119, 119A, 119B, 645, 645A, and 645C of the NRS.
I/We acknowledge receipt of a copy of this list of licensee duties, and have
read and understand this disclosure.
Seller/Landlord David L. Sawyer
Seller/Landlord Sally A. Sawyer
Date 09-26-96
Time 1:30 p.m.
Buyer/Tenant Amazon Natural Treasures
Michael A. Sylver
Date 09-25-96
Time 2:35 p.m.
*CONFIRMATION REGARDING REAL ESTATE AGENT RELATIONSHIP*
Property Address: 4011 W. Oquendo Road, Unit C, Las Vegas, Nevada
In the event any party to the real estate transaction is also represented by a
licensee who is affiliated with the same Company, the Broker may assign another
licensee to act for that party. The above Licensee will continue to act for
you. As set forth above, no confidential information will be disclosed.
This is [ ] is not [ ] such a transaction.
<PAGE> 38
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I/We confirm the duties of a real estate licensee of which has been presented
and explained to me/us. My/our representative's relationship is:
Lori A. Ferrario is the AGENT of Seller.
Dale Brown is the AGENT of Buyer.
* IF LICENSEE IS ACTING FOR MORE THAN ONE PARTY IN THIS TRANSACTION, you
will be provided a Consent to Act form for your review, consideration
and approval or rejection. A licensee can legally represent both the
Seller/Landlord and Buyer/Tenant in a transaction, but ONLY with the
knowledge and written consent of BOTH the Seller/Landlord and
Buyer/Tenant.
* A licensee who is acting for the Seller/Landlord exclusively, is not
representing the Buyer/Tenant and has no duty to advocate or negotiate
for the Buyer/Landlord.
* A licensee who is acting for the Buyer/Tenant exclusively, is not
representing the Seller/Landlord and has no duty to advocate or
negotiate for the Seller/Tenant.
[ ] I wish Representation as specified above or:
I am the [ ] Seller/Landlord [ ] Buyer/Tenant and choose to represent myself in
this real estate transaction.
CB Commercial Real Estate Group, Inc.
Seller's Landlord Company Buyer's/Tenant's Company
By: License #32361 By:
Licensed Real Estate Agent Licensed Real Estate agent
Seller/Landlord Buyer/Tenant
/s/ David L. Sawyer
Dated 09/26/96
Seller/Landlord Buyer/Tenant
/s/ Sally A. Sawyer
Dated 09/26/96
<PAGE> 1
EXHIBIT 10.3
1
LEASE CONTRACT
LESSOR:
LUCIO SAMPAIO DE SOUZA, Brazilian citizen, married, merchant, resident in
this city .RG # 728533 SSP/AM, CGC/CPF #001105BB2-20.
LESSEE:
AMAZON NATURAL TREASURES COMMERCIAL IMPORTADORA EXPORTADORA LTDA. Rua
Belem, 1036, facing Rua Recife, Adrianopolis. CGC #01541802/0001-71.
GUARANTOR(S):
CARLOS AUGUSTO GAMA FRANCO, Brazilian citizen, married, Accountant,
resident at Rua Lamartine Delamare, 160, Guara,SP RG #9263482 SSP/SP, CGC/CPF
#057893948-76.
OBJECT OF CONTRACT:
Said building at Belem Street, #1036, facing Recife St., Adrianopolis. The
said building Is destined as a commercial lease.
LEASE AMOUNT:
R$850,00 (Eight hundred and fifty Reais). The monthly lease shall be paid
up to the 20th day of the subsequent month, Either at the Lessor's address or
his representative's.
TERM OF THE CONTRACT:
1 (one year). Beginning 09/20/1996 and Ending 09/19/1997.
TAXES AND OTHER FEES:
It is the lessee's duty to pay all utilities and homeowners association
fees if and when applicable, as well as all taxes excised on the property.
GENERAL OBLIGATIONS:
The Lessee shall have inspected the property receiving it in perfect state
of, therefore obliging it self to;
a) Maintain such property in perfect state, so as when returned to the
Lessor it is in the same condition. All in accordance with the annexed
inspection signed by all parties.
<PAGE> 2
2
b) Not install, adapt, alter, or any construction work whatsoever, without
prior written permission by the Lessor.
c) Not transfer' this Contract, sublease, or lend said building, under any
circumstance, as well as alter the intent of this Contract.
d) Notify the Lessor of all correspondence, warrants, summons and any
other public notices addressed on his behalf.
d) In case of any authorized add-one and/or other alterations on the
building, restitute it to the "status quo" before returning it to the Lessor.
OF PROPERTY TAXES:
The parties agree that all property taxes due during the term of this
Contract shall be the Lessee's responsibility.
TERMINATION OF THE CONTRACT:
Any infraction to any and all clauses herewith determined, as well as any
other Law, are considered cause to terminate said Contract, with the subsequent
eviction and payment of all monies due.
Renewals incumbent upon the Lessee to renew said Contract if so it Wishes.
The new lease will be increased according to the Federal Government indexes
applicable to commercial leases.
INDEMNIZATION AND THE RIGHT OF OWNERSHIP:
Any and all betterment added to the property once authorized by the owner
(Lessor), even if necessary will be incorporated to the property, being denied
to the Lessee the right to seek any compensation, repayment or ownership over
said betterment.
SUBSEQUENT LEGAL ADVANTAGES:
This Contract will always be under the rule of the Brazilian Civil Code
and the Law #8.245 from 10.18.1991, being assured to the Lessor all rights and
advantages of any and all laws subsequently approved and regulator of the
matter.
OF THE GUARANTEES:
To guarantee the faithful fulfillment of said Contract and each of its
obligations, specially the payment of the rents, co-sign as Guarantor(s), the
said person(s) previously named, which will be co-responsible with the Lessee
for said payments.
<PAGE> 3
3
The Guarantor(s) will have solidarity with the Lessee's obligation to pay the
rents as well as all other clauses hereon established, or that, the Guarantor(s)
will renounce to the rights inherent to paragraph 1.491 of the Civil Code,
remaining such obligation until the return of the keys of the building to the
Lessor.
a) the GUARANTOR(S) acknowledge that said responsibilities and solidarity
will remain until the return of such keys, renouncing in this matter to
paragraphs 1.500 (Civil Code) rights.
b) in case of death, bankruptcy or personal bankruptcy of the
Guarantor(s), is incumbent upon the Lessee to replace it with another, to be
previously approved by the Lessor, within 30 days, failure to do so will be
cause for eviction.
OF THE RENT DUE DATE:
It is established that the Lessee shall make the rent payment until the
20th day of the subsequent month. After such date the Lessor(s) can submit the
amount for collection, either through an Attorney or an Agency, in which case
the Lessee's will be responsible for all and any fees thereof.
a) In case of delayed payment of such rents, the Lessee(s) shall be
responsible not only to pay such amount (Clause 5) will also incur into interest
of 1% a month applicable on top of any devaluation due to inflation, not
withstanding any other penalties and/or fees clue.
PENALTY CLAUSE:
The Lessor and the Lessee mutually agree to respect and abide by the
Clauses of this Contract, if and when however, one of the parties infringe upon
any of these Clauses, it shall pay the other a 10% penalty over the entire value
of this Contract. Such penalty is due in its totality whatever term of the
Contract has been fulfilled. The payment of such penalty does not preclude the
party not at fault to terminate the Contract.
a) it is agreed between the parties that the amount of the Penalty will be
altered every time the rent is changed, within proportion to such alteration,
which shall be automatic, notwithstanding such penalty payment, the Lessee is
not exempt from rent payment as well as damages incurred by the building.
b) the parties elect the jurisdiction of where the building is Noted,
whatever their domiciles may be, to solve any and all disputes arising from this
Contract.
<PAGE> 4
4
By having said Contract just and perfect, the parties sign this Contract
in 2 copies with same content in the presence of the undersigned witnesses.
Manaus, September 20th 1996.
LUCIO SAMPAIO DE SOUZA
(LESSOR)
AMAZON N.T.COM.IMP.LTDA
(LESSEE)
CARLOS AUGUSTO GAMA FRANCO
(GUARANTOR)
<PAGE> 1
EXHIBIT 10.4
COMMERCIAL LEASE
Triple Net
This Lease made and entered into this 8th day of January, 1997 by and
between Henry and Shirley Sanchez (hereinafter called "Lessor"), and Amazon
Natural Treasures, Inc. (hereinafter called Lessee"), the Lesser hereby leases
to Lessee and Lessee hereby leases from Lessor, on the terms and conditions
hereinafter set forth, that certain premises located in the City of Las Vegas,
County of Clark, State of Nevada, commonly known as 3977 W. Oquendo Rd., Las
Vegas, NV 89118, Unit C located in that certain building described as follows:
H & S Industrial Park
3977 W. Oquendo Rd.
Las Vegas, NV 89118
Unit C
upon the following forms and conditions:
RECEIVED FROM Amazon Natural Treasures, Inc., hereinafter referred to
as LESSEE, the sum of One thousand eight hundred & sixty dollars ($1,860.00),
evidenced by ____________, as a deposit which, upon acceptance of this leave,
shall belong to Lessor and shall be applied as follows:
<TABLE>
<CAPTION>
RECEIVED PAYABLE PRIOR
TO OCCUPANCY
<S> <C> <C>
Rent for the period from:
2/1 to 2/28/97 $860.00 $1,860.00
Security Deposit: $500.00 $ 500.00
Other: last month's rent $______ $1,860.00
TOTAL: $2,360.00 $4,220.00
</TABLE>
In the event that this lease is not accepted by the Lessor within n/a days, the
total deposit received shall be refunded.
1. TERMS:
The term hereof shall commence on 2/1, 1997, and expire on 2/28, 2000,
5% yearly rent increases after the first year.
2. RENT:
The total rent shall be $1,860.00, payable as follows: on the first day
of each month, $10.00 per day late charge. All rent shall be paid to
Owner or his authorized agents, at the following address 10 W. Wyoming,
Las Vegas, Nevada or at such other places as may be designed by Owner
from time to time.
<PAGE> 2
3. USE:
The premises are to be used for the operation of Shop and Warehouse,
without prior written consent of Lessor.
4. USES PROHIBITED:
Lessee shall not use any portion of the promises for purposes other
than those specified hereinabove, and no use shall be made or permitted
to be made upon the premises, nor acts done, which will increase the
exiting rate of insurance upon the property, or cause cancellation of
insurance policies covering said property. Lessee shall not conduct or
permit any sale by auction on the premises.
5. ASSIGNMENT AND SUBLETTING:
Lessee shall not assign this lease or sublet any portion of the
premises without prior written consent of the Lesser, which shall not
be unreasonably withheld. Any such assignment or sublet without consent
shall be void and, at the option of the Lessor, may terminate this
lease.
6. ORDINANCES AND STATUES:
Lessee shall comply with all statues, ordinances and requirements of
all municipal, state and federal authorities now in force, or which may
hereafter be in force, pertaining to the premises, occasioned by or
affecting the use thereof by Lessee. The commencement or pendency of
any state or federal court abatement proceeding affecting the use of
the premises shall, at the option of the Lessor, be deemed a breach
hereof.
7. MAINTENANCE REPAIRS, ALTERATIONS:
Lessee acknowledges that the premises are in good order and repair,
unless otherwise indicated herein. Less shall, at his own expense and
at all times, maintain the premises in good and safe condition,
including plate glass, electrical wiring, plumbing and heating
installations and any other system or equipment upon the premises and
shall surrender the same, at termination hereof, in as good condition
as received, normal wear and tear excepted. Lessee shall be responsible
for all repairs required, excepting the roof, exterior walls,
structural foundations, and: n/a, which shall be maintained by Lessor.
Lessee shall also maintain in good condition such portions adjacent to
the premises, such as sidewalks, driveways, lawns and shrubbery, which
would otherwise be required to be maintained by Lessor.
<PAGE> 3
No improvement or alteration of the premises shall be made without the
prior written consent of the Lessor. Prior to the commencement of any
substantial repair, improvement, or alteration, Lessee shall give
Lesser at least two (2) days written notice in order that Lesser may
post appropriate notices to avoid any liability for liens.
<PAGE> 4
Lessee shall not commit any waste upon the premises, or any nuisance or
act which may disturb the quiet enjoyment of any tenant in the
building.
8. ENTRY AND INSPECTION:
Lessee shall permit Lessor or Lessor's agents to enter upon the
premises at reasonable times and upon reasonable notice, for the
purpose of inspecting the same, and will permit Lessor at any time
within sixty (60) days prior to the expiration of this lease, to place
upon the premises any usual "To Let" or "For Lease" signs, and permit
persons desiring to have the same to inspect the premises thereafter.
9. INDEMNIFICATION OF LESSOR:
Lesser shall not be liable for any damage or injury to Lessee, or any
other person, or to any property, occurring on the demised premises or
any part thereof, and Lessee agrees to hold Lessor harmless from any
claims for damages, no matter how caused.
10. POSSESSION:
If Lessor is unable to deliver possession of the premises at the
commencement hereof, Lessor shall not be liable for any damage caused
thereby, nor shall this lease be void or voidable, but Lessee shall not
be liable for any rent until possession is delivered. Lessee may
terminate this lease if possession is not delivered within 30 days of
the commencement of the term hereof.
11. INSURANCE:
Lessee, at his expense, shall maintain plate glass and public liability
insurance including bodily injury and property damage insuring Lessee
and Lessor with minimum coverage as follows: $500,000.00 with Henry and
Shirley Sanchez shown as loss payee.
Lessee shall provide Lessor with a Certificate of Insurance showing
Lessor as additional insured. The Certificate shall provide for a
ten-day written notice to Lessor in the event of cancellation or
material change of coverage.
To the maximum extent permitted by insurance policies which may be
owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each
other, waive any and all rights of subrogation which might otherwise
exist.
<PAGE> 5
12. UTILITIES:
Lessee agrees that he shall be responsible for the payment of all
utilities, including water, gas, electricity, heat and other services
delivered to the premises.
13. SIGNS:
Lessor reserves the exclusive right to the road, side and rear walls of
the premises. Lessee shall not construe any projecting sign or owning
without the prior written consent of Lessor which consent shall not be
unreasonably withhold.
14. ABANDONMENT OF PREMISES:
Lessee not vacate or abandon the premises at any time during the term
hereof, and if Lessee shall abandon or vacate the premises, or be
dispossessed by process of law, or otherwise, any personal property
belonging to Lessee left upon the premises shall be deemed to be
abandoned, at the option of Lesser.
15. CONDEMNATION:
If any par to the premises shall be taken for condemned for public use,
and a part thereof remains which is susceptible of occupation
hereunder, this lease shall, as to the part taken, terminate as of the
date the condemnor acquires possession, and thereafter Lessee shall be
required to pay such proportion of the rent for the remaining term as
the value of the premises remaining bears to the total value of the
premises at the date of condemnation; provided, however, that Lessor
may at his option, terminate this lease as of the date condemnor
acquires possession. IN the event that the reminder is not susceptible
for use hereunder, this lease shall terminate upon the date upon which
the condemnor acquires possession. All sums which may be payable on
account of any condemnation shall belong to the Lessor, and Lessee
shall not be entitled to any part thereof, provided however, that
Lessee shall be entitled to retain any amount awarded to him for his
trade fixtures or moving expenses.
16. TRADE FEATURES:
Any and all improvements made to the premises during the term hereof
shall belong to the Lessor, except trade fixtures of the Lessee. Lessee
may, upon termination hereof, remove all his trade fixtures, but shall
repair or pay for all repairs necessary for damages to the premises
occasioned by removal.
<PAGE> 6
17. DESTRUCTION OF PREMISES:
In the event of a partial destruction of the premises during the term
hereof, from any cause, Lessor shall forthwith repair the same,
provided that such repairs can be made within sixty (60) days under
existing governmental laws and regulations, but such partial
destruction shall not terminate this lease, except that Lessee shall be
entitled to a proportionate reduction of rent while such repairs are
being made, based upon the extent to which the making of such repairs
shall interfere with the business of Lessee on the premises. If such
repairs cannot be made within said sixty (60) days, Lessor, at his
option, may make the same within a reasonable time, this lease
continuing in effect with the rent proportionately abated as aforesaid,
and in the event that Lessor shall not elect to make such repairs which
cannot be made within sixty (60) days, this lease may be terminated at
the option of either party.
In the event that the building in which the demised premises may be
situated is destroyed to an extent of not less than one-third of the
replacement costs thereof, Lessor may elect to terminate this lease
whether the demised premises be injured or not. A total destruction of
the building in which the premises may be situated shall terminate this
lease.
In the event of any dispute between Lessor and Lessee with respect to
the provisions hereof, the matter shall e settled by arbitration in
such a manner as the parties may agree upon, or if they cannot agree,
in accordance with the rules of the American Arbitration Association.
18. INSOLVENCY:
In the event a receiver is appointed to take over the business of
Lessee, or in the event Lessee makes a general assignment for the
benefit of creditors, or Lessee takes or suffers any action under any
insolvency or bankruptcy act, the same shall constitute a breach of
this lease by Lessee.
19. REMEDIES OR OWNER ON DEFAULT:
In the event of any breach of this lease by Lessee, Lessor may, at his
option, terminate the lease and recover from Lessee: (a) the worth at
the time of award of the unpaid rent which was owed at the time of
termination; (b) the worth at the time of award of the amount by which
the unpaid
<PAGE> 7
rent which would have been earned after termination unless the time of
the award exceeds the amount of such rental less that the Lessee proves
could have been reasonably avoided; (c) the worth at the time of award
of the amount by which the unpaid rent for the balance of the term
offer the time of award exceeds the amount of such rental loss that
Lessee proves could be reasonably avoided; and (d) any other amount
necessary to compensate Lessor for all detriment proximately caused by
Lessee's failure to perform his obligations under the lease or which in
the ordinary course of things would be likely to result therefrom.
Lessor may, in the alternative continue this lease in effect, as long
as Lessor does not terminate Lessee's right to possession, and Lessor
may enforce all his rights and remedies under the lease, including the
right to recover the rent as it becomes due under the lease. If said
breach of lease continues, Lessor may, at any time thereafter, elect to
terminate this lease.
Nothing contained herein shall be deemed to limit any other rights or
remedies which Lessor may have.
20. SECURITY:
The security deposit set forth above, if any, shall secure the
performance of the Lessee's obligations hereunder. Lessor may, but
shall not be obligated to apply all or portions of said deposit on
account of Lessee's obligations hereunder. Any balance remaining upon
termination shall be returned to Lessee. Lessee shall not have the
right to apply the Security Deposit in payment of the last month's
rent.
21. ATTORNEY'S FEES:
In case suit should be brought for recovery of the premises, or for any
sum due hereunder, or because of any act which may arise out of the
possession of the premises, by either party, the prevailing party shall
be entitled to all costs incurred in connection with such action,
including a reasonable attorney's fee.
23. WAIVER:
No failure of Lessor to enforce any term hereof shall be deemed to be a
waiver.
24. NOTICES:
<PAGE> 8
Any notice which either party may or is required to give, shall be
given by mailing the same, postage prepaid, to Lessee at the premises,
or Lessor at the address shown below, or at such other places as may be
designated by the parties from time to time.
<PAGE> 9
25. HOLDING OVER:
Any holding over after the expiration of this lease, with the consent
of Lessor, shall be construed as a month-to-month tenancy at a rental
of 5% additional of last year's rent per month, otherwise in accordance
with terms hereof, as applicable.
26. TIME:
Time is of the essence of this lease.
27. HEIRS, ASSIGNS, SUCCESSORS:
This lease is binding upon and inures to the benefit of the heirs,
assigns and successors in interest to the parties.
28. TAX INCREASE:
In the event there is any increase during any year of the term of this
lease in the City, County or State real estate taxes over and above the
amount of such taxes assessed for the tax year during which the term of
this lease commences, whether because of increased rate or valuation,
Lessee shall pay to Lessor upon presentation of paid tax bills an
amount equal to 10% of the increase in taxes upon the land and building
in which the leased premises are situated. In the event that such taxes
are assessed for a tax year extending beyond the term of the lease, the
obligation of Lessee shall be proportionate to the portion of the lease
term included in such year.
29. COST OF LIVING INCREASE.
The rent provide for in paragraph 2 shall be adjusted effective upon
the first day of the month immediately following the expiration of 12
months form date of commencement of the term and upon the expiration of
each 12 months thereafter in accordance with changes in the U.S.
Consumer Price Index for All Urban Consumers (1967=100) hereinafter
called the "CPI." The monthly rent shall be increased to an amount
equal to the monthly rent set forth in paragraph 2 multiple by a
fraction of the numerator of which is the CPI for the second calendar
month immediately proceeding the adjustment date and the denominator of
which is the CPI for the second calendar month proceeding the
commencement of the lease term. Provided, however, in no event shall
the monthly rent be less than the amount set forth in paragraph 2.
<PAGE> 10
30. OPTION TO RENEW:
Provided that Lessee in not in default in the performance of this
lease, Lessee shall have the option to renew the lease for an
additional term of 36 months commencing at the expiration of the
initial lease term. All of the terms and conditions of the lease shall
apply during the renewal term except that the monthly rent shall be at
the rate of the same rate of the last months rent of the previous lease
which shall be adjusted in accordance with the cost of living increase
provision set forth in paragraph 29.
The option shall be exercised by written notice give to lessor not less
than 30 days prior to the expiration of the initial lease term. If
notice is not given in the manner provided herein within the time
specified, this option shall expire.
31. LESSOR'S LIABILITY:
The term "Lessor," as used in this paragraph, shall mean only the owner
of the real property or a Lessee's interest in a ground lease of the
premises. In the event of any transfer of such title or interest, the
Lessor named herein (or the grantor in case of any subsequent
transfers) shall be relieved of all liability related to Lessor's
obligations to be performed after such transfer. Provided, however,
that any funds in the hands of Lessor or Grantor at the time of such
transfer shall be delivered to Grantee. Lessor's aforesaid obligations
shall be binding upon Lessor's succession and assigns only during their
respective periods of ownership.
32. ESTOPPEL CERTIFICATION.
(a) Lessee shall at any time upon not less than (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing [1] certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force and effect), the amount of any security deposit, and the date to
which the rent and other charges are paid in advance, if any, and [2]
acknowledging that there are not, to Lessee's knowledge, any uncured
defaults on the part of Lessor hereunder, or specifying such defaults
if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer to the Premises.
<PAGE> 11
(b) At Lessor option, Lessee's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be
conclusive upon Lessee [1] that this Lease is in full force and effect,
without modification except as may be represented by Lessor, [2] that
there are no uncured defaults in Lessor's performance, and [3] that not
more than one month's rent has been paid in advance or such failure may
be considered by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such statements
should include the past three years' financial statements of Lessee.
All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
33. COMMON AREA EXPENSES:
In the event the demised premises are situated in a shopping center or
in a commercial building in which there are common areas, Lessee agrees
to pay his pro-rata share of maintenance, taxes, and insurance for the
common area.
34. ADDENDUM:
An addendum, signed by the parties, [ ] is attached, [x] is not
attached hereto.
35. ENTIRE AGREEMENT:
The foregoing constitutes the entire agreement between the parties and
may be modified only by a writing signed by both parties. The following
Exhibits, if any, have been made a part of this lease before the
parties' execution hereof: n/a
The undersigned Lessee hereby acknowledges a copy hereof.
DATED: 01/08/97
/s/ Michael Sylver
Amazon Natural Treasures, Inc.
4011 W. Oquendo Ave. Ste. C
Las Vegas, NV 89118
(702) 795-4333
<PAGE> 12
DATED: 01/08/97
/s/ Henry Sanchez
10 W. Wyoming, Las Vegas, NV 89102
(702) 382-3476
<PAGE> 1
EXHIBIT 10.5
AGREEMENT
AGREEMENT made this 5th day of May, 1997, between C.A. GAMA FRANCO
(hereinafter referred to as "FRANCO"), a resident of Brazil, individually, and
AMAZON NATURAL TREASURES, INC., a public corporation organized and existing
under the laws of the State of Utah, (hereinafter referred to as "ANT") by its
representative MICHAEL A. SYLVER.
WITNESSETH:
WHEREAS:
FRANCO is an individual residing in Manaus, Brazil and
desires to represent ANT as its procurator in Brazil, and;
ANT is interested in retaining the services of FRANCO,
NOW THEREFORE, it is mutually agreed as follows:
1. APPOINTMENT AS PROCURATOR.
ANT does hereby appoint and FRANCO does hereby accept the position of
PROCURATOR of ANT's operations in Manaus Brazil.
2. DUTIES AS PROCURATOR.
(a) FRANCO will open a company office and/or lab in Manaus, Brazil, and
be responsible for and administer all acts related to the operation of
said office and/or lab.
(b) FRANCO will obtain necessary certificates and act as
ANT's representative in Manaus, Brazil.
(c) FRANCO will hire and supervise all necessary employees,
subject to approval by ANT.
(d) FRANCO will administer operational funds provided by ANT, make
payments, obtain and pay for necessary purchases.
(e) FRANCO will be responsible for arranging and ensuring the
exportation of ANT's products to the Las Vegas, Nevada, United States
of America.
(f) FRANCO acknowledges that the ultimate approval for decisions is to
be given by ANT; to that end FRANCO agrees to keep ANT's designated
representative informed on all subjects involving the ANT operation in
Manaus, Brazil and understands that he is ultimately responsible for
the successful implementation of those decisions.
<PAGE> 2
2
3. CONFIDENTIALITY.
FRANCO and ANT mutually recognize the importance of confidentiality at
all stages of the relationship established by this Agreement, and agree to take
all reasonable measures, including those needed to bind their respective
involved employees, to safeguard such confidentiality. FRANCO agrees to extend
the same standards of conduct to any third party FRANCO may engage pursuant to
this Agreement, including subcontractors, employees, etc., thereof. This
undertaking will extend to any related individuals and/or company of FRANCO.
4. REMUNERATION
(a) In consideration for FRANCO's acceptance and work as a full-time
representative of ANT and as its PROCURATOR and for his contribution to
this Agreement, ANT agrees to pay FOUR THOUSAND DOLLARS ($4,000.00) per
month payable on or before the 5th day of each month; FRANCO will be
responsible for all applicable taxes.
(b) FRANCO will be compensated with Nine Thousand (9,000) restricted
shares of ANT to be issued prior to December 31, 1997.
(c) FRANCO as employee shall be compensated at ANT's discretion by any
amount of free trading ANT shares. Such bonus or additional
compensation shall be paid at each annual meeting of the Board of
Directors and Shareholders of ANT.
(d) FRANCO shall be entitled to two (2) round trip airfare tickets
between the city of Manaus and Sao Paulo, to be issued upon request to
ANT, for each year of service by FRANCO.
5. EXPENSES.
(a) FRANCO shall be reimbursed for only those expenses pre-approved by
ANT incurred by FRANCO outside the state of Amazonas in his capacity as
set forth herein to be reimbursed within THIRTY (30) DAYS of approval
of such expenses.
(b) Any and all expenses which are not specifically pre-approved by ANT
shall be the sole responsibility of FRANCO.
<PAGE> 3
3
6. TERM AND TERMINATION.
This Agreement shall be effective for a period of five (5) years after
which the parties will enter into good faith negotiations to extend this
Agreement or enter into another agreement.
7. GENERAL PROVISIONS.
(a) Termination of Agreement for any reason, or expiration
of this Agreement, will not affect:
(i) Obligations, including the payment of any amount
provided herein, which have accrued as of the date of
termination or expiration;
(ii) Obligations which, in the context hereof, are intended to
survive termination or expiration of this Agreement.
(b) Any waiver by either party of the breach of any term or condition
of this Agreement will not be considered as a waiver of any subsequent
breach of the same or any other term or condition hereof.
(c) Neither party will be in breach hereof by reason of its delay in
the performance of or failure to perform any of its obligations
hereunder, if that delay or failure is caused by strike, acts of God or
the public enemy, riots, incendiaries, interference by civil or
military authorities, compliance with governmental priorities for
materials, or any fault beyond its control or without its fault or
negligence.
(d) In the event that any provision of this Agreement or any part
hereof is found invalid or unenforceable, the remainder of this
Agreement will be binding on the parties hereto, and will be construed
as if the invalid or unenforceable provision or part hereof had been
deleted from this Agreement.
(e) Words denoting the singular will include the plural and vice versa;
words denoting any gender will include all genders; words denoting
persons will include corporations and vice versa.
(f) The paragraph headings are for convenience only and will not be
deemed to affect in any way the language of the provisions to which
they refer.
<PAGE> 4
4
8. ARBITRATION.
Any dispute or difference between the parties relating to the
interpretation or implementation of this Agreement will be settled by
arbitration, as provided by the Nevada Revised Statutes. Such arbitration will
be held in the State of Nevada, County of Clark, City of Las Vegas, unless ANT
and FRANCO mutually agree in writing that another location would be more
appropriate.
10. GOVERNING LAW AND AUTHORITY.
(a) This Agreement will be interpreted in accordance with the laws of
the United States of America, State of Nevada, County of Clark.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
executed on the day and year first above written.
Signed, sealed and delivered in the presence of:
"ANT" "WITNESS"
/s/ Michael Sylver /s/ Rudbie Boryato
"FRANCO" "WITNESS"
- ----------------------- -------------------------
<PAGE> 1
EXHIBIT 10.6
AGREEMENT
AGREEMENT made this 28th day of Mai 1996, between LORIPAR,
LTD., a corporation organized and existing under the laws of the State of
Nevada, together with its principals: DOMINGOS LORICCHIO, IRENA AUSMA LORICCHIO,
DOMINGOS LORICCHIO Jr. and DENISE LORICCHIO, Residents of Brazil, individually
and further on behalf of ABRACEL INDUSTRIA E.COMERCIO Ltd., a Brazilian
Corporation (hereinafter collectively referred to as "LORICCHIO") and AMAZON
NATURAL TREASURES, INC., a public corporation organized and existing under the
laws of the State of Utah, (hereinafter referred to as "ANT") by its
representatives MICHAEL A. SYLVER and ROBERT S. QUALEY.
WITNESSETH:
WHEREAS:
LORICCHIO are the proprietors, manufacturers, distributors,
and/or inventors/developers of homeopathic medicines and phytotherapy medicines,
in Brazil and desires to manufacture and market their products internationally;
and
USER is interested in jointly, with LICENSOR; acquiring all
rights presently possessed by LICENSOR, including, but not limited to: patents,
inventions/developments, manufacturing and distribution know-how, rights to
obtain all products for sale and the above-referenced technologies to market
internationally,
NOW THEREFORE, it is mutually agreed as follows:
1. LICENSE GRANT
(a) LICENSOR hereby grants USER a exclusive license, without
the right to grant any sub-licenses, to use the unique products, licensed
patents and all Know-How in the operation and to sale all products
internationally.
2. CONFIDENTIALITY
LICENSOR and USER mutually recognize the importance of
confidentiality at all stages of the project contemplated by this Agreement, and
agree to take all reasonable measures, including those needed to bind their
respective involved employees, to safeguard such confidentiality. USER agrees to
extend the same standards of conduct to any third party engineering contractors
USER may engage pursuant to this Agreement, including subcontractors thereof.
This undertaking will extend to any related company of LICENSOR and USER.
<PAGE> 2
2
3. REMUNERATION
(a) In consideration for LICENSOR's contribution to this
Agreement, AMAZON NATURAL TREASURES, INC. agrees to provide suitable housing
accommodations for the Loricchio Family by obtaining a house or apartment until
such time as the Loricchio Family is able to sell their properties in Brazil
and/or otherwise obtain housing.
(b) Further, a minimum monthly payment of Eight Thousand
US($8,000.00) Dollars, to be paid by ABRACEL U.S.A., LIMITED, will be guaranteed
by AMAZON NATURAL TREASURES, INC., said amount to be paid by the 10th day of
each month, for an initial period of five years, plus extensions, if necessary.
(c) Further, LICENSOR shall obtain, in consideration for their
contribution to this Agreement, 610,000 shares in AMAZON NATURAL TREASURES, INC.
(d) LICENSOR to be provided an automobile for an initial
period of five years, plus extensions, if necessary.
(e) LICENSOR to be provided health insurance for an initial
period of five years, plus extensions, if necessary.
(f) LICENSOR to be provided with necessary legal support for
an initial period of five years, plus extensions, if necessary.
4. EXPENSES
LICENSOR shall receive their related operational costs, i.e.,
travel, hotels, etc., from the revenues of AMAZON NATURAL TREASURES, INC.
5. REPORTING AND PAYMENT
USER will keep complete, true and accurate books of account
and records for the purpose of showing the derivation of all amounts payable to
LICENSOR under this Agreement. Such books and records will be kept at the
Licensed Plant for at least FIVE (5) years following the end of the calendar
month to which they pertain, and will be open at all reasonable times to
inspection by the representative of LICENSOR for the purpose of verifying USER's
royalty statements, or USER's compliance in other respects with this Agreement.
The representative will be obliged to treat as confidential all relevant matters
and will be acceptable to USER, in the reasonable exercise of USER's discretion.
USER can specify that this representative be an independent Certified Public
Accountant.
<PAGE> 3
3
6. IMPROVEMENTS
LICENSOR and USER agree that improvements or modifications
developed pursuant to this Agreement, whether or not patentable, shall become
part of and subject to the terms of this Agreement. LICENSOR and USER will have
a royalty-free license to use any and all of these improvements and
modifications.
7. TERM AND TERMINATION
(a) This Agreement shall be effective until the expiration of
the last of the Licensed Patents or extensions or ninety-nine (99) years,
whichever is longer. If, at that time, USER wishes to continue to employ
LICENSOR in the operation of the business and have automatic access to further
relevant improvements developed by LICENSOR, the parties agree to negotiate, in
good faith, mutually acceptable terms under which this Agreement may continue.
(b) Either LICENSOR or AMAZON NATURAL TREASURES, INC. shall
have the right to terminate this Agreement by purchasing the other parties
shares for three times the market-value plus the sum of Twenty-Five Million
($25,000,000) US Dollars or its equivalent amount, in the future, adjusted for
inflation utilizing 1996 dollars as year 0, to each of the other parties hereto.
(c) The purpose this subsection is deter either party from
terminating this Agreement.
8. GENERAL PROVISIONS
(a) Termination of Agreement for any reason, or
expiration of this Agreement, will not affect:
(i) Obligations, including the payment of any
royalties, which have accrued as of the date of
termination or expiration; and
(ii) Obligations which, in the context hereof, are
intended to survive termination or expiration of this Agreement.
<PAGE> 4
4
(b) Any waiver by either party of the breach of any term or
condition of this Agreement will not be considered as a waiver of any subsequent
breach of the same or any other term or condition hereof.
(c) Neither party will be in breach hereof by reason of its
delay in the performance of or failure to perform any of its obligations
hereunder, if that delay or failure is caused by strike, acts of God or the
public enemy, riots, incendiaries, interference by civil or military
authorities, compliance with governmental priorities for materials, or any fault
beyond its control or without its fault or negligence.
(d) In the event that any provision of this Agreement or any
part hereof is found invalid or unenforceable, the remainder of this Agreement
will be binding on the parties hereto, and will be construed as if the invalid
or unenforceable provision or part hereof had been deleted from this Agreement.
(e) Words denoting the singular will include the plural and
vice versa; words denoting any gender will include all genders; words denoting
persons will include corporations and vice versa.
(f) The paragraph headings are for convenience only and will
not be deemed to affect in any way the language of the provisions to which they
refer.
9. ARBITRATION
Any dispute or difference between the parties relating to the
interpretation or implementation of this Agreement will be settled by
arbitration, as provided by the Nevada Revised Statutes. Such arbitration will
be held in the State of Nevada, County of Clark, City of Las Vegas unless
LICENSOR and USER mutually agree that another location would be more
appropriate.
10. GOVERNING LAW AND AUTHORITY
(a) This Agreement will be interpreted in accordance
with the laws of the State of Nevada.
IN WITNESS WHEREOF the parties hereto have caused
this-instrument to be executed on the day and year first above written.
Signed, sealed and delivered in the presence of:
"LICENSOR" "USER"
/s/ Domingos Loricchio /s/ Michael A. Sylver
- ---------------------- ---------------------
/s/ Irena Ausma Loricchio /s/ Robert S. Qualey
- ------------------------- --------------------
/s/ Denise Loricchio
- --------------------
/s/ Domingos Loricchio Jr.
- -------------------------
/s/ Ilana Sylver
----------------
<PAGE> 5
5
STATE OF NEVADA
COUNTY OF CLARK
Before me personally appeared ____________________________, to me well known and
known to me to be the person described in and who executed the: foregoing
instrument, and acknowledged to and before me that he executed said instrument
for the purposes therein expressed.
WITNESS my hand and official seal this _____ day of ____________, 1996.
-----------------------------------
Notary Public
(SEAL) State of Nevada
My Commission Expires:
<PAGE> 1
EXHIBIT 10.7
AMENDMENT TO AGREEMENT
The Agreement made the 28th day of May (Mai) 1996, between
LORIPAR, LTD., together with its principals DOMINGOS LORICCHIO, IRENA AUSMA
LORICCHIO, DOMINGOS LORICCHIO Jr. and DENISE LORICCHIO, Residents of Brazil,
individually and further on behalf of ABRACEL INDUSTRIA E. COMERCIO LTD., a
Brazilian corporation (hereinafter collectively referred to as "LORICCHIO") and
AMAZON NATURAL TREASURES, INC., a public corporation organized and existing
under the laws of the State of Utah, (hereinafter referred to as "ANT") by its
representatives MICHAEL A. SYLVER and ROBERT S. QUALEY IS AMENDED AS FOLLOWS:
PARAGRAPH 3(c) SHALL BE AMENDED TO READ: "Further, LICENSOR
shall obtain, in consideration for their contribution to this agreement,
5,610,000 shares of stock in AMAZON NATURAL TREASURES, INC.
AMAZON NATURAL TREASURES, INC. LORIPAR, LTD.
By: Michael A. Sylver, President By: Domingos Loricchio
<PAGE> 1
EXHIBIT 10.8
AGREEMENT FOR CONSULTING SERVICES
This agreement is entered into by and between Amazon Natural Treasures,
Inc., a Utah Corporation and Dr. Domingos Loricchio (hereinafter referred to as
Company) and RPD, LLC, a California Limited Liability Company (hereinafter
referred to as RPD) this 16th day of September 1996.
RECITALS
Company owns the proprietary rights to certain phytotherapy products
which provide remedies for a wide variety of ailments both physical and
emotional. Company harvests raw material from the Brazilian rain forest, which
it then uses in proprietary combinations to formulate marketable products for
consumption.
RPD is a business consulting firm which has expertise that Company
deems extremely valuable and is desirous of utilizing in the marketing of its
products.
NOW THEREFORE, in consideration of their mutual promises and other
consideration as hereinafter set forth, the parties agree as follows:
1. The recitals are incorporated into the agreement hereat
in full.
2. Upon Company's formal request for assistance, RPD agrees to provide
to Company strategic business advice and consultation subject to RPD's
availability and time restrictions. Company is not obligated to follow the
advice of RPD but may use it as Company sees fit.
3. Upon Company's formal request for assistance, Company agrees to
compensate RPD for such strategic business advice and consultation, unless
provided pursuant to section 4 and its subparts, according to the following:
A. RPD shall be reimbursed by Company for all expenses
incurred in participating in Company business, including without
limitation travel, hotel, transportation, meals away from home,
supplies, phone, and the like. Payment is due within 10 days of receipt
of such invoice by Company.
B. Company shall compensate RPD for time spent on
Company business at the rate of $2,000.00 per day in
addition to the foregoing. Said daily compensation shall be
paid weekly.
4. Company is also desirous of having RPD market its products. In the
event Company reaches an agreement in any form with any of the sources
introduced to Company by RPD, or if RPD
<PAGE> 2
2
is able to negotiate a contract for Company with any source to market, sell,
license, distribute, or deliver under royalty any of Company's products, RPD
shall be compensated according to the following excluding Nature Way:
A. Upon signing of a contract by Company pursuant to paragraph
4 above which will provide the company at least $1,000,000.00 in gross
revenues, or in the event RPD secures funding for the company in an
amount of at least $1,000,000.00 pursuant to paragraph 4.B below,
Company shall grant to RPD an option to buy up to 500,000 shares of
Company's restricted stock at a price of $.05 per share. This option
shall remain open for a period of one year from the date of this
agreement. RPD may exercise said option stating the number of shares to
be purchased. Upon payment for the stock, the Company will effect the
delivery of said shares in accordance with normal delivery procedures.
B. In the event that RPD secures funding from any source
except by way of a loan for Company, RPD shall be paid from said funds
$200,000.00 or 10% of the gross amount of the monies paid to Company
whichever is higher. In no event shall the money paid to RPD under this
paragraph exceed 25% of the funding procured by RPD and paid to
Company. All funds due hereunder shall be paid to RPD within 15 days of
the receipt of said funding by Company.
C. For all transactions in which RPD procures a buyer for, or
participates in the purchase of Company's products, RPD shall be paid
15% of the gross receipts paid to Company for the sale of any product
by the Company or for the receipt by the Company of any fee for the
license of the product, use of the product, or payment of a royalty for
the product unless paid pursuant to paragraph 4.B above. All funds due
hereunder shall be paid to RPD within 15 days of receipt of said monies
by Company.
5. Company agrees to cooperate with RPD and together use their best
efforts to bring about a contract with any acceptable company introduced by RPD
to Company as a potential purchaser or user of Company's products. In the event
the Company acts independently of RPD in reaching an agreement with any of RPD's
sources, Company shall be responsible for payment to RPD for all monies which
would otherwise be due under the compensation package outlined above as if the
Company had entered into an agreement with the prospective purchaser under the
direction of RPD. In any negotiation, by a source introduced by RPD, RPD
acknowledges that the Company will set and require certain minimum quantities be
purchased to maintain an exclusive arrangement by said source and that Company's
product's prices will incorporate the monies paid to RPD under the provisions as
stated in paragraph 4.C.
<PAGE> 3
3
6. Company maintains sole discretion in furnishing to RPD, or any of
his referred sources, any and all proprietary information including: documents,
materials, date, technical assistance, product samples, and formulas. No
proprietary information will be given to RPD or any referred source without the
written permission of the Company. Any written permission will stipulate the
conditions under which the proprietary information will be given and will
include any monetary compensation that the Company deems appropriate. Prior to
receiving any of Company's proprietary information, RPD shall sign an agreement
of confidentiality in Company's usual form. RPD shall not disclose any
proprietary information of Company to third parties without the prior approval
of Company.
7. From time to time RPD may procure a prospective purchaser who will
require an exclusive agreement with the Company to package, market, sell or
distribute Company's product. In such event Company agrees to provide such
exclusivity and will execute any and all documents required to effectuate such
exclusive agreements, provided said agreement is not in violation of the last
sentence of paragraph 5.
8. This agreement shall remain in effect for a period of one year and
may thereafter be renewed by the parties. All obligations to make payment under
the compensation package to RPD once commenced shall continue for as long as the
relationship/agreement under which payment is being made continues without any
time limitation. For example, if RPD is being paid 15% of monies received by
Company under a licensing agreement procured through RPD, RPD shall continue to
be paid for as long as the licensing agreement and/or the business relationship
between Company and licensee/purchaser exists.
9. Any obligation of the Company to pay RPD for any compensation
accrued to RPD by virtue of paragraph 3 and 4 above shall survive the
termination of this agreement.
10. Both parties recognize that each will in the course of doing
business receive from the other certain proprietary and confidential information
which is not available to the general public. In that event each agrees to keep
such imparted information confidential and proprietary.
11. In receiving the advice and consultation of RPD, Company
acknowledges that with regard to any corporate decision, the Company retains the
right to conduct its own independent research, rely on its own independent
sources and accepts the ultimate responsibility for all its decisions in this
regard.
12. This agreement shall be binding upon and inure to the benefit of
the successors and assigns of the respective parties.
<PAGE> 4
4
13. All notices required by this agreement shall be sent to a party at
the following respective address:
RPD
215 S. Hickory St. Suite 220
Escondido, Ca. 92025
Company
Amazon Natural Treasures, Inc.
6020 S. Spencer St., Suite B-7
Las Vegas, Nv. 89119
14. In the event of a dispute over the terms or enforcement of this
agreement, the parties agree that the site of the dispute shall be the domicile
of the defendant. The prevailing party in such dispute shall be entitled to
reasonable attorneys fees and costs including the cost of expert witness fees.
15. Nothing in this agreement shall be construed to create a
partnership, joint venture or an employment relationship between RPD and
Company.
16. All provisions of this agreement are and shall be defined to be
Severable, and if any provision of this agreement shall be deemed to be invalid
as coronary to law or public policy, sauce provision shall be deemed to be
severed from this agreement, and the remaining prove signs shall attain in full
force and effect.
17. Neither party to this agreement shall be liable to the other for
loss or damage arising out of any delay or failure by such party in performing
its obligations hereunder, if such delay or failure was the unavoidable
consequence of any act of God, exercise of governmental power, strike or other
labor disturbance, war, revolution, embargo, insurrection, operation of military
forces, or other event or condition beyond the control of such party; provided
that such party (1) notifies the other party of such inability to perform and
the reasons thereof with reasonable promptness; and (2) performs its obligations
hereunder as soon as circumstances permit.
18. This agreement may be sent via fax to both parties and signed as
such. A party's signature on such faxed copy may be required to the other via
fax and used as if it were the original signature.
<PAGE> 5
5
19. This constitutes the entire agreement between the parties relating
to the, subject matter herein unless modified in writing and signed by both
parties.
RPD, LLC Amazon Natural Treasures, Inc.
Richard P. Dubrule, /s/ Michael Sylver,
President -------------------
President
/s/ Dr. Domingos Loricchio
--------------------------
<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
Employment Agreement, between AMAZON NATURAL TREASURES, INC. (the
"Company") and RUDINE BORGATO (the "Employee").
1. For good consideration, the Company employs the Employee on the
following terms and conditions.
2. Term of Employment: Subject to the provisions for termination set
forth below this agreement will begin on November 1, 1996, and cease on October
31, 1998 unless sooner terminated.
3. Salary: The Company shall pay Employee a salary of $36,400.00 per
year, for the services of the Employee, payable at regular payroll periods. This
amount is the starting pay and may increase periodically by way of merit
increase.
4. Duties and Position: The Company hires the Employee in the capacity
of Vice President of International Affairs. The Employee's duties may be
reasonably modified at the Company's direction from time to time.
5. Employee to Devote Full Time to the Company: The Employee will
devote full time, attention, and energies to the business of the Company and
during this employment, will not engage in any other business activity,
regardless of whether such activity is pursued for profit, gain, or other
pecuniary advantage. Employee is not prohibited from making personal investments
in any other businesses provided those investments do not require active
involvement in the operation of said companies.
6. Confidentiality of Proprietary Information: Employee agrees, during
or after the term of this employment, not to reveal confidential information, or
trade secrets to any person, firm, corporation, or entity. Should Employee
reveal or threaten to reveal this information, the Company shall be entitled to
an injunction restraining the Employee from disclosing same, or from rendering
any services to any entity to whom said information has been or is threatened to
be disclosed. The right to secure an injunction is not exclusive, and the
Company may pursue any other remedies it has against the Employee for a breach
or threatened breach of this condition, including the recovery of damages from
the Employee.
7. Reimbursement of Expenses: The Employee may incur reasonable
expenses for furthering the Company's business, including expenses for
entertainment, travel, and similar items. The Company shall reimburse Employee
for all business expenses after the Employee presents an itemized account of
expenditures, pursuant to Company policy.
<PAGE> 2
2
8. Health Insurance: The Employee will be entitled to Health Insurance
coverage for himself only as of his employment date. Extra Health Insurance
coverage for his family will be made available at the Employee's sole expense.
Until Insurance coverage is made available to all employees, the Employee will
receive up to $103.00 monthly to fund a COBRA health plan that covers himself
only from his former employer.
9. Vacation: The Employee shall be entitled to a yearly vacation of two
weeks at full pay.
10. Disability: If Employee cannot perform the duties because of
illness or incapacity for a period of more than four weeks, the compensation
otherwise due during said illness or incapacity will be reduced by thirty
percent (30%). The Employee's full compensation will be reinstated upon return
to work. However, if the Employee is absent form work for any reason for a
continuous period of over three months, the Company may terminate the Employee's
employment, and the Company's obligations under this agreement will cease on
that date.
11. Termination of Agreement: The Employee may be terminated only for
"cause," as defined below. The type of action which would be the basis for a
determination that "cause" exists to terminate your employment is the following:
a) Your conviction of a felony
b) Your conviction of a misdemeanor involving moral
turpitude.
c) Embezzlement of our corporate funds.
d) Repeated acts displaying inadequate performance for the job
position.
d) Gross misconduct, defined as follows:
1) Unexcused absences or consistently being late without
cause.
2) Being unable or impaired to perform your duties
because of your overindulgence in drugs or alcohol.
3) Your refusal to perform your job functions, including
the required travel.
4) Referring clients to competing companies
5) Committing acts that sabotage our company.
6) Incurring corporate indebtedness above and beyond
normal business expenses, without the consent of your supervisor.
7) Repeated acts of Insubordination to Corporate
superiors.
<PAGE> 3
3
If the Employee is terminated for "cause," the Company may initiate
termination immediately and without any prior notice to the Employee.
Additionally, the Company will not pay the Employee any severance pay or cash
out any accrued benefits. Without cause, the Employee may terminate employment
upon thirty days' written notice to the Company. Employee may be required to
perform his/her duties and will be paid the regular salary to date of
termination but shall not receive a severance allowance. Notwithstanding
anything to the contrary contained in this agreement, the Company may terminate
the Employee's employment upon thirty days' notice to the Employee should any of
the following events occur:
a) The sale of substantially all of the Company's assets to a
single purchaser or group of associated purchasers; or
b) The sale, exchange, or other disposition, in one transaction
of the majority of the Company's outstanding corporate shares; or
c) The Company's decision to terminate its business and liquidate
its assets;
d) The merger or consolidation of the Company with another
company.
e) Bankruptcy or Chapter 11 Reorganization.
In the event of the transfer of ownership or merger with another company, the
Company, at its whim, may elect to keep the Employee in a substantially same job
function and compensation or elect to terminate the Employee. In the event of
termination under these conditions, the new or merged Company will pay to the
Employee a one-year severance allowance.
12. Death Benefit: Should Employee die during the term of employment,
the Company shall pay to Employee's estate any compensation due through the end
of the month in which death occurred.
13. Restriction on Post Employment Competition: For a period of three
(3) years after the end of employment, the Employee shall not control, consult
to or be employed by any business similar to that conducted by the Company,
either by soliciting any of its accounts or by operating within Employer's
general trading area.
14. Assistance in Litigation: Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably required in connection with any litigation in which it is, or may
become, a party either during or after employment.
<PAGE> 4
4
15. Effect of Prior Agreements: This agreement supersedes any prior
agreement between the Company or any predecessor of the Company and the
Employee, except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere provided and
not expressly provided in this agreement.
16. Settlement by Arbitration: Any claim or controversy that arises out
of or relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court with
jurisdiction.
17. Limited Effect of Waiver by Company. Should Company waive breach of
any provision of this agreement by the Employee, that waiver will not operate or
be construed as a waiver of further breach by the Employee.
18. Severability: If, for any reason, any provision of this agreement
is held invalid, all other provisions of this agreement shall remain in effect.
If this agreement is held invalid or cannot be enforced, then to the full extent
permitted by law any prior agreement between the Company (or any predecessor
thereof) and the Employee shall be deemed reinstated as if this agreement had
not been executed.
19. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the benefit
and be binding upon the Company's successors and assignees.
20. Oral Modifications Not Binding: This instrument is the entire
agreement of the Company and the Employee. Oral changes shall have no effect. It
may be altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
Signed this 31st day of October, 1996.
/s/ Michael Sylver /s/ Rudine Borgato
- ------------------ ------------------
Company Employee
<PAGE> 1
EXHIBIT 10.10
RETAIL MERCHANDISE PURCHASE AND SALES AGREEMENT
SELLER:
AMAZON NATURAL TREASURES, INC. a corporation organized
and existing under the laws of the State of Utah having offices
at 4011 W. Oquendo Ave., Suite C, Las Vegas, Nevada 89118
PURCHASER:
DR. RANDALL W. ROBIRD, CHIROPRACTIC PHYSICIAN,
INDIVIDUALLY AND DBA APPLIED HEALTH DYNAMICS
To Dr. Robirds:
This letter agreement ("Agreement") constitutes the
understanding and agreement by and between AMAZON NATURAL TREASURES, INC. a
corporation organized and existing under the laws of Utah having offices at 4011
W. Oquendo Ave., Suite C, Las Vegas, Nevada 89118, (hereinafter referred to as
the "Seller") and DR. RANDALL W. ROBIRDS, CHIROPRACTIC PHYSICIAN, INDIVIDUALLY
AND DBA APPLIED HEALTH DYNAMICS, having offices at the Chiropractic Specialty
Center, 1201 N. Decatur #109, Las Vegas, Nevada 89108 (hereinafter referred to
as the "Purchaser"), whereby Seller will sell to Purchaser, and Purchaser will
purchase from Seller, all of the products of every kind and nature offered for
sale by the Seller in the marketing of its products for Twenty Percent (20%)
less than the suggested retail price at the time of purchase of the product by
Purchaser from Seller. Purchaser agrees that he will sell said products for the
suggested retail price then in effect.
In consideration of the premises and the mutual covenants and
conditions herein contained, the Seller hereby agrees with you as follows:
1. Agreement to Sell and Purchase the Products. The Purchaser
agrees to purchase from Seller, and Seller agrees to sell to the Purchaser, upon
the terms and conditions hereinafter set forth, the Products for the purchase
price of Twenty Percent less than the suggested retail price then in effect on
the date of purchase of product by Purchaser payable by check or wire transfer
of immediately available funds on said date.
2. General. This letter agreement shall bind and inure to the
benefit of the Purchaser, the Seller and their respective successors and
assigns. The terms and provisions of this letter agreement may not be modified
or amended, or any of the provisions hereof waived except, in the case of
modification and amendment, pursuant to the written consent of the parties to
this letter agreement, and, in the case of waiver, pursuant to a
<PAGE> 2
2
writing by the party so waiving. Section headings in this letter agreement are
for convenience of reference only and shall not be considered a part of or
affect the construction or interpretation of any provision of this letter
agreement. The invalidity or unenforceability of any term or provision of this
letter agreement shall not impair or affect the remainder of this letter
agreement, and the remaining terms and provisions hereof shall not be
invalidated but shall remain in full force and effect. This letter agreement
shall be governed by and construed in accordance with the laws of Nevada and any
action, claim or proceeding brought hereunder shall be commenced exclusively in
the federal or state courts located in such State.
3. Confidentiality.
(a) Purchaser recognizes that trade secrets and
other proprietary information of Seller may be conveyed to Purchaser pursuant to
this Agreement, and Purchaser agrees to keep such information in confidence and
not to disclose it during or within Ten (10) years after the term of this
Agreement to third parties other than Purchasers Affiliates that shall be bound
by confidentiality restrictions as set forth herein.
(b) The restrictions set forth in subparagraph (a)
of this paragraph shall not apply to any information (i) well-known and in the
public domain at the time of disclosure; (ii) known to Purchaser at the time it
was disclosed to it by Seller as shown by documentation establishing such prior
knowledge; (iii) disclosed with the prior written approval of Seller; and (iv)
rightfully disclosed to Purchaser by a third party other than a Seller
Affiliate.
4. Relationship. Purchaser and Seller shall act as principals
in all respects hereunder, and nothing herein shall be construed to constitute
either as the agent, partner, or joint venturer of the other.
5. Trademark. Purchaser recognizes that the name and
registered trademark "AMAZON NATURAL TREASURES, INC." ("Trademark"), has become,
by reason of the excellence of the products it identifies and its continued use
in commerce, a recognized symbol of quality and is of unique and exceptional
value. Accordingly:
(a) Purchaser acknowledges that Seller has the
exclusive ownership and right to use the Trademark in the distribution and sale
of Products and Purchaser will never contest such ownership and right.
<PAGE> 3
3
(b) Neither Purchaser nor any Affiliate will use
the Trademark as a part of its corporate name without the prior written consent
of Seller, which consent Seller may deny or may grant on such terms and
conditions as Seller may from time to time prescribe and which Seller may
withdraw at any time, all in the absolute discretion of Seller.
(c) Any particular use of the Trademark by Purchaser
will be discontinued immediately if, in the exercise of its sole judgment,
Seller deems such use inconsistent with the reputation and standing of Seller,
or with the Seller's business, advertising or public relations policies.
6. Pricing. The Purchaser shall pay to Seller, for purchase of
all the Seller's products, Eighty Percent (80%) of the then existing Seller
suggested retail price at the time of purchase. Further, Purchaser will not
sell product for a price less than the suggested retail price.
7. Miscellaneous.
(a) Nothing contained in this Agreement shall be
construed as (i) a warranty or representation as to the validity or scope of any
patent, efficacy, or claim for the products; (ii) an agreement to bring or
prosecute actions or suits against third parties for infringement, or conferring
any rights to bring or prosecute actions against third parties for infringement;
(iii) conferring any rights to use in advertising, publicity, or otherwise, any
trademark, trade name or names, or any contraction, abbreviation, or simulation
thereof, of Seller except as provided herein; (iv) conferring by implication,
estopped, or otherwise, upon Purchaser any license or other right in or to any
patent, trademark, copyright or know-how.
(b) No delay or failure of either party in exercising
any right hereunder shall affect such right, nor shall any single or partial
exercise of any right preclude any further exercise thereof. No modification,
amendment, addition, or waiver, of any of this Agreement shall be effective
unless set forth in a writing signed by Seller and Purchaser which specifically
states that such writing is to be a modification, amendment, addition, or
waiver, and then only in that specific instance and for which given.
(c) This Agreement contains the entire and complete
understanding of the parties with respect to the subject matter and merges all
prior and contemporaneous understandings.
(d) This Agreement may not be assigned by Purchaser
without the prior written consent of Seller, which shall not be unreasonably
withheld; this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns and sublicensees.
<PAGE> 4
4
(e) No remedy conferred herein is intended to be
exclusive of any other remedy and each and every such remedy shall be cumulative
and in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
(f) Each of the parties hereto shall make, do or
cause to be done, such further acts and things, and execute, acknowledge, and
deliver, such instruments and documents as may be necessary to effectuate the
purposes and intent of this Agreement.
(g) The invalidity, partial failure of consideration,
or unenforceability, of any particular provision of this Agreement shall not
affect the validity or enforceability hereof.
(h) This Agreement shall be governed by the laws
of the State of Nevada.
Please confirm your agreement with the foregoing by signing
this letter agreement in the space provided below and returning an executed copy
to the attention of the undersigned.
Very truly yours,
Amazon Natural Treasures, Inc.
BY: /s/ Michael A. Sylver, President
--------------------------------
12-10-96
ACCEPTED AND AGREED TO, and
intending to be legally bound as of the
date first above written:
Dr. Randall W. Robirds dba Applied Health Dynamics
BY: /s/ Randall W. Robirds
----------------------
<PAGE> 1
EXHIBIT 24.1
[SCHVANEVELDT AND COMPANY LETTERHEAD]
Consent of Darrell T. Schvaneveldt
Independent Auditor
I consent to the use in this Form 10-KSB, of our report dated December
31, 1996, on the financial statements of Amazon Natural Treasures, Inc., dated
April 27, 1997, included herein and to the reference made to me.
SCHVANEVELDT & COMPANY
Salt Lake City, Utah
June 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT DECEMBER 31, 1996 (AUDITED) AND
THE CONSOLIDATED STATEMENT OF INCOME FOR THE 12 MONTHS ENDING DEC. 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,390
<SECURITIES> 0
<RECEIVABLES> 2,000
<ALLOWANCES> 0
<INVENTORY> 38,149
<CURRENT-ASSETS> 41,539
<PP&E> 69,435
<DEPRECIATION> (12,475)
<TOTAL-ASSETS> 106,193
<CURRENT-LIABILITIES> 69,128
<BONDS> 40,000
0
0
<COMMON> 24,664
<OTHER-SE> (27,023)
<TOTAL-LIABILITY-AND-EQUITY> 106,193
<SALES> 34,975
<TOTAL-REVENUES> 34,975
<CGS> 16,727
<TOTAL-COSTS> (260,206)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (238,781)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 94
<CHANGES> 0
<NET-INCOME> (238,687)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
