U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission file number 1-12350
Regenesis Holdings, Inc.
(Name of Small Business Issuer in its Charter)
Florida 65-0827283
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Intercontinental Professional Center
1555 N. Park Drive, Suite 103, Weston, Florida 33326
----------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(954) 217-3744
--------------
(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Act:
None.
-----
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class)
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. Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy 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. $ -0-.
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 asked prices of such stock, as of a specified date within the past 60
days.
Not applicable. There has been no public trading market for the
issuer's securities during the past 60 days.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,322,345 as of June 1, 1999.
This report contains a total of pages.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Other than historical and factual statements, the matters and items discussed in
this Annual Report on Form 10-KSB are forward-looking statements that involve
risks and uncertainties. Actual results of the Company may differ materially
from the results discussed in the forward-looking statements. Certain factors
that could contribute to such differences are discussed with the forward-looking
statements throughout this report.
General
Regenesis Holdings, Inc. (the "Company" or "Regenesis") was organized under the
laws of the State of Florida on July 6, 1993 under the name International Pizza
Corporation. On October 30, 1995, the Company changed its name to QPQ
Corporation, and on November 4, 1997, changed its name to Regenesis Holdings,
Inc. On August 8, 1997, the Company effected a reverse split of its outstanding
common stock at the rate of 1:20, and on September 17, 1997, it effected a
reverse split of its outstanding common stock at the rate of 1:3. The
information in this Report gives retroactive effect to such recapitalizations of
the Company.
The Company was originally formed to develop and operate Domino's Pizza outlets
in the Republic of Poland, through its wholly-owned subsidiary, Pizza King
Polska Sp z.o.o. ("Pizza King"). From August 1995 through September 3, 1997, the
Company also operated medical centers offering primary care medical services and
medically supervised weight loss programs, through its wholly-owned subsidiary
QPQ Medical Centers, Inc. ("QPQ Medical").
Pursuant to an agreement dated May 23, 1997, the Company transferred its
interest in Pizza King, as well as certain related assets, to an unaffiliated
party in June 1997. Also in June 1997, the Company sold certain of its operating
weight loss centers, and on September 3, 1997, the Company sold its interest in
QPQ Medical, all to an unaffiliated party. The Company recorded a loss from
discontinued operations totaling $1,968,524 in connection with these sales.
As of December 31, 1998, the Company had no operating subsidiaries or business
operations, and had minimal cash and working capital. The Company's ability to
meet its general and administrative obligations is dependent upon its ability to
secure and develop new business opportunities through acquisitions or business
combinations. The Company intends to search for, investigate and attempt to
secure and develop business opportunities through acquisitions and/or similar
business combinations. However, there is no assurance that it will be successful
in such endeavors.
On December 22, 1998, Zirk Engelbrecht and Mario Gambuzzo, comprising all of the
directors of the Company, appointed Mitchell Sandler as director and, on the
same date, each of Messrs. Engelbrecht and Gambuzzo resigned. As a result, a
change in control of the Company's Board of Directors took place.
Subsequent Events
On January 20, 1999, Mr. Sandler appointed Russell Adler as a director of the
Company and the Chairman of its Board of Directors. Mr. Sandler remains the
Company's President and a member of the Board of Directors. Messrs. Sandler and
Adler have directed the Company's shift of focus to operations in the Internet
and related technology markets.
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<PAGE>
On March 18 , 1999, the Company acquired all of the operating assets of NetDisc,
Inc. ("NetDisc") in exchange for 10,000 shares of the Company's common stock.
NetDisc is engaged in Internet advertising, and has developed CD Rom/Internet
technology which directs users to the Web sites of advertisers. In connection
with the asset purchase agreement, NetDisc pledged to an unaffiliated third
party all of the assets that it purchased. The Company assumed none of NetDisc's
liabilities.
The Company is currently evaluating other transactions consistent with its focus
on the Internet and technology markets. While the Company intends to seek other
business opportunities through acquisitions, reverse mergers or other venture
activities, the Company is not a party to any current agreements to consummate
such a transaction.
Employees
The Company currently has nine employees, all of which are full-time. The
Company's address and phone number are: 1555 N. Park Drive, Suite 103, Weston,
Florida 33326; (954) 217-3744.
The Company files annual, quarterly and special reports, proxy statements and
other information with the SEC. The Company's SEC filings are available to the
public over the Internet at the SEC's web site at http://www.sec.gov. You may
also read and copy any document the Company files at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently leases approximately 2,000 square feet of office space at
its Weston, Florida corporate headquarters from an unaffiliated party. Its
monthly lease payments are $4,000. The term of the lease is three months,
commencing May 10, 1999 and ending August 10, 1999, with an option to renew for
an additional three month term.
The Company leases approximately 500 square feet of office space in New York,
New York from an unaffiliated party. The term of the lease is 12 months,
commencing June 1, 1999 and ending March 31, 1999, and terminable by either
party upon thirty days written notice to the other party. Its monthly lease
payments are $4,626. The lease provides for automatic extensions of its term,
with a 5% increase in the annual rent, unless either party gives 60 days'
written notice to the other to the contrary.
ITEM 3. LEGAL PROCEEDINGS
Regenesis received a letter in August 1998 on behalf of one of its stockholders
whereby the stockholder alleged that he was damaged by affirmative
misrepresentations and material omissions allegedly made by Regenesis and its
affiliates in connection with the 1996 sale of its securities to the
stockholder. The amount of damages alleged to have been suffered by the
stockholder is $1,200,000, excluding interest and attorney's fees. In December
1998, in an effort to resolve any such pending allegations, Regenesis joined a
suit in which this stockholder was charged with libel and slander. Regenesis
believes that this matter will be resolved in a manner favorable to it, but
there can be no assurances of this. If this matter is resolved in a manner
unfavorable to Regenesis, its financial position could be materially adversely
affected.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
3
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock was traded on the OTC Bulletin Board under the symbol
"RGNS" until December 15, 1998, when it ceased trading due to its failure to
comply with the requirements of Rule 15c2-11. The following table sets forth the
high and low bid quotations for the common stock for the periods indicated as
reported by Nasdaq. These quotations reflect prices between dealers, do not
include retail mark-ups, markdowns, commissions and may not necessarily
represent actual transactions. This table gives retroactive effect to reverse
stock splits at the rates of 1:20 and 1:3 effected in August 1997 and September
1997, respectively.
<TABLE>
<CAPTION>
Period High Low
- ------ ---- ---
<S> <C> <C>
First Quarter ended 3/31/97 $0.042 $0.013
Second Quarter ended 6/30/97 $0.018 $0.001
Third Quarter ended 9/30/97 $0.906 $0.031
Fourth Quarter ended 12/31/97 $0.875 $0.033
First Quarter ended 3/31/98 $5.500 $2.750
Second Quarter ended 6/30/98 $4.875 $1.000
Third Quarter ended 9/30/98 $4.000 $0.250
Fourth Quarter ended 12/15/98 $1.031 $0.063
</TABLE>
As of June 1, 1999, there were approximately 184 holders of record of the
3,322,345 shares of common stock that were issued and outstanding. The transfer
agent for the common stock is Continental Stock Transfer and Trust Company, 2
Broadway, New York, New York, telephone (212) 509-4000.
The Company has never paid cash dividends on its common stock, and presently
intends to retain future earnings, if any, to finance the expansion of its
business and does not anticipate that any cash dividends will be paid in the
foreseeable future. The future dividend policy will depend on the Company's
earnings, capital requirements, expansion plans, financial condition and other
relevant factors.
The Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any equity security that has a market price (as
defined) of less than $5.00 per share, subject to certain exceptions. The
Company's common stock may be deemed to be a "penny stock" and thus will become
subject to rules that impose additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors, unless the common stock is listed on The
Nasdaq SmallCap Market. Consequently, the "penny stock" rules may restrict the
ability of broker/dealers to sell the Company's securities, and may adversely
affect the ability of holders of the Company's common stock to resell their
shares in the secondary market.
Recent Sales of Unregistered Securities
On February 1, 1999 the Company sold 35,000 shares of its Series C Preferred
Stock for a purchase price of $350.00 or $.01 per share, to Mr. Adler, the
Chairman of the Board of the Company. Inasmuch as Mr. Adler, as an executive
officer and a director of the Company, is an accredited investor, issuance of
such securities was exempt from the registration requirements of the Securities
Act pursuant to the exemption set forth in Section 4(2) of such Act and the
rules and regulations thereunder.
4
<PAGE>
On February 3, 1999, the Company sold 10,000 and 3,000 shares of its Series C
Preferred Stock for a purchase price of $130.00 or $.01 per share, to Mr. Adler
and Mr. Sandler, Chairman of the Board and President of the Company,
respectively. Inasmuch as each of Messrs. Adler and Sandler is an executive
officer and a director of the Company, and therefore an accredited investor,
issuance of such securities was exempt from the registration requirements of the
Securities Act pursuant to the exemption set forth in Section 4(2) of such Act
and the rules and regulations thereunder.
On February 5, 1999, the Company granted options under its 1997 Stock Option
Plan to purchase an aggregate of 500,000 shares of its common stock to Mr.
Adler. Such options have an exercise price of $.25 per share, are immediately
exercisable and expire February 4, 2003. Inasmuch as Mr. Adler, as the Company's
Chief Executive Officer, is an accredited investor and had access to relevant
information concerning the Company, the issuance of such securities was exempt
from the registration requirements of the Securities Act pursuant to the
exemption set forth in Section 4(2) of such Act and the rules and regulations
thereunder.
On February 15, 1999, the Company consummated the sale of 950,000 of shares of
common stock for an aggregate purchase price of $9,500.00, or $.01 per share, to
29 investors. Inasmuch as each of such investors is either an accredited
otherwise qualified investor, or had a pre-existing relationship with the
Company and had access to relevant information concerning the Company, the
issuance of such securities was exempt from the registration requirements of the
Securities Act pursuant to the exemption set forth in Section 4(2) of such Act
and the rules and regulations thereunder.
On February 17, 1999, Mr. Adler transferred 29,000 of his shares of Series C
Preferred Stock in the following manners to the following transferees, each of
which is an officer of the Company: 5,000 shares to Mr. Sandler; 13,333.33
shares to Mr. Gallo; and 10,666.66 shares to Mr. Brownstein. Messrs. Adler,
Sandler and Gallo are also directors of the Company. Each of Messrs. Adler,
Sandler, Gallo and Brownstein then converted all of his shares of Series C
Preferred Stock into an aggregate of 900,000 shares of common stock of the
Company, as follows: Mr. Adler: 300,000 shares; Mr. Sandler: 150,000 shares; Mr.
Gallo: 250,000 shares; and Mr. Brownstein: 200,000 shares.
On February 23, 1999 the Company consummated the sale of 500,000 of its shares
of common stock for an aggregate purchase price of $100,000, or $.20 per share,
to four institutional investors. Inasmuch as each of such institutional
investors is an accredited investor and had access to relevant information
concerning the Company, the issuance of such securities was exempt from the
registration requirements of the Securities Act pursuant to the exemption set
forth in Section 4(2) of such Act and the rules and regulations thereunder.
On March 18, 1999, in connection with the acquisition of all of the operating
assets of NetDisc, the Company issued 10,000 shares of its common stock to the
seller of such assets. NetDisc is engaged in the Internet advertising business
and has developed CD Rom/Internet technology which directs users to the web
sites of advertisers. Inasmuch as the seller of the assets had access to
relevant information concerning the Company, including financial information,
the issuance of such securities was exempt from the registration requirements of
the Securities Act pursuant to the exemption set forth in Section 4(2) of such
Act and the rules and regulations thereunder.
Also on March 18, 1999, the Company granted 100,000 shares of its common stock
to Mark Jelaso, the marketing director of the Company, pursuant to the terms of
Mr. Jelaso's employment agreement. Inasmuch as Mr. Jelaso had access to relevant
information concerning the Company, issuance of such securities was exempt from
the registration requirements of the Securities Act pursuant to the exemption
set forth in Section 4(2) of such Act and the rules and regulations thereunder.
5
<PAGE>
On March 30, 1999, the Company consummated the sale of 100,000 shares of its
common stock for a purchase price of $100,000, or $1.00 per share, to an
institutional investor. Inasmuch as the purchaser was an accredited investor and
had access to relevant information concerning the Company, including financial
information, the issuance of such securities was exempt from the registration
requirements of the Securities Act pursuant to the exemption set forth in
Section 4(2) of such Act and the rules and regulations thereunder.
No underwriters were involved in any of the transactions described above, and no
commissions were paid in connection therewith.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. The forward-looking statements contained
in this Report are subject to certain risks and uncertainties. Actual results
could differ materially from current expectations. Among the factors that could
affect the Company's actual results and could cause results to differ from those
contained in the forward-looking statements contained herein is the Company's
ability to implement its business strategy successfully, which will depend on
business, financial, and other factors beyond the Company's control, including,
among others, prevailing changes in consumer preferences, access to sufficient
quantities of raw materials, availability of trained laborers and changes in
tobacco products regulation. There can be no assurance that the Company will
continue to be successful in implementing its business strategy. Other factors
could also cause actual results to vary materially from the future results
covered in such forward-looking statements. Words used in this Report such as
"expects," "believes," "estimates" and "anticipates" and variations of such
words and similar expressions are intended to identify such forward-looking
statements.
The following should be read in conjunction with the Financial Statements of the
Company and the notes thereto included elsewhere in this report.
OVERVIEW
Regenesis was organized under the laws of the State of Florida on July 6, 1993
under the name International Pizza Corporation. On October 30, 1995, the Company
changed its name to QPQ Corporation, and on November 4, 1997, changed its name
to Regenesis Holdings, Inc.
The Company was originally formed to develop and operate Domino's Pizza outlets
in the Republic of Poland, through its wholly-owned subsidiary, Pizza King
Polska Sp z.o.o. ("Pizza King"). From August 1995 through September 3, 1997, the
Company also operated medical centers offering primary care medical services and
medically supervised weight loss programs, through its wholly-owned subsidiary
QPQ Medical Centers, Inc. ("QPQ Medical").
Pursuant to an agreement dated May 23, 1997, the Company transferred its
interest in Pizza King, as well as certain related assets, to an unaffiliated
party in June 1997. Also in June 1997, the Company sold certain of its operating
weight loss centers, and on September 3, 1997, the Company sold its interest in
QPQ Medical, all to an unaffiliated party. The Company recorded a loss from
discontinued operations totaling $1,968,524 in connection with these sales.
6
<PAGE>
As of December 31, 1998, the Company had no operating subsidiaries or business
operations, and had minimal cash and working capital. The Company's ability to
meet its general and administrative obligations is dependent upon its ability to
secure and develop new business opportunities through acquisitions or business
combinations. The Company intends to search for, investigate and attempt to
secure and develop business opportunities through acquisitions and/or similar
business combinations. However, there is no assurance that it will be successful
in such endeavors.
On December 15, 1998, the Company's common stock was delisted from the OTC
Bulletin Board for failure to comply with Rule 15c-211 and has not traded
publicly since that date.
Results of Operations
For the years ended December 31, 1998 and 1997 the Company generated no
revenues, and incurred net losses of $436,213 and $4,948,494, respectively.
General and administrative expenses for the years ended December 31, 1998 and
1997 aggregated $399,589 and $2,565,185, respectively. For the year ended
December 31, 1998, general and administrative expenses were comprised of
executive salaries and benefits of $61,667, legal and professional fees, office
rent, travel, telephone and other consulting fees of $237,720. For the year
ended December 31, 1997, general and administrative expenses were comprised of
executive and office staff salaries and benefits of $462,113, legal and
professional fees, office rent, travel, telephone and other consulting fees of
$1,737,332. The shares of common stock issued for a portion of the compensation
and consulting fees were valued at the market value of the Company's stock on
the date of authorization.
Interest and other income for the year ended December 31, 1998 and 1997 was
$1,714 and $19,757, respectively.
Interest expense for 1998 and 1997 was $0 and $(31,375), respectively.
In 1997, the Company incurred a loss of $1,968,524 from discontinued operations
($1,371,183 of which was attributable to loss from operations and $597,341 of
which was attributable to loss on disposal of discontinued operations). No
comparable losses were incurred for 1998.
LIQUIDITY AND CAPITAL RESOURCES
For the years ended December 31, 1998 and 1997, net cash used in operating
activities was $221,539 and $1,536,576, respectively. The decrease was primarily
attributable to expenses and losses incurred in 1997 relating to discontinued
operations.
Net cash provided by investing activities for 1998 was $238,300, attributable to
collections on notes receivable from Lator International, Inc. In 1997, net cash
provided by investing activities was $570,021, primarily attributable to
proceeds received from the sales of discontinued operations.
Net cash provided by financing activities for 1998 was $3,487, primarily
attributable to loan proceeds received from officers. In 1997, net cash provided
by financing activities was $896,681, primarily attributable to proceeds
received from the issuance of 8% convertible debentures.
7
<PAGE>
As of December 31, 1998, the Company had cash of $20,748 and working capital of
$3,545. The Company's ability to meet its future obligations in relation to the
orderly payment of its recurring general and administrative expenses on a
current basis is totally dependent on its ability to secure and develop new
business opportunities through acquisitions or other venture opportunities.
Since the Company has no current source of liquidity, the Company is unable to
predict how long it may be able to survive without a significant infusion of
capital from outside sources and it is further unable to predict whether such
capital infusion, if available, will be on terms and conditions favorable to the
Company.
In order to generate future operating activities, the Company intends to search
for, investigate and attempt to secure and develop business opportunities
through acquisitions, mergers or other business combinations and strategic
alliances. There can be no assurance that the Company will be successful in its
search for new business opportunities or that any such acquired businesses,
assets or new ventures will be successful. Although the Company engages in these
discussions from time to time, it is not at present party to any agreement or
contract. The report of Rachlin Cohen & Holtz, LLP, the Company's auditors
("Auditors") in connection with their audit of the Company's financial
statements for the year ended December 31, 1998, contains an explanatory
paragraph which express substantial doubt as to the ability of the Company to
continue as a going concern, which assumes the realization of assets and
liquidation of liabilities in the ordinary course of business. For each of the
two years ended December 31, 1998 and 1997, the Company incurred losses of
$436,213 and $4,948,494, respectively, and, as of December 31, 1998 had no
operating activities. Uncertainty exists with regard to the Company's ability to
generate sufficient cash flows from operational or other sources to meet and
fund its commitments with regard to existing liabilities and recurring expenses,
which give rise to substantial doubt as to the Company's ability to continue as
a going concern.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Year 2000 issue
relates to whether computer systems will properly recognize and process
information relating to dates in and after the year 2000. These systems could
fail or produce erroneous results if they cannot adequately process dates beyond
the year 1999 and are not corrected. Significant uncertainty exists in the
software industry concerning the potential consequences that may result from the
failure of software to adequately address the Year 2000 issue. The Company has
analyzed software and hardware used internally by the Company in all support
systems to determine whether they are Year 2000 compliant. The Company believes
that all of its software has already been upgraded by the manufacturers thereof
or was recently purchased and is Year 2000 compliant. The Company does not
believe that the aggregate cost for the Year 2000 issue will be material due to
the nature of it business. The Company, however, cannot predict the effect of
the Year 2000 issue on entities with which the Company transacts business, and
there can be no assurance that the effect of the Year 2000 issue on such
entities will not have a material adverse effect on the Company's business,
financial condition or results of operations. The Company will be formulating a
contingency plan with respect to such entities with which it does business.
Any new software, hardware or support systems implemented in the future will be
Year 2000 compliant or will have updates or upgrades or replacements available
before the Year 2000 to enable the system to be Year 2000 compliant. Management
is currently assessing the Year 2000 compliance expense and related potential
effect on the Company's earnings.
ITEM 7. FINANCIAL STATEMENTS
The financial statements required by this report are appended hereto commencing
on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The information required by this Item has been previously filed with the
Commission within the meaning of Rule 12b-2 of the Exchange Act.
8
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names, positions with the Company and ages of
the executive officers and directors of the Company. Directors of the Company
will be elected at the Company's annual meeting of stockholders. One half of the
total number of directors are elected at each annual meeting, and, therefore,
each director serves for two years or until his successor is elected and
qualifies. Officers are elected by the Board and their terms of office are,
except to the extent governed by employment contract, at the discretion of the
Board.
Name Age Positions Held
- ---- --- --------------
Russell Adler 39 Chairman of the Board
Lawrence Gallo 35 Chief Executive Officer,
President and Director
Mitchell Sandler 39 Vice President, Director
Joel F. Brownstein 57 Chief Financial Officer,
Treasurer
Russell Adler has served as the Chairman of the Board of the Company and as a
member of its Board of Directors since January 1999. From December 1996 to
November 1998, Mr. Adler served as consultant and counsel to Equity Management
Partners, Inc., an investment banking firm. From January 1996 to August 1997,
Mr. Adler served as President of Strategic Holdings Corp., an investment banking
firm. From 1993 to December 1995, Mr. Adler was employed as vice president of
operations for The Silicon Group, Inc., a semiconductor and computer software
development company. From 1987 to 1990, Mr. Adler served as consultant and
counsel to the Chairman of J.W. Gant, a registered broker-dealer. Between 1984
and 1987, Mr. Adler served as president of Air & Waterworks, Inc., a
manufacturer of water coolers. Mr. Adler is a member in good standing of the
Florida Bar. He received a B.A. in Business and Sociology from William Penn
College in 1982 and a J.D. from Nova Southeastern University School of Law in
1986.
Mitchell Sandler has served as President (and until January 1999, Chairman of
the Board) and as director of the Company since December, 1998. Between 1993 and
December 1997, he served as President of The Silicon Group, Inc., a
semi-conductor and computer software development company. From 1984 and 1992,
Mr. Sandler was employed by All-American Semiconductor, a distributor of
semi-conductors, first as salesman, then as Regional Sales Manager for the
southeast (United States). Mr. Sandler holds an Associate's degree from Santa Fe
Community College and attended the University of Florida.
Lawrence Gallo has served as a director of the Company since January 1999. From
January 1998 until the present, Mr. Gallo served as director of Launch
Management, a financial, creative and business management consultant to sports
figures and entertainers, which he founded. From January 1998 to February 1998
Mr. Gallo served as director of Modern Records. From March 1997 to December 1997
Mr. Gallo served as Senior Vice President of Hoeing, Inc., a New York based
brokerage firm. From January 1986 to March 1997, Mr. Gallo was employed by
Lehman Brothers, Inc., initially serving as Senior Vice President of
Institutional Investment Services, then as Director of Equity Finance in London,
England. Mr. Gallo is a founding member of The Global Fund Managers'
Association, comprised of alternative investment managers and venture capital
organizations.
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Joel F. Brownstein has been Chief Financial Officer of the Company since January
1999. From February 1992 until the present, Mr. Brownstein served as President
of The Brownstein Group, an investment consulting firm for public and private
companies. From 1990 to 1994 he served as Vice President of Corporate
Development for Pinnacle Technologies, a manufacturer of solvent-free inks,
plastics and coatings. Between 1985 and 1987, Mr. Brownstein was employed by
Securitech Group, a manufacturer of hardware, as Vice President of Corporate
Development. Mr. Brownstein has also served as Vice President-Director of
Research for Doley Daniels & Cartwright, a broker-dealer specializing in
international securities research, as Vice President of Sales and Marketing for
Marsan Securities, Inc., a broker-dealer, as Senior Bank Examiner for the
Federal Reserve Bank of New York and as a securities analyst/portfolio manager
for Marine Midland Banks and Manufacturer Hanover Trust. Mr. Brownstein holds a
B.A. from Adelphi University, an M.B.A. in Finance and Investments from Baruch
College and has completed coursework for an M.B.A. in Marketing and Real Estate
Law.
ITEM 10. EXECUTIVE COMPENSATION
Cash Compensation
The following table shows, for the year ended December 31, 1998, the cash and
other compensation paid by the Company to its Chief Executive Officer and to
each of the executive officers of the Company who had annual compensation in
excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------- ------- ------------------------------- ----------------------------------- -----------
Annual Compensation Long-Term Compensation
------- ------------------------------- ----------------------------------- -----------
Awards
------- --------- --------- ----------- -------------------------- -------- -----------
Securities
Other Under-
Annual Restricted Lying All Other
Name and Principal Compen- Stock Options/ LIP Compen-
Position Year Salary Bonus sation Award(s) SAYS Payout sation
($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence Gallo 1998 0 0 0 0 0 0 0
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
Mitchell Sandler 1998 0 $6,500 0 0 0 0 0
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
</TABLE>
Employment Agreements
The Company has entered into employments with each of Mr. Adler, Mr. Sandler,
Mr. Gallo, Mr. Brownstein and Mr. Jelaso.
On February 15, 1999 the Company entered into an employment agreement with Mr.
Adler, which provides for Mr. Adler's employment as Chairman of the Board of
Directors. This agreement provides for: (i) a base annual salary of $140,400;
(ii) the issuance of 300,000 shares of the Company's common stock; and (iii) the
grant of options to purchase 500,000 shares of the Company's common stock at a
purchase price of $.25 per share. The issued common stock and common stock
underlying the options are to be registered on a Form S-8 Registration Statement
as soon as practical. In addition, the Board of Directors or the Compensation
Committee of the Board of Directors, may, in its sole discretion, award to Mr.
Adler a bonus based on certain levels of either sales or profits attained by the
Company. This agreement also provides that Mr. Adler shall be entitled to
additional
10
<PAGE>
compensation to be negotiated on a case-by-case basis for those
corporate finance transactions brought to the Company by him. The term of this
agreement is four years.
On April 1, 1999 the Company entered into an employment agreement with Mr.
Sandler, which provides for Mr. Sandler's employment as Vice President and
Secretary. This agreement provides for a base annual salary of $135,000 to be
paid to Mr. Sandler commencing March 1, 1999, as well as the issuance of 150,000
shares of common stock and the grant of options to purchase 150,000 shares of
the Company's common stock at a purchase price of $.25 per share, which options
are to be registered for resale as soon as practical. In addition, this
agreement provides that Mr. Sandler shall be entitled to additional compensation
to be negotiated on a case-by-case basis for those corporate finance
transactions brought to the Company by him. The term of this agreement is three
years.
On April 18, 1999, the Company entered into an employment agreement with Mr.
Gallo, which provides for Mr. Gallo's employment as President of the Company.
This agreement provides for a base annual salary of $150,000, the issuance of
250,000 shares of common stock of the Company, as well as the grant of options
to purchase 150,000 shares of common stock at a purchase price of $.25 per
share. The issued common stock and common stock underlying the options are to be
registered on a Form S-8 as soon as practical. The term of this agreement is one
year.
Also on April 18, 1999, the Company entered into an employment agreement with
Mr. Brownstein, which provides for Mr. Brownstein's employment as Chief
Financial Officer and Treasurer of the Company. This agreement provides for a
base annual salary of $135,000 , the issuance of 200,000 shares of common stock
of the Company and the grant of options to purchase 150,000 shares of common
stock at a purchase price of $.25 per share. The issued common stock and common
stock underlying the options are to be registered on a Form S-8 as soon as
practical. The term of this agreement is one year.
On April 1, 1999, the Company entered into an employment agreement with Mr.
Jelaso, which provides for Mr. Jelaso's employment as Director of Marketing of
the Company. This agreement provides for a base annual salary of $125,000 and
the grant of options to purchase 100,000 shares of common stock under the 1997
Plan. The term of this agreement is three years.
Option Grants in Last Fiscal Year
No options were granted in the last fiscal year.
Incentive and Non-Qualified Stock Option Plan
On October 3, 1997, the Company adopted 1997 Stock Option Plan (the "Plan")
which authorizes the issuance of options to purchase a maximum 1,000,000 shares
of common stock. All such shares have been included on a Form S-8 Registration
Statement, filed October 3, 1997.
The Company believes the Plan will work to increase the proprietary interest in
the Company of its directors, officers, employees and consultants, and to align
more closely their interests with the interests of the Company's stockholders.
The Plan will also maintain the Company's ability to attract and retain the
services of experienced and highly qualified employees and directors.
Under the Plan, the Company has reserved an aggregate of 1,000,000 shares of
common stock for issuance pursuant to options granted under the Plan ("Plan
Options"). The Board of Directors of the Company administers the Plan including,
without limitation, the selection of the persons who will be granted Plan
Options under the
11
<PAGE>
Plan, the type of Plan Options to be granted, the number of shares subject to
each Plan Option and the Plan Option price.
The Plan authorizes the issuance of incentive stock options ("ISOS") as defined
in Section 422A of the Internal Revenue Code of 1986, non-statutory options
("NSOs") and together with ISOS,("Options"). In addition, the Plan also allows
for the inclusion of a reload option provision ("Reload Option"), which permits
an eligible person to pay the exercise price of the Plan Option with shares of
common stock owned by the eligible person and receive a new Plan Option to
purchase shares of common stock equal in number to the tendered shares.
Any ISOS granted under the Plan must provide for an exercise price of at least
100% of the fair market value of the underlying shares on the date of such
grant, but the exercise price of any ISOS granted to an eligible person owning
more than 10% of the Company's common stock must be at least 110% of such fair
market value as determined on the date of the grant. The aggregate fair market
value of the shares covered by the ISOS granted under the Plan that become
exercisable by a Plan participant for the first time in any calendar year is
subject to a $100,000 limitation. The exercise price of each NSO is determined
by the Board of Directors or a committee thereof, in its discretion, provided
that the exercise price of an NSO is not less than fair value on the date of the
grant. The Board of Directors (or committee thereof), shall determine the term
of the Options; provided, however, that in no event may an ISO be exercisable
more than 10 years after the date of its grant and, in the case of an ISO
granted to an eligible employee owning more than 10% of the Company's common
stock, no more than five years after the date of the grant. Any option which is
granted shall be vested and exercisable at such time as determined by the Board
of Directors or a committee thereof.
The per share purchase price of shares subject to Plan Options granted under the
Plan may be adjusted in the event of certain changes in the Company's
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
As of December 31, 1998, there were options outstanding to purchase 1,667 shares
of common stock granted pursuant to the Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
common stock, par value $.01 beneficially owned as of June 1, 1999 for (i) each
stockholder known by the Company to be the beneficial owner of five (5%) percent
or more of the Company's outstanding common stock, (ii) each of the Company's
directors, (iii) each named executive officer (as defined in Item 402(a)(2) of
Regulation S-B), and (iv) all executive officers and directors as a group. At
June 1, 1999 there were 3,322,345 shares of common stock outstanding
(certificates representing 2,460,000 of which have not yet been physically
issued, but are deemed to be outstanding). The table gives effect to the
conversion of an aggregate of 48,000 shares of Series C Preferred Stock into an
aggregate of 900,000 shares of common stock.
Name and Address of Amount and Nature of Percent
Beneficial Owner(1) Beneficial Ownership(2) of Class
------------------- ----------------------- --------
Russell Adler 900,000(3) 23.5%
Mitchell Sandler 300,000(4) 8.6%
Lawrence Gallo 400,000(5) 11.5%
Joel F. Brownstein 350,000(6) 10.1%
Renee Adler 500,000(7) 15.0%
All directors and officers
as a group (4 persons)(8) 1,950,000 45.6%
- ----------------------
12
<PAGE>
(1) Unless otherwise indicated, the address of each of the persons named in
the table is 1555 N. Park Drive, Suite 103, Weston, Florida 33326. Unless
otherwise noted, the Company believes that each of the persons named in
the table have sole voting and dispositive power with respect to all the
shares of common stock of the Company beneficially owned by such person.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of warrants or
options or the conversion of convertible securities. Each beneficial
owner's percentage ownership is determined by assuming that warrants or
options that are held by such person (but not those held by any other
person) and that are exercisable within 60 days have been exercised.
(3) Includes presently exercisable options to purchase 500,000 shares of
common stock at a purchase price of $.25 per share. Also includes 100,000
shares of common stock held by Ms. Christine Adler, Mr. Adler's spouse,
over which Mr. Adler disclaims all voting and dispositive power. Does not
include shares of common stock held by Rene Adler, Mr. Adler's mother.
Also does not include shares of common stock held by 444 Corporation, a
corporation of which Mr. Adler's father is a principal.
(4) Includes presently exercisable options to purchase 150,000 shares of
common stock at a purchase price of $.25 per share.
(5) Includes presently exercisable options to purchase 150,000 shares of
common stock at a purchase price of $.25 per share.
(6) Includes presently exercisable options to purchase 150,000 shares of
common stock at a purchase price of $.25 per share.
(7) Does not include shares of common stock held by Mr. Adler, Rene Adler's
son. Includes 150,000 shares of common stock held by 444 Corporation, a
corporation of which Rene Adler's husband is a principal, over which she
disclaims all voting and dispositive power. Rene Adler's address is 1800
NE 114th Street, Apartment 2111, North Miami, Florida 33181.
(8) Includes those individuals whose holdings are described in notes 3-6,
above.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
None.
13
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits
Exhibits Description of Documents
- -------- ------------------------
3.1 Articles of Incorporation of International Pizza Corporation, as
amended.(1)
3.2 Bylaws of International Pizza Corporation, as amended.(1)
3.3 Articles of Amendment to the Articles of Incorporation of QPQ
Corporation setting forth the designations, rights and preferences
of the Series A Preferred Stock.(1)
3.4 Articles of Amendment to the Articles of Incorporation of QPQ
Corporation changing its name to Regenesis Holdings, Inc.(1)
3.5 Articles of Amendment to the Articles of Incorporation of Regenesis
Holdings, Inc. increasing the authorized capital and setting forth
the designations, rights and preferences of the Series B and Series
C Preferred Stock.(2)
3.6 Articles of Amendment to the Articles of Incorporation of Regenesis
Holdings, Inc. restating the designations, rights and preferences of
the Series C Preferred Stock.(3)
6.1 Asset Purchase Agreement by and between Regenesis Holdings, Inc. and
NetDisc, Inc., dated as of March 18, 1999.(3)
10.1 Agreement on Transfer the Shares as Collateral dated May 23, 1997 by
and between QPQ Corporation and International Fast Food
Corporation.(4)
10.2 Stock Purchase Agreement dated as of September 3, 1997 by and
between QPQ Corporation and Linde Group.(5)
10.3 Lease Agreement dated 5/12/99 by and between Omnioffices, Inc. and
Regenesis Holdings, Inc.(3)
10.4 Lease Agreement dated 5/10/99 by and between Finance Team of America
and Regenesis Holdings, Inc.(3)
10.5 Employment Agreement dated 4/1/99 between Regenesis Holdings, Inc.
and Mitchell B. Sandler.(3)
10.6 Employment Agreement dated as of 2/15/99 between Regenesis Holdings,
Inc. and Russell Adler.(3)
10.7 Employment Agreement dated 4/18/99 between Regenesis Holdings, Inc.
and Lawrence Gallo.(3)
10.8 Employment Agreement dated 4/18/99 between Regenesis Holdings, Inc.
and Joel F. Brownstein.(3)
10.9 Employment Agreement dated 4/1/99 between Regenesis Holdings, Inc.
and Mark Jelaso.(3)
16.1 Accountant's letter dated January 20, 1999 of Rachlin Cohen & Holtz,
LLP (6)
16.2 Accountant's letter dated January 20, 1999 of Moore Stephens
Lovelace, P.A.(6) 27 Financial Data Schedule.(3)
- ---------------------
(1) Incorporated by reference to exhibits from the Company's Form 10-KSB Report,
as amended, as filed with the Securities and Exchange Commission 6/10/98.
(2) Incorporated by reference as an exhibit to the Company's Form 8-K as filed
with the Commission 2/18/99.
(3) Filed herewith.
(4) Incorporated by reference as an exhibit to the Company's Form 8-K as filed
with the Commission 6/20/97.
(5) Incorporated by reference as an exhibit to the Company's Form 8-K as filed
with the Commission 9/18/97.
(6) Incorporated by reference as an exhibit to the Company's Form 8-K as filed
with the Commission 1/20/99.
14
<PAGE>
(b) Reports on Form 8-K.
During the last quarter of the period covered by this Report, the Company filed
a Report on Form 8-K on December 29, 1998 disclosing (a) the December 22, 1998
resignations of (i) Zirk Engelbrecht, the Company's Chairman of the Board, Chief
Executive Officer, Chief Operating Officer and President, and (ii) Mario
Gambuzzo, a director of the Company, and (b) the appointment of Mitchell Sandler
as a director and President of the Company on the same date.
15
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
REGENESIS HOLDINGS, INC.
(Registrant)
Date: By:
--------------------------- ---------------------------
Russell Adler
Chairman of the Board
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
Date:
------------------
By: By:
--------------------------- ----------------------------
By:
---------------------------
16
<PAGE>
================================================================================
================================================================================
REGENESIS HOLDINGS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
================================================================================
================================================================================
<PAGE>
REGENESIS HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1 to F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statements of Operations F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 to F-22
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
Regenesis Holdings, Inc.
Weston, Florida
We have audited the accompanying balance sheet of Regenesis Holdings, Inc. as of
December 31, 1998 and the related statements of operations, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Regenesis Holdings, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company had no operations or sources of revenues
during 1998 and, accordingly, has suffered and continues to suffer losses and,
as of December 31, 1998, reflects a significant deficit and only minimal
stockholders' equity. These factors, among others, raise substantial doubt about
its ability to continue as a going concern. Management's plans with regard to
these matters are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
RACHLIN COHEN & HOLTZ LLP
Miami, Florida
May 25, 1999
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors
Regenesis Holdings, Inc.
Miami Beach, Florida
We have audited the accompanying statements of operations, stockholders' equity,
and cash flows of Regenesis Holdings, Inc. for the year ended December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Regenesis
Holdings, Inc. for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered and continues to
suffer significant losses, has an accumulated deficit and, as of December 31,
1997 has no operations or sources of revenues. These factors, among others,
raise substantial doubt about its ability to continue as a going concern.
Management's plans with regard to these matters are described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
MOORE STEPHENS LOVELACE, P.A.
Orlando, Florida
May 22, 1998
F-2
<PAGE>
REGENESIS HOLDINGS, INC.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
------
Current Assets:
Cash $ 20,748
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 14,403
Loans payable to officers 2,800
------------
Total current liabilities 17,203
------------
Commitments, Contingencies and Subsequent Events --
Stockholders' Equity:
Preferred stock, $.01 par value, 10,000,000 shares
authorized; none issued and outstanding --
Common stock, $.01 par value, 100,000,000 shares
authorized; 762,345 shares issued and outstanding 7,623
Additional paid-in capital 12,471,481
Deficit (12,475,559)
------------
3,545
------------
$ 20,748
============
See notes to financial statements.
F-3
<PAGE>
REGENESIS HOLDINGS, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
Revenue $ -- $ --
----------- -----------
General and Administrative Expenses 399,589 2,565,185
----------- -----------
Other Income (Expenses):
Interest and other income 1,714 19,757
Interest expense -- (31,375)
Underwriter warrant settlement -- (201,000)
Provision for doubtful accounts (38,338) (202,167)
----------- -----------
Total other income (expenses), net (36,624) (414,785)
----------- -----------
Loss from Continuing Operations (436,213) (2,979,970)
----------- -----------
Discontinued Operations:
Loss from operations -- (1,371,183)
Loss on disposal of discontinued operations -- (597,341)
----------- -----------
Loss from discontinued operations -- (1,968,524)
----------- -----------
Net Loss $ (436,213) $(4,948,494)
=========== ===========
Basic and Diluted Net Loss per Common Share:
Continuing operations $ (0.59) $ (10.63)
Discontinued operations -- (7.03)
----------- -----------
Net Loss $ (0.59) $ (17.66)
=========== ===========
Weighted Average Common Shares Outstanding 733,308 280,221
=========== ===========
See notes to financial statements.
F-4
<PAGE>
REGENESIS HOLDINGS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Additional
------------ Paid-In
Shares Amount Capital
------ ------ -------
<S> <C> <C> <C>
Balance, January 1, 1997 127,557 $ 1,275 $ 9,276,942
Issuance of Common Stock in Exchange for 8% Convertible Debentures,
Net of Unamortized Debenture Issue Costs of $165,927 64,000 640 1,136,071
Issuance of Common Stock in Satisfaction of Liabilities and Payment of
Legal and Professional Expenses 457,667 4,577 1,620,863
Issuance of Common Stock in Payment of Officer Compensation 6,086 61 34,493
Options Granted to Officers and Directors as Compensation -- -- 225,995
Issuance of Common Stock in Private Placement 8,333 83 49,917
Translation Adjustments -- -- --
Net Loss -- -- --
------------ ------------ ------------
Balance, December 31, 1997 663,643 6,636 12,344,281
Issuance of Common Stock in Satisfaction of Liabilities and Payment of
Legal and Professional Expenses 30,000 300 127,200
Options exercised by Officers and Directors 68,702 687 --
Net Loss -- -- --
Balance, December 31, 1998 762,345 $ 7,623 $ 12,471,481
============ ============ ============
</TABLE>
(RESTUBBED TABLE)
<TABLE>
<CAPTION>
Accumulated
Translation
Adjustment Deficit Total
---------- ------- -----
<S> <C> <C> <C>
Balance, January 1, 1997 $ 68,537 $ (7,090,852) $ 2,255,902
Issuance of Common Stock in Exchange for 8% Convertible Debentures,
Net of Unamortized Debenture Issue Costs of $165,927 -- -- 1,136,711
Issuance of Common Stock in Satisfaction of Liabilities and Payment of
Legal and Professional Expenses -- -- 1,625,440
Issuance of Common Stock in Payment of Officer Compensation -- -- 34,554
Options Granted to Officers and Directors as Compensation -- -- 225,995
Issuance of Common Stock in Private Placement -- -- 50,000
Translation Adjustments (68,537) -- (68,537)
Net Loss -- (4,948,494) (4,948,494)
------------ ------------ ------------
Balance, December 31, 1997 -- (12,039,346) 311,571
Issuance of Common Stock in Satisfaction of Liabilities and Payment of
Legal and Professional Expenses -- -- 127,500
Options exercised by Officers and Directors -- -- 687
Net Loss -- (436,213) (436,213)
Balance, December 31, 1998 $ -- $(12,475,559) $ 3,545
============ ============ ============
</TABLE>
See notes to financial statements.
F-5
<PAGE>
REGENESIS HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (436,213) $(4,948,494)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization -- 61,506
Provision for doubtful accounts 38,338 --
Loss on sale of discontinued operations -- 802,491
Loss on disposal of property and equipment 14,013 --
Expenses paid by issuance of common stock 127,500 1,712,294
Other operating expenses 2,420 64,019
Changes in operating assets and liabilities:
Notes and accounts receivable including accrued
interest receivable -- 25,906
Prepaid expenses 18,000 (18,000)
Accounts payable and accrued expenses 14,403 (2,412)
Discontinued operations:
Non-cash charges and working capital changes -- 766,114
----------- -----------
Net cash used in operating activities (221,539) (1,536,576)
----------- -----------
Cash Flows from Investing Activities:
Proceeds from sale of discontinued operations -- 585,000
Proceeds from sale of equipment -- 49,282
Discontinued operations -- 300,000
Notes receivable from Lator International, Inc. 238,300 (350,000)
Payments for furniture, equipment and leasehold improvements -- (14,081)
----------- -----------
Net cash provided by investing activities 238,300 570,201
----------- -----------
Cash Flows from Financing Activities:
Net proceeds from issuance of common stock -- 50,000
Proceeds from short-term loans from former shareholders -- 397,000
Repayment of short-term loans from former shareholders -- (397,000)
Net proceeds from issuance of 8% convertible debentures -- 1,066,667
Proceeds from exercise of stock options 687 196,333
Proceeds of loans from officers 2,800 --
Discontinued operations -- (321,718)
Payments to affiliates, net -- (94,601)
----------- -----------
Net cash provided by financing activities 3,487 896,681
----------- -----------
Foreign Currency Translation Adjustment -- (68,537)
----------- -----------
Net Increase (Decrease) in Cash 20,248 (138,231)
Cash, Beginning 500 138,731
----------- -----------
Cash, Ending $ 20,748 $ 500
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest:
Continuing operations $ -- $ 31,375
=========== ===========
Discontinued operations $ -- $ 17,475
=========== ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
On November 4, 1997, the Company changed its name to Regenesis
Holdings, Inc. (the Company). The Company, formerly known as QPQ
Corporation, was originally organized for the purpose of developing
and operating franchised Domino's Pizza stores in the Republic of
Poland (Poland). From August 9, 1995 through September 3, 1997, the
Company's wholly-owned subsidiary, QPQ Medical Centers, Inc. (QPQ
Medical) was in the business of developing and/or operating medical
centers which offered primary care medical services and medically
supervised weight loss programs. On June 27, 1997, the Company sold
its wholly-owned Polish subsidiary Pizza King Polska, Sp z.o.o. (PK
Polska) to an unrelated party, in exchange for $500,000 cash,
relinquishment of certain PK Polska related assets owned by the
Company and assumption of all liabilities of PK Polska by the
purchaser. On September 3, 1997, the Company sold its wholly-owned
subsidiary QPQ Medical Centers, Inc. to an unrelated party, in
exchange for $60,000 cash, a $150,000 note receivable and the
assumption of all liabilities of QPQ Medical by the purchaser. See
Note 10 for additional details regarding the disposition of PK
Polska and QPQ Medical.
The Company operated as a holding company for 1998 with no
operating subsidiaries.
In 1999, management shifted the Company's focus to operations in
the Internet and related technology markets. In March 1999, the
Company acquired all of the assets of NetDisc, Inc. ("NetDisc").
NetDisc is engaged in the business of marketing Internet and
e-commerce web sites through a specialized and unique advertising
campaign, which integrates CD-ROM video productions and print media
distribution to provide a direct connection to the targeted web
site, including e-commerce products.
Basis of Presentation
The accompanying financial statements at December 31, 1997 include
the accounts of the Company. The results of operations and cash
flows for PK Polska and QPQ Medical for the year ended December 31,
1997 and for the periods from January 1, 1997 until the dates of
their sale are included in discontinued operations in the
accompanying financial statements.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
F-7
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Loss Per Common Share
The net loss per common share in the accompanying statements of
operations has been computed based upon the provisions of Statement
of Financial Accounting Standards No. 128, Earnings Per Share,
which was adopted in 1997, and requires restatement of previously
reported per share amounts. The basic and diluted net loss per
common share in the accompanying statements of operations is based
upon the net loss divided by the weighted average number of shares
outstanding during each period. Diluted per share data is the same
as basic per share data since the inclusion of all potentially
dilutive common shares that would be issuable upon the exercise of
options and warrants and the assumed conversion of preferred stock
would be anti-dilutive.
Income Taxes
The Company accounts for its income taxes under the provisions of
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, which requires recognition of deferred tax
liabilities and assets for expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax liabilities and assets are
determined based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
Acquisition Costs of Development Rights
All costs associated with the acquisition of Domino's Development
Rights were capitalized. The cost of these rights were amortized on
a straight-line basis over a period of 10 years (see Note 3).
Advertising and Promotion Expense
Production costs of future media advertising were deferred until
the advertising occurred. All other advertising and promotion costs
were expensed when incurred.
Foreign Currency
The only currency that may be used in Poland is the Zloty. The
value of the Zloty is pegged pursuant to a system based on a basket
of currencies, as well as all other economic and political factors
that affect the value of currencies generally. The accounts of PK
Polska were measured using the Polish Zloty. Monetary assets and
liabilities were translated from the local currency, the Zloty, to
U.S. dollars at the period end exchange rate. Non-monetary assets,
liabilities and related expenses, primarily furniture, equipment,
leasehold improvements and related depreciation and amortization,
were translated at a weighted average exchange rate. For the year
ended December 31, 1997, the Company recognized a currency
translation loss of $68,537, which is included in stockholders'
equity under the caption Accumulated Translation Adjustment.
F-8
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash. At
various times during the year the Company had deposits in financial
institutions in excess of the federally insured limits. The Company
maintains its cash with high quality financial institutions, which
the Company believes limits these risks.
Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, Reporting Comprehensive Income and No. 131, Disclosures
About Segments of an Enterprise and Related Information. SFAS No.
130 establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. SFAS
No. 131 establishes standards for the way that public companies
report information about operating segments in annual financial
statements and requires reporting of selected information about
operating segments in interim financial statements issued to the
public. Both SFAS No. 130 and SFAS No. 131 are effective for
periods beginning after December 15,1997. The Company adopted these
new accounting standards in 1998, and their adoption had no effect
on the Company's financial statements and disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as
a hedge, the objective of which is to match the timing of the gain
or loss recognition on the hedging derivative with the recognition
of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss
is recognized in income in the period of change. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999.
Historically, the Company has not entered into derivatives
contracts to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new
standard on January 1, 2000 to affect its financial statements.
NOTE 2. GOING CONCERN
Going Concern
The accompanying financial statements have been prepared on a going
concern basis, which assumes the realization of assets and
liquidation of liabilities in the ordinary course of business.
During the years ended December 31, 1998 and 1997, the Company has
incurred net losses of $436,213 and $4,948,494 and, as of December
31, 1998 and 1997, has no operating activities. As more fully
described below under "Liquidity and Plan of Operations",
F-9
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 2. GOING CONCERN (Continued)
Going Concern (Continued)
significant uncertainties exist with regard to the Company's
ability to generate sufficient cash flows from operations or other
sources to meet and fund its commitments with regard to existing
liabilities and recurring expenses, which gives rise to substantial
doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
Liquidity and Plan of Operations
As of December 31, 1998, the Company had cash of $20,748 and
working capital of $3,545, respectively. The Company's ability to
meet its future obligations in relation to the orderly payment of
its recurring general and administrative expenses on a current
basis is totally dependent upon its ability to secure and develop
new business opportunities through acquisitions or other venture
opportunities. Since the Company has no source of liquidity, the
Company is unable to project how long it may be able to survive
without a significant infusion of capital from outside sources and
it further is unable to predict whether such capital infusion, if
available, would be at terms and conditions that are acceptable to
the Company.
In order to generate future operating activities, the Company
intends to search for, investigate and attempt to secure and
develop, business opportunities through acquisitions, reverse
mergers or other venture activities. However, there can be no
assurance that the Company will be successful in its search for new
business opportunities or that any such businesses or ventures
acquired will be successful.
NOTE 3. DOMINO'S DEVELOPMENT RIGHTS
From June 1993 through June 1997, the Company's wholly-owned Polish
subsidiary operated four Domino's Pizza stores in the Republic of
Poland pursuant to the terms of a Development Agreement between
Domino's Pizza, Inc. and the Company which granted the Company the
exclusive right to develop and/or franchise Domino's stores in Poland,
subject to certain terms and conditions. The Company paid Domino's a
development fee of $300,000.
The Company was required to pay Domino's a franchise fee for each store
opened and a monthly royalty fee based upon a percentage of gross
sales.
As more fully described in Note 7, the Company sold its wholly-owned
Polish subsidiary that operated the Domino's Pizza stores.
NOTE 4. INCOME TAXES
No credit for income taxes has been reflected in the accompanying
financial statements for 1998 and 1997 because of the significant
uncertainty that exists regarding realization of such income tax
credits.
F-10
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 4. INCOME TAXES (Continued)
As of December 31, 1998, the Company had temporary differences
primarily related to net operating loss carryforwards. As of December
31, 1998, the Company estimates that it has net operating loss
carryforwards of approximately $7,657,000 for U.S. tax purposes, which
expire in various years through 2018; however, the utilization of the
benefits of such carryforwards may be limited, as more fully discussed
below. Sufficient uncertainty exists regarding the realization of these
operating loss carryforwards and, accordingly, deferred tax assets of
approximately $2,833,000 as of December 31, 1998 were subject to and
presented net of a 100% valuation allowance.
The ultimate determination of the Company's taxable income, including
the amount and expiration dates of net operating loss carryforwards, is
subject to, among other things, certain restrictions as a result of the
late filing of the various returns. The Company may also be subject to
possible review and examination of such tax returns by the appropriate
taxing authorities. Additional income taxes, including penalties for
non-compliance and interest, if any, that may be assessed will be
charged to operations when determined.
In accordance with certain provisions of the Tax Reform Act of 1986, a
change in ownership of greater than 50% of a corporation within a three
year period will place an annual limitation on the corporation's
ability to utilize its existing tax benefit carryforwards. Under such
circumstances, the potential benefits from utilization of the tax loss
carryforwards as of that date may be substantially limited or reduced
on an annual basis. To the extent that net operating loss
carryforwards, when realized, relate to stock option deductions, the
resulting benefits will be credited to stockholders' equity.
NOTE 5. STOCKHOLDERS' EQUITY
Reverse Stock Split
On August 8, 1997, the Company declared a 1-for-20 reverse stock
split effective on August 22, 1997, and on September 17, 1997, the
Company declared a 1-for-3 reverse stock split effective on October
8, 1997. All information relating to outstanding shares of common
stock in the accompanying financial statements for all periods
presented has been restated to reflect the reverse splits.
Stock Option Plans
The Company's Stock Option Plan (the Plan) and Directors Stock
Option Plan (the Directors Plan) (collectively the Plans),
authorized the issuance of 16,667 and 833 shares of common stock
options, respectively.
F-11
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5. STOCKHOLDERS' EQUITY (Continued)
Stock Option Plans (Continued)
The following table reflects the option activity for the year ended
December 31, 1997; there were no options granted under the Plans
for the year ended December 31, 1998:
1997
Outstanding at beginning of year 8,375
Options granted -
Options exercised -
Options expired (8,375)
------
Options outstanding at end of year -
=========
Options exercisable at end of year -
=========
Price range of options outstanding at end of year -
=========
On October 3, 1997, the Company established its 1997 Stock Option
Plan (the 1997 Plan) which authorizes the issuance of options to
purchase a maximum of 1,000,000 shares of common stock. All shares
to be issued under the 1997 Plan have been registered pursuant to a
Form S-8 Registration Statement, which was filed and became
effective on October 3, 1997.
A summary of the status of options under this plan as of December
31, 1998 and 1997 and changes during the year ended on that date
are presented below:
<TABLE>
<CAPTION>
1998 1997
---- ----
Option Market Option Market
Price Price Average Price Price Average
at Date at Date Term at Date at Date Term
Shares of Grant of Grant in Years Shares of Grant of Grant in Years
------ -------- -------- -------- ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
Beginning
of Year 70,369 $.01-$3.60 $3.250-$5.64 5.0 - $ - $ - -
Options
Granted - - - - 496,369 $.01-$3.60 $3.250-$5.64 3.3
Options
Exercised (68,702) .01-3.60 3.250-5.64 5.0 (426,000) .20-.75 2.125-3.25 3.0
Balance at
End of
Year 1,667 .01-3.60 3.250-5.64 5.0 70,369 .01-3.60 3.250-5.64 5.0
Options
Exercisable
At End of
Year 1,667 .01-3.60 3.25-5.64 - 70,369 .01-3.60 3.250-5.64 -
</TABLE>
The weighted average remaining term of options exercisable at
December 31, 1998 approximated 3.9 years.
F-12
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5. STOCKHOLDERS' EQUITY (Continued)
Stock Option Plans (Continued)
The difference between the option price and quoted market value of
the 426,000 options exercised aggregating $1,142,825 was charged to
consulting fees and is included in general and administrative
expenses in the accompanying consolidated statement of operations
for the year ended December 31, 1997.
The 70,369 options outstanding were granted to the Company's then
President and Chief Executive Officer (68,702) and a Director of
the Company (1,667) and the difference between the option price and
quoted market value aggregating $225,995 was charged to
compensation expense and is included in general and administrative
expenses in the accompanying consolidated statements of operations
for the year ended December 31, 1997. In addition, the President
received 6,086 shares of common stock in payment of $34,554 of
compensation.
The options granted to the Company's President and Chief Executive
Officers were issued pursuant to an agreement with the Company's
Board of Directors on December 15, 1997, in satisfaction of all
shares of common stock and options to purchase common stock which
were issuable pursuant to the anti-dilutive provision of his
employment agreement.
The Company applies APB Opinion 25, Accounting for Stock Issued to
Employees and related interpretations in accounting for options
issued to employees and consultants. Compensation cost for stock
options is measured as the market price of the Company's common
stock at the date of grant, or agreement in principle to grant the
option, if earlier, over the amount the recipient must pay to
acquire the common stock.
SFAS No. 123, Accounting for Stock-Based Compensation, was issued
during 1995 and was effective for the year ended December 31, 1996.
This pronouncement establishes financial accounting and reporting
standards for companies to recognize compensation expenses for
grants of stock, stock options and other equity instruments to
employees based on new fair value accounting rules. Companies that
choose not to adopt the new fair value accounting rules are
required to disclose proforma net income and earnings per share
under the new method. Had compensation cost for the Company's stock
option plans been determined based upon fair values at the grant
dates for awards under these plans consistent with the methodology
prescribed under SFAS 123 for options granted in 1997, the
Company's net loss and net loss per share for the year would have
been increased by approximately $1,360,000 or $4.85 per share.
($22.51 pro forma net loss per share). The fair value of the
options granted during 1997 is estimated as $2,540,000, on the date
of such grants using the Black-Scholes option-pricing model with
the following assumptions: volatility of 1,350% in 1997, expected
dividends of 0, risk free interest rate of 5%, and terms of 3 to 5
years in 1997. The pro forma net loss for 1998 would not have been
materially different from the historical net loss, inasmuch as
substantially all of the options previously granted had been vested
and there were no options granted in 1998.
F-13
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5. STOCKHOLDERS' EQUITY (Continued)
Preferred Stock
On October 7, 1997, the Board of Directors of the Company
designated 300,000 shares of authorized preferred stock as Series A
Preferred Stock with a par value of $.01 per share. The Series A
Preferred Stock has equal voting rights with the Company's common
stock; is convertible at the option of the holder into five shares
of common stock for each share of Series A Preferred Stock; is
redeemable at any time at the sole option of the Company at a
redemption price to be negotiated by the parties; is entitled to
dividends from time to time as determined at the sole discretion of
the Company out of funds legally available for the payment of
dividends; and is entitled to a liquidation preference of $0.1 per
share upon voluntary or involuntary dissolution or winding up of
the Company.
8% Convertible Debentures
In March 1997, the Company entered into Securities Subscription
Agreements (the "Agreements") for the sale of $1,280,000 of 8%
Convertible Debentures (the "Debentures") with a maturity date of
March 31, 1998, for which the Company received net proceeds of
$1,066,667. Interest on the debentures was payable quarterly.
The Debentures were originally convertible into shares of common
stock at a conversion price per share equal to the lower of (a) 75%
of the average closing bid price of the common stock for five
business days immediately preceding the conversion date or (b) 75%
of the average of the closing bid price of the common stock for the
business day immediately preceding the date of the individual
Subscription Agreement.
Pursuant to a settlement entered into with all holders of the
Debentures, the holders agreed to accept three shares of common
stock in exchange for each $1 of principal amount of each
Debenture. In addition, all accrued interest on the debentures was
satisfied by issuance of the common stock. On June 4,1997, the
Company issued 64,000 shares of common stock in exchange for all of
the outstanding Debentures.
The $165,927 of unamortized costs associated with issuance of the
debentures has been charged against additional paid-in capital in
the accompanying consolidated financial statements at December 31,
1997.
The Debentures were originally issued in reliance upon the
exemption from registration afforded by Regulation S as promulgated
by the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
Other Matters
During the year ended December 31, 1997, the Company issued 8,333
shares of common stock in a private offering and received net
proceeds of $50,000. As of December 31, 1997, such shares had not
been issued, but are reflected as outstanding in the accompanying
financial statements, since the proceeds from such offering were
received prior to December 31, 1997. The shares were issued in
April 1998.
F-14
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5. STOCKHOLDERS' EQUITY (Continued)
Other Matters (Continued)
During the years ended December 31, 1998 and 1997, the Company
issued 30,000 shares of common stock and 463,753 shares of common
stock and 70,369 options to purchase common stock in payment of
expenses and satisfaction of liabilities, respectively. In the
opinion of the Company, all such shares and options were valued at
their estimated fair market value on the date of issuance, after
considering all factors that could reasonably impact the fair
market value of the shares and options. The Company did not obtain
any independent fairness opinions with regard to the issuance of
any of the shares and options.
In connection with its initial public offering in 1993, the Company
issued 23,428 of redeemable common stock purchase warrants. Each
warrant entitles the holder to purchase one share of common stock
for $396, exercisable through September 22, 1998. The Company also
sold to the underwriters a purchase warrant which allows the holder
to purchase for $8.70 each up to 2,083 warrants which can be
converted to one share of common stock per warrant at an exercise
price of $540.
As of December 31, 1998, the Company had 503,631 shares of common
stock potentially issuable pursuant to its stock option plans and
outstanding warrants.
See Note 12 regarding equity transactions subsequent to December
31, 1998.
NOTE 6. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended December 31,
1998 and 1997 are comprised of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Consulting fees, including $1,292,742 paid by issuance of common
stock in 1997 $ - $1,402,553
Legal and professional, including $127,500 and $62,569 paid by
issuance of common stock in 1998 and 1997, respectively 233,772 269,236
Salaries and wages, including $260,549 paid by issuance of common
stock and options to purchase common stock in 1997 61,667 462,113
Depreciation and amortization - 88,160
Directors' fees - 18,000
Rent - 24,087
Travel 3,948 23,456
Loss on disposal of property and equipment 14,013 81,582
All other, including $43,796 paid by issuance of common stock
in 1997 86,189 195,998
-------- ----------
$399,589 $2,565,185
======== ==========
</TABLE>
F-15
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7. DISCONTINUED OPERATIONS
Effective June 23, 1997, the Company sold three of its four operating
medical centers to an unrelated party in exchange for cash of $25,000,
which was received on July 1, 1997, and notes receivable of $57,000.
The Company recorded a loss on disposition of assets of $228,088, which
is included in loss from operations, under discontinued operations in
the accompanying consolidated statements of operations for the year
ended December 31, 1997. After completion of this sale it was the
Company's intention to continue to operate the remaining medical
center. Subsequently, management of the Company determined that it
would be in the best interest of the Company to dispose of the
remainder of its medical center operation in order to eliminate the
continuing losses associated with such operation and the potential
contingent liabilities related to the weight loss business.
On September 3, 1997, the Company sold its 100% interest in QPQ Medical
to an unrelated party in exchange for $60,000 cash, a $150,000 note
receivable and the assumption of all liabilities of QPQ Medical by the
purchaser. In addition, QPQ Medical transferred computer equipment with
a net book value of $74,789 to the Company as additional consideration.
The Company recorded a loss of $295,630 on the sale of QPQ Medical. The
note bears interest at 10% per annum, is payable in monthly principal
installments of $5,000 commencing October 1, 1997, with a balloon
payment of $90,000 payable on September 30, 1998. Interest is payable
at maturity. The note is collateralized by a first lien on all assets
of QPQ Medical and certain other assets owned by the purchaser.
As a result of the failure of the purchasers to meet their payment
obligations under the $57,000 and $150,000 notes as of December 31,
1997, the Company recorded a provision for doubtful accounts of
$202,167 to reduce such notes to their estimated net realizable value
at December 31, 1997, which amount is included in other expenses in the
accompanying financial statements.
In connection with the sale of QPQ Medical, the Company received
computer equipment worth a net book value of $74,789 as part of the
consideration for such sale. During the period from the sale of QPQ
Medical through December 31, 1997, the Company was unsuccessful in its
various attempts to sell the equipment, and as of December 31, 1997,
recorded a provision of $64,018 to reduce such equipment to its
estimated net realizable value of $3,000. The $64,018 provision is
included in general and administrative expenses in the accompanying
consolidated financial statements.
On June 27, 1997, the Company sold its wholly-owned Polish subsidiary,
PK Polska, for $500,000 cash, plus a release from all other obligations
of the Company relative to PK Polska, including bank guarantees. The
Company also relinquished its $300,000 certificate of deposit (which
was used as collateral for a $300,000 bank loan to PK Polska) and
transferred the unamortized cost of its Domino's Development rights to
the purchaser.
F-16
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7. DISCONTINUED OPERATIONS (Continued)
Following is a computation of the loss incurred on the sale of QPQ
Medical and PK Polska:
<TABLE>
<CAPTION>
QPQ PK
Medical Polska
------- ------
<S> <C> <C>
Net assets at date of sale $580,418 $312,068
Certificate of deposit relinquished - 300,000
Transfer of net book value of Domino's development rights - 189,103
-------- --------
Total 580,418 801,711
Less proceeds received 284,788 500,000
-------- --------
Loss on sale $295,630 $301,711
======== ========
</TABLE>
Following is a condensed summary of the results of operations of QPQ
Medical and PK Polska for all periods presented in the accompanying
consolidated financial statements:
Year Ended
December 31, 1997
-----------------
Revenue $ 1,260,707
Net loss (1,371,183)
The 1997 amounts include the results of operations of PK Polska for the
period from January 1, 1997 through June 27, 1997, the results of
operations of three medical centers for the period from January 1, 1997
through June 23, 1997 and the operation of one medical center for the
period from January 1, 1997 through September 3, 1997.
NOTE 8. NOTES RECEIVABLE - LATOR INTERNATIONAL, INC.
On October 8, 1997, the Company agreed to purchase all of the
outstanding common stock of Lator International, Inc. ("Lator") in
exchange for 300,000 shares of the Company's Series A Preferred Stock.
Completion of the acquisition was contingent upon Lator's acquisition
of 100% of the outstanding common stock of 9006-1474 Quebec, Inc.,
d/b/a Torland ("Torland") on or before December 31, 1997.
As a result of Lator's inability to obtain the necessary financing and
complete the acquisition of Torland, in May 1998, the Company
retroactively canceled its acquisition of Lator, and entered into a
Termination and Release Agreement (the "Agreement") with all parties to
the original agreement. Pursuant to the Agreement, amounts advanced to
Lator by the Company, aggregating $350,000 at December 31, 1997, were
to be repaid in full by Lator, although no specific repayment terms
were specified in the Agreement. The notes were unsecured and pursuant
to the Agreement all interest due on the notes was waived by the
Company.
After receipt of the $350,000 of advances from the Company, Lator
advanced the funds to LPS Acquisition Corp. ("LPS"), a wholly-owned
subsidiary of Coventry Industries Corp. ("Coventry"). At the time of
the transaction, C. Lawrence Rutstein was President and Chief Executive
Officer and a Director of the Company and a member of the Board of
Directors of Coventry, and Robert Hausman was President of Coventry and
a member of the Board of Directors of both the Company and Coventry.
F-17
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 8. NOTES RECEIVABLE - LATOR INTERNATIONAL, INC. (Continued)
In 1998, the Company collected approximately $139,000 on the above
described notes. In June 1998, the Company assigned the remaining notes
to a third party for $100,000 and the assumption of certain liabilities
approximating $76,000. The Company wrote off the remaining balance of
approximately $35,000, which was recorded as a provision for doubtful
accounts in the accompanying statement of operations for the year ended
December 31, 1998.
NOTE 9. RELATED PARTY TRANSACTIONS
From January 13, 1997 through March 12, 1997, the Company's former
Chairman of the Board, Chief Executive Officer and President, along
with his mother, loaned the Company an aggregate of $397,000, repayable
on demand, with interest at 8% per annum. The loans were made for
working capital purposes. On March 17, 1997, the loans were repaid in
full together with $3,022 of accrued interest from proceeds received in
connection with issuance of the 8% Convertible Debentures.
During the year ended December 31, 1997, the Company incurred $7,676 of
legal fees from the law firm of Selmon & Claire. Robert Claire, a
partner in the law firm, was a director of the Company during the
period from October 1997 through March 1998.
On February 15, 1999, the Company issued 516,000 shares of common stock
to related parties in connection with its offering of 950,000 shares.
NOTE 10. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
Certain supplemental disclosures of non-cash investing and financing
activities for the years ended December 31, 1998 and 1997 are as
follows:
Year ended December 31, 1997:
Issuance of 64,000 shares of common stock in satisfaction of
$1,280,000 principal amount of 8% convertible debentures and $22,638
of accrued interest
Issuance of 457,667 shares of common stock in satisfaction of
liabilities and payment of legal, professional and consulting expenses
Issuance of 6,086 shares of common stock in payment of officer
compensation Issuance of options to purchase 70,369 shares of common
stock in payment of $225,995 of
compensation expense
Year ended December 31, 1998:
Accounts payable totaling $76,345 were forgiven by the assignees of
the Lator Notes Receivable.
Issuance of 30,000 shares of common stock in satisfaction of
liabilities and payment of legal, professional and consulting
expenses.
F-18
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 11. COMMITMENTS AND CONTINGENCIES
Litigation
The Company received a letter in August 1998 on behalf of one of
its stockholders whereby the stockholder alleged that he was
damaged by affirmative misrepresentations and material omissions
allegedly made by the Company and its affiliates in connection with
the 1996 sale of its securities to the stockholder. The amount of
damages alleged to have been suffered by the stockholder is
$1,200,000, excluding interest and attorneys fees. In December
1998, in an effort to resolve any such pending allegations, the
Company joined a suit in which this stockholder was charged with
libel and slander. The Company believes that this matter will be
resolved in a manner favorable to it, but there can be no assurance
of this. Because of the uncertainty of the loss, if any, that may
result from this matter, no provision has been made in the
accompanying financial statements for any loss.
Warrant Settlement
On November 20, 1996, the Company was notified by holders of
warrants for the purchase of an aggregate of 637 shares of common
stock issued on September 22, 1993, pursuant to the Underwriter's
Common Stock Purchase Agreement, between the Company and Reich &
Co., Inc., that pursuant to the anti-dilution provisions contained
in such warrants, the warrant exercise per share of common stock
underlying the warrants was reduced to $15 per share. The claim
alleged that the number of shares for which the warrants are
exercisable increased to an aggregate of 22,950 shares.
Additionally, the warrant holders demanded registration of such
shares. On May 14, 1997, the Company repurchased the warrants for a
total purchase price of $201,000. The accompanying financial
statements for the year ended December 31, 1997 include a loss on
underwriter warrant settlement in the amount of $201,000.
Consulting Agreement
On April 18, 1997, the Company entered into a two year consulting
agreement with an unrelated individual to provide advice and
consult with the Company concerning business acquisitions,
including asset purchases, consolidations, mergers, joint ventures
and strategic alliances with companies located in Russia and the
former Soviet Republic. The Company issued 5,000 shares of common
stock as initial compensation and further agreed to issue 10,000
shares of common stock upon the successful completion of an
acquisition or merger introduced to the Company by the consultant.
If any such acquisition or merger is not completed due to the fault
of the Company, the 10,000 shares will be issued to the consultant
as a breakup fee. The agreement was terminated and the shares were
returned to the Company in 1998.
Employment Agreements
On May 9, 1997, the Company entered into a five year employment
agreement with its then President providing for annual salary of
$120,000 with annual increases equal to the greater of the annual
increase in CPI or 6% of the previous year's base salary. The
President received a signing bonus in the form of 6,086 shares of
common stock and received options to purchase an aggregate of
68,702 shares of common stock at an amended exercise price of $.01
per share. The options vested immediately and were exercised in
full on May 12, 1998. This employment agreement was terminated in
June 1998.
F-19
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 11. COMMITMENTS AND CONTINGENCIES (Continued)
In 1999, the Company entered into employment agreements with five
of its key management personnel. The agreements expire at various
dates from 2000 to 2003; provide for aggregate annual salaries of
approximately $685,000; and provide for the issuance of a total of
1,000,000 shares of common stock and the granting of options to
purchase a total of approximately 950,000 shares of common stock
under the Company's 1997 stock option plan, at an exercise price of
$.25 per share.
NOTE 12. SUBSEQUENT EVENTS
Acquisitions
On March 18, 1999, the Company acquired substantially all of the
operating assets and business operations of NetDisc, Inc. for
10,000 shares of the Company's common stock. The acquisition will
be accounted for under the purchase method of accounting.
NetDisc is engaged in Internet advertising, and has developed CD
Rom/Internet technology which directs users to the Web sites of
advertisers. In connection with the asset purchase agreement,
NetDisc pledged to an unaffiliated third party all of the assets
that it purchased. The Company assumed none of NetDisc's
liabilities.
Operating Leases
On May 10, 1999, the Company entered into a lease for its main
office in Weston, Florida. The lease, which expires on August 10,
1999, requires monthly payments of $4,000. The Company plans to
either expand its current location or lease at another location
when the lease expires.
On May 12, 1999, the Company entered into an office service
agreement for a New York office. The agreement, which expires on
May 31, 2000, requires monthly payments of $4,626 and may be
terminated by either party upon thirty days written notice. Upon
expiration of the initial term of the agreement, there is an
automatic extension for the same period of time as the initial term
with an increase in the base rent of 8%. The terms of the agreement
will remain the same as the initial term if extended.
Equity Transactions
On February 1, 1999, the Board of Directors of the Company
designated 300,000 shares of authorized Preferred Stock as Series B
Preferred Stock with a par value of $.01 per share. The Series B
Preferred Stock has equal voting rights with the Company's Common
Stock upon conversion to common stock; is convertible, at the
option of the holder, into twenty shares of Common Stock for each
share of Series B Preferred Stock; is redeemable at any time at the
sole option of the Company at a redemption price to be negotiated
by the parties; is entitled to dividends from time to time as
determined in the sole discretion of the Company out of funds
legally available for the payment of dividends; and is entitled to
a liquidation preference of $.01 per share upon voluntary or
involuntary dissolution or winding up of the Company.
F-20
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 12. SUBSEQUENT EVENTS (Continued)
Equity Transactions (Continued)
On February 1, 1999, the Board of Directors of the Company
designated 300,000 shares of authorized Preferred Stock as Series C
Preferred Stock with a par value of $.01 per share. The Series C
Preferred Stock has equal voting rights with the Company's Common
Stock; is convertible, at the option of the holder, into 18.75
shares of Common Stock for each share of Series C Preferred Stock;
is redeemable at any time at the sole option of the Company at a
redemption price to be negotiated by the parties; is entitled to
dividends from time to time as determined in the sole discretion of
the Company out of funds legally available for the payment of
dividends; and is entitled to a liquidation preference of $.01 per
share upon voluntary or involuntary dissolution or winding up of
the Company.
On February 1, 1999, the Board of Directors of the Company and a
majority of the stockholders filed an amendment to the Articles of
Incorporation, which provide for an increase in the number of
shares of common and preferred shares as follows: The maximum
number of shares of all classes of stock which the Corporation is
authorized to have outstanding at any one time is 110,000,000
shares, of which 10,000,000 shares shall be preferred stock, par
value $.01 per share, issuable in one or more classes or series
(the "Preferred Stock"), and 100,000,000 shares shall be Common
Stock, par value $.01 per share (the "Common Stock"). Retroactive
effect has been given to this amendment to the Company's authorized
stock in the accompanying financial statements. All or any part of
the
Common Stock and Preferred Stock may be issued by the Corporation
from time to time and for such consideration as the Board of
Directors may determine. All of such shares, if and when issued,
and upon receipt of such consideration by the Corporation, shall be
fully paid and non-assessable.
On February 1, 1999, the Company sold 35,000 Series C Preferred
Stock to the Company's Chairman and received net proceeds of $350.
Contemporaneously, the Chairman transferred 29,000 of his Series C
Preferred Stock to certain officers of the Company. On February 3,
1999, the Company sold 13,000 of its Series C Preferred Stock in a
private offering and received net proceeds of $130. The Chief
Executive Officer and a director purchased 3,000 and 10,000 shares,
respectively. All of the Series C Preferred Stock was subsequently
converted into a total of 900,000 shares of common stock.
On February 5, 1999, the Company granted an aggregate of 500,000
stock options under its 1997 Stock Option Plan, to the Chairman,
Chief Executive Officer and President, at an exercise price of $.25
per share.
On February 15, 1999, the Company completed an offering of 950,000
shares of its common stock in a private offering and received net
proceeds of $9,500. This offering included 516,000 shares issued to
related parties.
F-21
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 12. SUBSEQUENT EVENTS (Continued)
Equity Transactions (Continued)
On February 23, 1999, the Company consummated four Subscription
Agreements to sell 500,000 of the Company's common stock to
unrelated investors at $.20 per share. The Company has received
$100,000 for the sale of 500,000 shares and is in the process of
delivering the shares to the investors. The subscription agreement
expires on June 30, 1999.
On March 18, 1999, the Company granted 100,000 shares of common
stock to an officer, pursuant to the terms of his employment
agreement.
On March 30, 1999, the Company accepted a Subscription Agreement
from an institutional investor (the "Buyers") for a total of
100,000 shares of its common stock at $1.00 per share for a total
subscription price of $100,000.
The following is a summary of the shares of common stock issued
subsequent to December 31, 1998:
Balance, December 31, 1998 762,345
Private offering, February 15, 1999 950,000
Private offering, February 23, 1999 500,000
Shares to officers under employment agreements 100,000
Conversion of Series C preferred stock 900,000
Shares issued for NetDisc, Inc. acquisition 10,000
Private offering, March 30, 1999 100,000
---------
Balance, March 30, 1999 3,322,345
=========
F-22
Exhibit 3.6
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
OF
REGENESIS HOLDINGS, INC.
Pursuant to Sections 607.1006 and 607.0602 of the Business Corporation
Act of the State of Florida, the following provisions of the Articles of
Incorporation of Regenesis Holdings, Inc., a Florida corporation
("Corporation"), filed with the Department of State on July 6, 1993, Document
Number P93000046905 be, and are hereby, amended as shown below:
The Articles of Incorporation are hereby amended by striking out
Article 4 in its entirety, and substituting in lieu thereof the new Article 4 as
follows:
ARTICLE 4
(A) The maximum number of shares of all classes of stock which the
Corporation is authorized to have outstanding at any one time is 110,000,000
shares, of which 10,000,000 shares shall be preferred stock, par value $.01 per
share, issuable in one or more classes or series (the "Preferred Stock"), and
100,000,000 shares shall be Common Stock, par value $.01 per share (the "Common
Stock"). All or any part of the Common Stock and Preferred Stock may be issued
by the Corporation from time to time and for such consideration as the Board of
Directors may determine. All of such shares, if and when issued, and upon
receipt of such consideration by the Corporation, shall be fully paid and
non-assessable.
(B) The Board of Directors is authorized to adopt resolutions at any
time and from time to time dividing the Preferred Stock into one or more classes
or series, which classes or series may have such voting powers, full or limited,
or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions as the Board may specify in such resolutions and as may mow or
hereafter be permitted by Florida law.
(C) Except as otherwise required by law, each holder of Common Stock
shall be entitled to one vote for each share standing in such person's name on
the books of the Corporation. Subject to the rights of any outstanding shares of
Preferred Stock having preferential dividend rights, holders of Common Stock are
entitled to such dividends as may be declared by the Board of Directors out of
funds lawfully available therefor.
CHARLES B. PEARLMAN, ESQ., FLA BAR #235547
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Phone No.: (954) 763-1200
6306-0100 240891.1
<PAGE>
Upon any liquidation, dissolution or winding up the affairs of the
Corporation, holders of Common Stock are entitled to receive pro rata the
remaining assets of the Corporation, after the holders of outstanding shares of
Preferred Stock having preferential rights to such assets have received in full
the distributions to which they are entitled.
(D) PREFERRED STOCK
1. DESIGNATION AND INITIAL NUMBER.
The series of Preferred Stock hereby classified shall be
designated "Series B Preferred Stock." The initial number of
authorized shares of the Series B Preferred Stock shall be
300,000 shares. Upon issuance of the shares of Series B
Preferred Stock an amount at least equal to the par value
shall be the stated capital of the Company.
The series of Preferred Stock hereby classified shall be
designated "Series C Preferred Stock." The initial number of
authorized shares of the Series C Preferred Stock shall be
100,000 shares. Upon issuance of the shares of Series C
Preferred Stock an amount at least equal to the par value
shall be the stated capital of the Company.
2. VOTING RIGHTS.
Holders of the shares of Series B & C Preferred Stock shall be
entitled to full voting rights, share for share, with the then
outstanding Common Stock as well as with any other class or
series of stock of the Company which have general voting power
with the Common Stock concerning any matter being voted upon.
Except as so provided, shares of Series B & C Preferred Stock
shall at no time be entitled, as a series, class or otherwise,
to any other or special or restrictive voting rights of any
kind whatsoever, except as then and when and to the extent
required by applicable law.
3. CONVERSION PRIVILEGE.
The holders of the Series B & C Preferred Stock shall have the
right, pursuant to the Series B & C Preferred Stock
convertible agreement, to convert the shares into shares of
the Company's Common Stock, par value $.01 per share, on the
following terms and conditions:
6306-0100 240891.1
2
<PAGE>
a. Each share of Series "B" Preferred Stock shall be
convertible as stated herein, into twenty (20) fully
paid and non-assessable shares of
Common Stock.
b. Each share of Series "C" Preferred Stock shall be
convertible at any time, and from time to time, into
Eighteen and Three-Fourths (18.75) fully paid and
non-assessable shares of Common
Stock.
c. Upon presentation and surrender to the
Company (or any office or agency maintained for
the transfer of the Series B & C Preferred Stock)
of certificates of Series B & C Preferred Stock to
be so converted, duly endorsed in blank for
transfer or accompanied by proper instruments
of transfer in blank, all bearing medallion
guaranteed signature(s) of the holders and
accompanied by written notice of conversion (the
"Conversion Notice"), the holder of such shares
of Series B & C Preferred Stock shall be entitled,
subject to the limitations contained herein, to
receive in exchange therefor a certificate or
certificates representing such number of fully
paid and non-assessable shares of Common
Stock which shall represent the number of
shares of Series B & C Preferred Stock issuable
upon such conversion. The shares of Series B
& C Preferred Stock shall be deemed to have
been converted, and the person converting the
same to have become the holder of record of
Common Stock, for all purposes as of the date of
delivery of the Conversion Notice.
d. The Company shall, so long as any of the shares
of Series B & C Preferred Stock are outstanding,
reserve and keep available out of its authorized
and unissued Common Stock, solely for the
purpose of effecting the conversion of the shares
of Series B & C Preferred Stock, such number of
shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all of
6306-0100 240891.1
3
<PAGE>
the shares of Series B & C Preferred Stock then
outstanding.
e. The Company shall not issue any fraction of a share
of Common Stock upon any conversion, but shall round
up the number of shares of Common Stock issuable upon
such conversion to the next highest whole sale.
4. REDEMPTION.
The shares of Series B & C Preferred Stock are redeemable at
any time at the sole option of the Company at a redemption
price to be negotiated by the parties.
5. DIVIDENDS.
The shares of Series B & C Preferred Stock shall be paid
dividends from time to time as determined in the sole
discretion of the Board of Directors out of funds legally
available for the payment of dividends by the Company.
6. LIQUIDATION.
In the event of any voluntary or involuntary dissolution or
winding up of the Company, the holders of shares of Series B &
C Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Company available for
distribution to its shareholders an amount per share equal to
$.01 without interest, and no more, before any payment shall
be made to the holders of any stock of the Company ranking
junior to the Series B & C Preferred Stock. A merger of
consolidation of the Company with or into any other
corporation, share exchange or sale of conveyance of all or
any part of the assets of the Company which shall not in fact
result in the liquidation of the Company and the distribution
of assets to its shareholders shall not be deemed to be a
voluntary or involuntary liquidation, dissolution or winding
up of the Company within the meaning of this Article 4.
6306-0100 240891.1
4
<PAGE>
7. TRANSFERABILITY.
The shares of Series B & C Preferred Stock may be transferred
at any time and from time to time at the sole option of the
holder.
The foregoing amendment was adopted, pursuant to the Florida Business
Corporation Act, by affirmative vote of all of the Directors and a majority of
the Shareholders of the Common Stock of the Corporation, which shares consenting
and voted represented a majority of the total issued and outstanding capital
stock of the Corporation entitled to vote, pursuant to written consent dated
June 1, 1999. Therefore, the number of votes cast by the Shareholders of the
Corporation for the amendment to the Corporation's Articles of Incorporation was
sufficient for approval.
IN WITNESS WHEREOF, these Articles of Amendment of REGENESIS
HOLDINGS, INC. have been executed on this 14th day of June, 1999.
Mitchell B. Sandler, President
6306-0100 240891.1
5
Exhibit 6.1
THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated as of March 18,
1999, by and between Regenesis Holdings, Corp., a Florida corporation ("Buyer);
and NetDisc, Inc., a Florida corporation (the "Company").
R E C I T A L S
WHEREAS, the Company is engaged in the business of marketing Internet
and e-commerce web sites through a specialized and unique advertising campaign
which intergrates CD ROM video productions and print media distribution to
provide a direct connection to the targeted web site, including e-commerce
products such as: cars, boats, cosmetics, travel, fishing, diving, and gym
equipment (the "Business").
WHEREAS, the parties have entered into a letter of intent, security
agreement, promissory note and non-compete (the "Letter of Intent") providing
for, among other things, the purchase and pledge by Buyer of all of the assets
of the Company, (the "Assets").
WHEREAS, Sellers wish to sell, and Buyer wishes to purchase, the Assets
for the purchase price and upon the terms and subject to the conditions
described in this Agreement, as contemplated by the Letter of Intent.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, terms, and conditions herein made, the parties, intending to be
legally bound, agree as follows:
ARTICLE I
Definitions
1.1 Definitions. As used in this Agreement, the following terms have the
meanings specified in this Section 1.1.
(a) "Business Assets" has the meaning given that term in Section 2.2
(b) "Buyers' Documents" means this Agreement and any other agreements,
notes, certificates, exhibits, schedules and documents executed or delivered or
to be executed or delivered by Buyer in connection herewith.
(c) "Closing" has the meaning given that term in Section 3.1
(d) "Closing Date" has the meaning given that term in Section 3.1
(e) "Encumbrance" means any liability, debt, mortgage, security
interest, lien, claim, encumbrance, title defect, pledge, charge, assessment,
covenant, encroachment and burdens of any kind or nature whatsoever.
(f) "Governing Documents" means the certificate or articles of
incorporation, bylaws, deed of trust, formation or governing agreement and other
charter documents or organization or governing documents or instruments.
(g) "Intellectual Property" has the meaning given that term in Section
4.15.
1
<PAGE>
(h) "Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
(i) "Regenesis Shares" means shares of common stock of Regenesis
Holdings, Corp., par value $.01 per share.
(j) "Sellers' Documents " means this Agreement and any other
agreements, notes, certificates, exhibits, schedules and documents executed or
delivered or to be executed or delivered by Seller in connection herewith.
1.2 Construction. As used herein, unless the context otherwise
requires: (i) references to "Article" or "Section" are to an article or section
hereof; (ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits
and Schedules attached hereto and are incorporated herein by reference and made
a part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the table of contents, captions and
other headings of the various articles, sections and other subdivisions hereof
are for convenience of reference only and shall not modify, define or limit, or
affect the interpretation of any of the terms, meaning or provisions hereof.
Purchase Price, Assets.
2.1 Purchase Price. Subject to any adjustment to be made by reason of
the other terms of this Agreement, the consideration to be paid by Buyer to or
upon the order of Seller for their property to be sold and conveyed as stated
shall be 10,000 Shares of Buyers' Common Stock par value $.01.
2.2 Assets. Included within the Business would be all the assets of the
Business as set forth in the Schedule A for the Business dated March 7, 1999
adjusted for transactions conducted in the ordinary course of business,
including among other things, the name(s) of the Business, the Business
organization, all property, rights, contracts of any nature, inventories,
accounts receivable, cash, stock and other investments, rights under domestic
and foreign copyrights, patents, trademarks and licensing agreements, know-how
and know-how agreements, subscription and circulation lists and goodwill related
to the Business.
2.3 Liabilities. Not included within the Business would be any of
Seller's liabilities and obligations. Seller will continue to be responsible for
all of its liabilities and obligations not expressly assumed by Buyer.
Closing, Delivery of Shares
3.1 Location. The closing hereunder (the "Closing") shall take place at
10:00 A.M. on the 18th day of March 1999 (the "Closing Date") at the offices of
Buyer 345 S. State Road 7 Margate FL (or at such other time and place as may be
agreed by Buyer and Seller).
2
<PAGE>
3.2 Deliveries at Closing.
(a) By the Company. Contemporaneously herewith, the Company shall
deliver the documents listed below:
(i) Consents and Approvals. Any written consents, waivers,
permits and approvals from third parties, or any Governmental Body or
administrative authorities, in form and substance satisfactory to
Buyer; any consents necessary to transfer and continue in effect all
contracts listed on any Schedule to this Agreement as in effect on the
date hereof.
(ii) The Assets. A list of Assets as set forth in Schedule A.
(iii) Other Documents. Such other certificates, instruments
and other documents as Buyer shall reasonably require in connection
with the transactions contemplated by this Agreement.
(b) By Buyer. Within 30 days of closing herewith, the Buyer shall
deliver:
(i) The Shares. 10,000 Shares of Regenesis Common Stock
contemplated by this Agreement.
Representations and Warranties of the Company
The Company represents, warrant and agree, as follows:
4.1 Corporate Status of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. The Company is qualified to do business and in good standing in each
jurisdiction where the operation of its business requires that it be so
qualified. The Company has all requisite corporate power and authority to own,
operate and sell its properties and assets, to conduct its business as it is now
being conducted, to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
4.2 Authority Concerning this Agreement. The execution, delivery and
performance by the Company of this Agreement and any document executed by the
Company, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized and approved by all necessary
corporate action of the Company.
4.3 Title to Assets. Except as described in Schedule B hereto, the
Company has good and marketable title to all its assets, free and clear of any
and all Encumbrances. The Company's assets constitute all of the assets that are
used in connection with, necessary for, or beneficial to the operation of the
Business.
4.4 No Violation. The authorization, execution, delivery, and
performance of this Agreement and any Sellers' Document, and the consummation of
the transactions as contemplated hereby and thereby, do not and will not (1)
violate any of the provisions of the Governing Documents of the Company; (2)
violate, conflict with, result in the breach of or constitute a default under,
3
<PAGE>
require any notice or consent under, give rise to a right of termination of, or
accelerate the performance required by, any terms or provisions of any material
agreement, instrument, or writing of any nature to which the Company is a party
or is bound; or (3) violate, or result in the breach of, conflict with, or
require any notice, filing or consent under any statute, rule, regulation or
other provision of law, or any order, judgment or other direction of a court or
other tribunal, or any other governmental requirement, permit, registration,
license or authorization applicable to the Company, or any of its assets or the
Business; or (4) result in the creation of any lien, claim, encumbrance, or
restriction on any of the Company's assets. The Company is not a party to any
non-competition or similar agreement that in any way restricts the sale of the
Assets.
4.5 Liabilities. All liabilities of the Company (whether accrued,
unmatured, contingent, or otherwise and whether due or to become due) are either
set forth on Schedule D in the ordinary course of business as theretofore
conducted, or are not materially adverse to the operations or prospects of the
Business.
4.6 No Adverse Change. Since the Letter of Intent Date, the Company has
operated its business diligently and only in the ordinary course of business as
theretofore conducted, and the Company has not and through the Closing Date, the
Company shall not have:
(a) failed to maintain its books, accounts and records in the
usual, regular and ordinary manner and in accordance with good business
practices and consistent with past practice;
(b) experienced any loss of customers which adversely affects
or could adversely affect the Company or the Business or operations of the
Company;
(c) to the best of Sellers' and the Company's knowledge,
suffered any material adverse effects to the Assets;
(d) incurred any accepted purchase order or quotation,
arrangement or understanding for the future sale of services or products of the
Company that has not shown a gross profit or which the Company expects will not
be profitable;
4.7 Intellectual Property.
(a) Schedule A hereto contains a true and correct description
of the following:
(i) All patents, trade marks, copyrights, trade names, service
marks and other trade designations, including common law rights, registrations,
applications for registration, domain names (Netdisc.net), web site, technology,
know-how or processes ("Intellectual Property") currently owned, in whole or in
part, by the Company and all licenses, royalties, assignments and other similar
agreements relating to the foregoing to which the Company is a party;
(ii) All agreements relating to Intellectual Property that the
Company is licensed or authorized to use from others or which the Company
licenses or authorizes others to use.
4
<PAGE>
(b) Except as set forth on Schedule C, the Company owns the
Intellectual Property free and clear of and without conflict with the rights of
others. Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing shall be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing. The
Company has not interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of third parties, and
the Company has not received any charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation or violation. To
the best of Sellers' and the Company's knowledge, no third party has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of the Company.
4.8 Contracts, Leases and Commitments; Customers and Suppliers. The
Company has furnished to Buyer true copies of all contracts, leases, agreements
and commitments to which the Company is a party or by which it or its assets are
bound or which otherwise relate to the Business, which contracts, leases and
commitments are listed in Schedule _____, including summaries of the terms of
any unwritten commitments. Except as set forth in Schedule ________ : (1) the
Company and the other parties thereto, have complied in all material respects
with all of the Company's contracts, leases, and commitments, all of which are
valid and enforceable; (2) all of the Company's contracts, leases, and
commitments are in full force and effect and there exists no event or condition
which with or without notice or lapse of time would be a default thereunder,
give rise to a right to accelerate or terminate any provision thereof, or give
rise to any lien, claim, encumbrance, or restriction on any of the assets or
properties of the Company; (3) all of the Company's contracts, leases, and
commitments have been entered into on an arm's-length basis; and (4) none of the
Company's purchase commitments is in excess of the normal requirements of its
business or at an excessive price. Except for purchase orders or sales orders or
invoices made, taken, or received by the Company in the ordinary course of its
business consistent with past practice, the Company is not a party, nor is any
of its assets or Business subject, to any contract, lease, or commitment not
listed in such Schedule (including, without limitation, financing or security
agreements or guaranties, repurchase agreements, agency agreements,
manufacturers' representative agreements, commission agreements, employment, or
collective bargaining agreements, pension, bonus, or profit-sharing agreements,
group insurance, medical or other fringe benefit plans, and leases of real or
personal property), other than (i) contracts terminable without penalty on not
more than thirty days' notice that do not involve the receipt or expenditure of
more than $10,000 in any one year, or (ii) contracts that do not involve the
receipt or expenditure of more than $5,000 individually or $10,000 in the
aggregate in any one year.
4.9 Inventory. The Company does not maintain any inventory.
4.10 Accounts Receivable. Except as set forth in Schedule E hereto, all
of the Company's accounts receivable have arisen in the ordinary course of
business. All such accounts receivable are bona fide, valid and binding
receivables representing obligations for the face dollar amount thereof and will
be collected in full within ninety (90) days of their due date and are subject
to no defenses, counterclaims or set-offs of any nature whatsoever.
4.11 Compliance with Law. During the three years preceding the date
hereof, no notice, citation, summons or order has been received by the Company
and no complaint has been served on the Company no penalty has been assessed and
no investigation, proceeding or review has been instituted or threatened (a)
with respect to alleged violation by the Company of any law. No event has
occurred or condition or state of facts exists that could give rise to any such
violation of any law.
5
<PAGE>
4.12 Litigation. There are no actions, suits, proceedings, claims, or
governmental investigations pending or threatened against, the Company or any of
its assets, or, in connection with the Company's Business, or any of the
Company's officers, directors, or employees (provided that for the purposes of
this sentence, a lawsuit which has been filed but which has not been served
shall be deemed to be merely threatened and not pending and a governmental
investigation which has been initiated but for which no notice has been given to
the Company shall also be deemed to be merely threatened and not pending). To
the best of Sellers' and the Company's knowledge, there are no facts or state of
facts existing that (with or without the giving of notice or the passage of time
or both) could form the basis for any such suit, proceeding, action, claim or
investigation.
4.13 Books and Records. The books and records of the Company are
complete and correct in all material respects and have been maintained in
accordance with good business practices.
4.14 Improper Payments. The Company and its officers and agents have
not made any illegal or improper payments to, or provided any illegal or
improper benefit or inducement for, any governmental official, supplier,
customer, or other person, in an attempt to influence any such person to take or
to refrain from taking any action relating to the Company. The Company's
employees may from time to time have made customary holiday gifts of nominal
value to suppliers or customers.
4.15 No Misstatements. No representation, warranty, or other statement
by the Sellers or Company herein or in any Sellers' Document contains or will
contain an untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
materially misleading. The Company is not aware of any matter that could
reasonably be expected to have a materially adverse effect on the sale of the
Company's Assets that has not been disclosed in writing to Buyer.
Representations and Warranties of Buyer
Buyer represents, warrant and agree that:
5.1 Corporate Status of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Buyer has all requisite corporate power and authority to own, operate and lease
its properties and assets, to conduct its business as it is now being conducted,
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
5.2 Authority Concerning this Agreement. The execution, delivery and
performance by Buyer of this Agreement and any document and the consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized and approved by all necessary corporate action. This Agreement is
valid and binding upon Buyer and enforceable against Buyer in accordance with
their respective terms, except to the extent that enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency or moratorium laws,
or other laws affecting the enforcement of creditors' rights or by the
principles governing the availability of equitable remedies.
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5.3 No Violation. The authorization, execution, delivery, and
performance of this Agreement and the consummation of the transactions as
contemplated hereby and thereby do not and will not (1) violate any of the
provisions of the Governing Documents of Buyer; (2) violate, conflict with,
result in the breach of or constitute a default under, require any notice or
consent under, give rise to a right of termination of, or accelerate the
performance required by, any terms or provisions of any material agreement,
instrument, or writing of any nature to which Buyer is a party or is bound; or
(3) violate, or result in the breach of, conflict with, or require any notice,
filing or consent under any statute, rule, regulation or other provision of law,
or any order, judgment or other direction of a court or other tribunal, or any
other governmental requirement, permit, registration, license or authorization
applicable to Buyer; or (4) result in the creation of any lien, claim,
encumbrance, or restriction on any of its Assets.
5.4 Securities. Regenesis Shares, when issued and paid for pursuant to
the terms of this Agreement will be duly authorized, validly issued, fully paid
and nonassessable.
Miscellaneous Provisions
6.1 Nature and Survival of Representations and Warranties.
All representations and warranties made by Buyer and Sellers hereunder shall
survive the Closing until the earlier to occur of the third anniversary of the
date of this Agreement or the date at which the Buyer sells the Division to a
third party, except that with respect to a breach of the representations and
warranties relating to taxes, such representations and warranties shall survive
the Closing until six months after the expiration of the applicable statute of
limitations. The expiration of any representation or warranty shall not affect
any claim made in writing prior to the date of such expiration. The
representations and warranties hereunder shall not be affected or diminished by
any investigation made or any information provided at any time by or on behalf
of the party for whose benefit such representations and warranties were made or
by the closing of the transactions contemplated hereby.
6.2 Further Actions. At any time and from time to time after the
Closing, at Buyer's request and without further consideration, Sellers shall
cooperate and execute and deliver such other instruments of sale, conveyance,
transfer, assignment and confirmation and take such further action as Buyer may
reasonably deem necessary or desirable in order to more effectively convey,
transfer and assign to Buyer, and to confirm Buyer's title to, all of the Shares
of Sellers, to put Buyer in actual possession and operating control of the
Company and the Business, and to assist Buyer in exercising all rights with
respect thereto.
6.3 Brokers. Each party represents to the other that it has had no
dealings with any broker or finder in connection with the transactions
contemplated by this Agreement. Should any claim be made for a broker's,
finder's or similar fee, on account of any actions or dealings by a party or its
agents, such party shall indemnify, defend, protect and hold the other party
harmless from and against any and all liability and expenses, including
reasonable attorneys' fees, incurred by reason of any claim made by such broker.
6.4 Indemnification.
(a) By Seller. Seller shall, jointly and severally, indemnify,
defend, protect and hold harmless Buyer, promptly upon demand at any time and
from time to time, against any and all losses, liabilities, claims, actions,
damages, and expenses, including, without limitation, reasonable attorneys' fees
and disbursements incurred by Buyer or its affiliates (collectively, "Losses"),
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arising out of or in connection with any of the following: (i) any
misrepresentation or breach of any warranty made by Sellers in any Sellers'
Document; (ii) any breach or non-fulfillment of any covenant or agreement made
by Sellers in Sellers' Documents; (iii) the claims of any broker or finder
engaged by Sellers; and (iv) without in any manner limiting the foregoing, any
liabilities or obligations of, or claims or causes of action against, Sellers or
the Company which arise with respect to or relate to any period or periods on or
prior to the Closing Date hereof, except for those which are set forth or
reserved against in the Closing Balance Sheet or are set forth in a schedule
hereto, or were incurred in the ordinary course of business as heretofore
conducted and are not materially adverse to the operations or prospects of the
Business.
(b) By Buyer. Buyer shall, jointly and severally, indemnify,
defend, protect and hold Sellers and its affiliates (including its shareholders)
harmless, promptly upon demand at any time and from time to time, against any
and all Losses arising out of or in connection with any of the following: (a)
any misrepresentation or breach of any warranty made by Buyer in any of Buyer's
Documents or (b) any breach or non-fulfillment of any covenant or agreement made
by Buyer in Buyer's Documents.
(c) Threshold for Indemnification. Neither Buyer nor Seller
shall be required to indemnify the other pursuant to this Section 6.4 until the
aggregate amount required to be paid thereunder exceeds Twenty-five Thousand
Dollars, in which case the Indemnifying Party shall then be required to so
indemnify the indemnified party for any and all Damages exceeding $25,000.
(d) Defense. The obligations and liabilities of the parties
hereunder with respect to a third party claim shall be subject to the following
terms and conditions:
(e) An indemnified party shall give the indemnifying party
written notice of a third party claim promptly after receipt by the indemnified
party of notice thereof, and the indemnifying party may undertake at its sole
cost and expense the defense, compromise and settlement thereof by
representatives of its own choosing reasonably acceptable to the indemnified
party. The assumption of the defense, compromise and settlement of any such
third party claim by the indemnifying party shall be an acknowledgment of the
obligation of indemnifying party to indemnify the indemnified party with respect
to such claim hereunder. If the indemnified party desires to participate in, but
not control, any such defense, compromise and settlement, it may do so at its
sole cost and expense. If, however, the indemnifying party fails or refuses to
undertake the defense of such third party claim within ten (10) days after
written notice of such claim has been given to the indemnifying party by the
indemnified party, the indemnified party shall have the right to undertake the
defense of such claim with counsel of its own choosing with all costs charged to
the indemnifying party.
(f) No settlement of a third party claim involving the
asserted liability of the indemnifying party under this Section 6.4 shall be
made without the prior written consent of both the indemnifying party and the
indemnified party. In the event that the indemnifying party wishes to accept or
to offer a settlement of a third party claim and the indemnified party rejects
the settlement, and the claim is later resolved by settlement, compromise or by
final judgment of a court of law, the indemnifying party's maximum liability to
the indemnified party shall not exceed the rejected settlement amount.
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(g) Right of Set-Off.
(i) In the event any claim of a right to indemnification
is made by Buyer, or other indemnified party under this Section 6.4, such party
may, at its sole option, satisfy all or a portion of its Losses by way of
set-off against the Earn-out Consideration and any other payments due to
Sellers.
(ii) This Section in no way constitutes a limitation on
Buyer's rights hereunder or a measure of liquidated damages and Buyer may seek
full indemnification for all damages suffered and may pursue all rights and
remedies available to it, at law or in equity, against any party hereto, jointly
with other parties hereto or severally, without seeking recourse against any
other party and without exercising any right of offset.
(h) Insurance proceeds/tax benefits. The liability of the
Sellers with respect to any claim for indemnification shall be reduced by the
tax benefit actually realized by Buyer and any insurance proceeds received by
Buyer as a result of any Loss upon which the claim for indemnification is based.
The amount of any such tax benefit shall be determined by taking into account
the effect, if any and to the extent determinable, of timing differences
resulting in acceleration of Losses or deferral of gains.
6.5 Notices. All notices or other communications in connection with
this Agreement shall be in writing and shall be considered given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent via commercial courier or telecopier,
directed as follows:
If to Sellers: Netdisc
----------------------------
----------------------------
With a copy to:
----------------------------
----------------------------
----------------------------
If to Buyer: Regenesis Holdings, Inc.
8881 N. Lake Dasha Drive
Plantation, FL 33324
With a copy to: Russell Adler, Esq.
1800 N.E. 114st Suite 2111
Miami, Florida 33331
Telephone: (954) 474-3712
Fax: (954) 474-3712
6.6 Miscellaneous.
(a) Entire Agreement. This Agreement (which includes the
schedules and exhibits hereto) sets forth the parties' final and entire
agreement with respect to its subject matter and supersedes any and all prior
understandings and agreements, including, but not limited to the Letter of
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Intent. This Agreement can be amended, supplemented, or changed, and any
provision hereof can be waived, only by a written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, change, or waiver is sought.
(b) Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and assigns;
provided, however, that neither this Agreement nor any right or obligation
hereunder may be assigned or transferred, except that Buyer may assign this
Agreement and its rights hereunder to any direct or indirect wholly-owned
subsidiary of Buyer and to financial institutions providing financing for the
transaction.
(c) Construction of Agreement. The section headings in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When the context in which the words
are used in this Agreement indicates that such is the intent, words in the
singular number shall include the plural and vice versa. References to any
gender shall include any other gender that may be applicable in the
circumstances. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Agreement to be drafted.
(d) Publicity. No party shall issue any press release or make
any other publicly available disclosure of the terms of this transaction without
the prior written consent of Buyer and Sellers; provided, however, that the
restrictions of this covenant shall not apply (i) if otherwise required by law,
(ii) if necessary or appropriate in connection with the transactions
contemplated hereunder, (iii) to the extent such information shall have
otherwise become publicly available.
(e) Severability. If any provision of this Agreement shall be
held by any court of competent jurisdiction to be illegal, invalid, or
unenforceable, such provision shall be construed and enforced as if it had been
more narrowly drawn so as not to be illegal, invalid or unenforceable, and such
illegality, invalidity or unenforceability shall have no effect upon and shall
not impair the enforceability of any other provision of this Agreement.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each one of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Delivery of an
executed counterpart of this Agreement via telephone facsimile transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.
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IN WITNESS WHEREOF, on the date first above written, the parties have duly
executed this Agreement.
Very truly yours,
/s/ Mitchell B. Sandler
- ----------------------------------
Regenesis Holdings, Inc.
Name: Mitchell B. Sandler
Title: President
Accepted as of the date
First above written:
/s/ Marc Jelaso
- ----------------------------------
Marc Jelaso, President
NetDisc, Inc.
A Florida Corporation
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EMPLOYMENT AGREEMENT
AGREEMENT dated this 18th day of April, 1999, between REGENESIS
HOLDINGS, INC., a Florida corporation having its principal place of business at
345 South State Road 7, Margate, FL 33066 (hereinafter the "Company"), and JOEL
F. BROWNSTEIN (hereinafter the "Employee").
WHEREAS, the Company desires to employ the Employee because of his special
knowledge and skills; and,
WHEREAS, the Employee desires to work for the Company;
NOW, THEREFORE, in consideration of the foregoing, ten dollars paid in hand, and
other good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the following is agreed:
1. DUTIES.
The Company hereby employs Joel F. Brownstein as Chief Financial
Officer and Treasurer having such powers and duties in those capacities as set
forth from time to time by the Board of Directors (the "Board") in the By-laws
of the Company or otherwise. Employee shall devote his best efforts to the
Business of the Company.
2. COMPENSATION.
As compensation for his services to the Company, in whatever capacity
rendered, the Company shall pay to Employee $135,000 per annum, payable in
monthly installments of $11,250 per month. This salary shall be paid on such
dates during the month as other salaried employees are paid during the term of
this Agreement which is one year.
In addition, Employee shall be entitled to the following: medical
insurance coverage, including major medical and dental coverage equivalent to
that provided to other key employees of the Company; such disability coverage as
is maintained on other key employees, and, the Company will provide errors and
omissions coverage for Employee as an officer and director of the corporation.
Employee shall be entitled to such amount of vacation and sick days and
personal days as are allowed other members of senior management. Additionally,
Employee shall be entitled to all holidays provided to other key employees.
Further, Employee shall receive a stock grant of 200,000 shares of the
Company's common stock and an option to purchase 150,000 shares at $.25 per
share. The 200,000 shares and options shall be registered upon a Form S-8 as
soon as practical.
Furthermore, Employee shall receive additional compensation for those
corporate finance transactions which are brought to the Company by Employee,
said compensation to be paid at the closing of such transactions. Such
compensation shall be negotiated in good faith prior to each such transaction
<PAGE>
and if the parties cannot decide on said compensation, then the Company shall
not undertake such transaction(s). If the parties do not reach agreement and the
Company proceeds with such transaction(s), then Employee shall be compensated
according to the custom in the industry as determined by a sole arbitrator
chosen in accordance with the with the then prevailing rules of the American
Arbitration Association.
3. EXPENSES
The Employee may incur up to $2,500 per month in reasonable expenses
for promoting the business of the Company, including expenses for travel,
entertainment and similar items. The Company will reimburse the Employee for all
such expenses upon the presentation by the Employee from time to time, of an
itemized account justifying each expenditures. Such reimbursement shall be
provided within 10 working days of such presentation by Employee. Additional
expenses must be approved in advance by the Board of Directors of the Company.
4. RESERVED
5. NOTICE
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and by registered mail, and mailed to the parties
at the following addresses:
COMPANY: at the principal offices of the Company
EMPLOYEE: at his last known residence.
6. TERMINATION
This Agreement may be terminated prior to one year from the date first
written above in any one of the following manners:
1. The death of Employee; or,
2. The failure of the Company, as evidenced by filing
under the Bankruptcy Act for liquidation, or the making
of an assignment for the benefit of creditors.
3. At the end of the term as set forth herein above.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Florida.
If any provision of this Agreement is declared void, such provision shall be
deemed severed from this agreement, which shall otherwise remain in full force
and effect.
8. BINDING EFFECT
This Agreement is binding upon the parties hereto and upon successors
in the interest to the Company. This Agreement shall not be amended or otherwise
modified except by further express agreement in writing or executed by both
parties hereto. Any waiver of any breach of this Agreement shall be made in
writing and shall be applicable only to such breach and shall not be construed
to waive any subsequent or prior to breach other than the specific breach so
waived.
<PAGE>
9. SUPERCEDES EARLIER AGREEMENTS
This Agreement supersedes all earlier agreements between the parties
hereto.
10. ARBITRATION
Any dispute arising hereunder shall be resolved by arbitration before a
sole arbitrator under the prevailing rules of the American Bar Association. The
decision of arbitrator shall be binding upon the parties hereto and enforceable
at the law before any court of competent jurisdiction. The place of Arbitration
shall be Broward County, Florida
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
REGENESIS HOLDINGS, INC.
/s/ Joel F. Brownstein By: /s/ Russell Adler
- ----------------------------- --------------------------------
Joel F. Brownstein Russell Adler
Chairman
HQ BUSINESS CENTERS
MASTER OFFICE SERVICE AGREEMENT
This Master Office Service Agreement ("Master Agreement") is dated May
12, 1999 and is entered into in 666 5th (Enter - City & State) by and between
OMNIOFFICES, INC. (hereinafter "HQ") and REGENISIS HOLDINGS, INC. (hereinafter
"Client").
1. OFFICE. Client shall execute an Office Service Agreement ("Office
Service Agreement") for each HQ Business center location where Client licences
an Office and is provided services by HQ. Furthermore, each Office Agreement
shall be attached as a schedule to this Master Agreement. Furthermore, all of
the terms and conditions of each Office Agreement shall be incorporated into and
become part of this Master Agreement.
Client shall, as part of the Base Services,. be granted a license to
use the Office and shall have access to the Office twenty-four (24) hours a day,
seven (7) days a week. HQ agrees to provide office clearing, maintenance
services, electric heating and air conditioning to the Office for normal office
use in such reasonable quantities and during such reasonable hours as shall be
determined by HQ or the Building. In addition, Client will have reasonable use
of HQ common area facilities during normal business hours. Client shall use the
Office and common areas of the HQ Business Center solely for general office use
in the conduct of the Client's business. HQ agrees, at its own cost and expense,
to furnish and to install furniture, fixtures and equipment that are in HQ's
sole opinion necessary to provide suitable office facilities for the Client upon
such terms and conditions routinely applicable to the facility; provided that
such furniture, fixtures and equipment shall remain HQ's property.
If, for any reason whatsoever, HQ is unable to provide use of the
Office or a mutually agreed upon alternative Office at the time herein agreed,
client may either extend the Commencement Date until the Office becomes
available or, as its sole remedy for such failure, cancel and terminate this
Agreement if the use of the Office is not available to Client within five (5)
business days after written notice to HQ by Client, in which case any prior
payments shall be fully refunded. No such failure to provide use of the Office
shall subject HQ to any liability for loss or damage, nor affect the validity of
this Agreement or the obligations of the Client hereunder.
HQ will have the right to relocate Client to another office in the HQ
Business Center, and to substitute such other office for the Office licensed
hereby, provided such other office is substantially similar in area and
configuration to Client's contracted office and provided Client shall incur no
increase in the Monthly Base Services Fee or any relocation cost or expense.
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2. SERVICES. HQ agrees, in consideration of the Monthly Base Services
Fee, to provide Base Services to Client as described in Schedule "A". From time
to time during the Term, HQ may, at its option, make other services available to
Client of the nature described in Schedule "B", at fees that are from time to
time established by HQ. Fees are subject to change at HQ's discretion, with
thirty (30) days written notice to the Client from the HQ Center. HQ shall be
under no obligation to provide Schedule "B" services if the monthly cost thereof
exceeds the Refundable Services Retainer. IN the event Client is in default of
this Agreement, HQ may, at its option, cease furnishing any and all services
including telephone services.
Client will not offer to any party in the HQ Business Center or the
Building, any of the services that HQ provides to its clients including, but not
limited to, the services described in Schedule "A" or "B".
Client acknowledges that due to the imperfect nature of verbal, written
and electronic communications, neither HQ nor HQ's Landlord or any of its
officers, directors, employees, shareholders, partners, agents or
representatives shall be responsible for damages, direct or consequential, that
may result from the failure of HQ to furnish any service, including but not
limited to the serve of conveying messages, communications and other utility or
services required under this Master Agreement, Office Service Agreement or
agreed to by HQ. Client's sole remedy and HQ's sole obligation for any failure
to render any service, any error or omission, or any delay or interruption with
respect thereto, is limited to an adjustment to Client's billing in an amount
equal to the charge for such service for the period during which the failure,
delay or interruption continues.
WITH THE SOLE EXCEPTION OF THE REMEDY SET FORTH IN THIS PARAGRAPH,
CLIENT EXPRESSLY AND SPECIFICALLY AGREES TO WAIVE, AND AGREES NOT TO MAKE, ANY
CLAIM FOR DAMAGES, DIRECT OR CONSEQUENTIAL, INCLUDING WITH RESPECT TO LOST
BUSINESS OR PROFITS, ARISING OUT OF ANY FAILURE TO FURNISH ANY SERVICE, ANY
ERROR OR OMISSION WITH RESPECT THERETO, OR ANY DELAY OR INTERRUPTION OF THE
SAME.
3. DURATION OF AGREEMENT. This Master Agreement can be terminated by
either party upon thirty (30) days written notice provided in accordance with
section 8(H), if and only if all of the licenses for office space granted in
accordance with the attached schedules have expired or been terminated.
Upon any termination of this Master Agreement or any Office Agreement,
whether by lapse of time or otherwise, or upon any revocation of Client's
license herein granted, the Client shall cease all use of the Office, the HQ
Business Center and all services immediately. For each and every month or
portion thereof that Client continue use of the Office after the termination of
this Master Agreement or any Office Agreement by lapse of time or otherwise,
without the express written consent of HQ, Client shall pay HQ an
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amount equal to 150% of the Monthly Base Services Fee computed on a per-month
basis for each month or portion thereof that Client continues the use of the
Office.
4. PAYMENTS AND ESCALATIONS. Client agrees to pay to HQ the Monthly
Base Services Fee plus applicable sales or use taxes, in advance, on the first
day of each calendar month during the initial Term and all extensions thereof,
without any deduction, offset, notice o demand. If the Commencement Date shall
be other than the first day of a month, fees for any such month shall be
prorated. Charges for any Schedule "B' service purchased by Client from HQ shall
be due and payable on the 10th of the month following the order for any such
service.
One year after the Commencement Date of an Office Agreement and each
and every anniversary date thereafter, the Monthly Base Services Fee will
automatically increase by an agreed upon percentage of the Monthly Base SERVICES
Fee due for the month preceding such anniversary date.
All Monthly Base Services Fees and other sums payable hereunder shall
be payable at the office of HQ or at such other location or to any agent
designated in writing by HQ. In addition to any other sums due, Client shall pay
monthly late charges equal to five (5%) of all amounts that have not ben paid to
HQ within five (5) days of their respective due dates. The parties agree that
such late charges are fair and reasonable compensation for costs incurred by HQ
where there is default in any payment due under this Master Agreement or an
Office Agreement.
Upon the execution of an Office Agreement, Client s hall pay HQ or its
agent the Refundable services Retainer. The Refundable SERVICES Retainer need
not be kept separate and apart from other funds of HQ, no interest shall be paid
thereon, and may be used by HQ to provide Schedule "A" and "B" services under
this Agreement. In addition to the Refundable SERVICES Retainer, Client will,
upon execution of an Office Agreement, pay to HQ the Monthly Base Services Fee
for the first full month of the Initial Term.
Client agrees that the Refundable Services Retainer shall not be used
by Client as payment for the Monthly Base Services Fee for the last month of the
Initial Term, or any extension thereof.. In the event Client defaults in the
performance of any of the terms hereof, HQ may terminate this Agreement and the
license herein granted and may also use, apply or retain the whole, or any part,
of the Refundable Services Retainer for the payment of any service fee or any
other payment due hereunder, or for payment of any other sum that HQ may spend
by reason of Client's default. If Client shall, at the end of the term of this
Agreement, have fully and faithfully complied with all of the terms and
provisions of this Agreement, and surrendered all keys, access cards and
building passes, the Refundable Services Retainer, or any balance thereof, shall
be returned to Client within forty-five (45) days thereafter.
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5. DAMAGES AND INSURANCE. Client will not damage or deface the
furnishings, walls, floors or ceilings, nor make holes for the hanging of
pictures or make or suffer to be made any waste, obstruction or unlawful,
improper or offensive use of the Office or the common area facilities. Client
will not cause damage to any part of the Building or the property of HQ or
disturb the quiet enjoyment of any other licensee or occupant of the Building.
At the termination of this Agreement, the Office shall be in as good condition
as when Client commenced the use thereof, normal wear and tear excepted. Client
agrees to pay for repainting and cleaning fees for each Office occupied less
than twelve 912) months by client, at a cost not to exceed One Hundred Fifty
Dollars ($150.00) per Office. Client is responsible for costs of repairing any
damage to office or furniture and to return each office to HQ in good condition.
HQ will have the right, at any time and from time to time, to enter the Office
to inspect the same, to make such repairs and alterations as HQ reasonably deems
necessary, and the cost of any such repair resulting from the act or omission of
Client shall be reimbursed to HQ by Client upon demand. HQ shall have the right
to show the Office to prospective Clients, provided HQ will use reasonable
efforts not to disrupt Client's business.
HQ or Client and its respective directors, licensors, officers, agents,
servants and employees shall not, to the extent permitted by law, except upon
the affirmative showing of HQ's or Client's gross negligence or wilful
misconduct, be liable for, and Client or HQ waives all right of recovery against
such entities and individuals for any damage or claim with respect to any injury
to person or damage to, or los or destruction of any property of Client or HQ,
its employees, authorized persons and invitees due to any act, omission or
occurrence in or about the HQ Business Center or the Building. Without
limitation of any other provision hereof, each party hereto hereby agrees to
indemnify, defend and hold harmless the other party hereto, and such other
party's officers, directors, employees, shareholders, partners, agents and
representatives from and against any liability to third parties arising out of,
in the case of Client as an indemnifying party, Client's use and occupancy of
the Office or any Act or omission constituting gross negligence or willful
misconduct of Client or Client's officers, directors, employees, shareholders,
partners, agents, representatives, contractors, customers or invitees and, in
the case of HQ as an indemnifying party, any act or omission constituting gross
negligence or willful misconduct of HQ or HQ's officers, directors, employees,
shareholders, partners, agents or representatives. Subject to the foregoing,
Client assumes all risk of loss with respect to all personal property of Client,
its agents, employees, contractors and invitees, within or about the HQ Business
Center or the Building. Client acknowledges that it is the Client's
responsibility to maintain insurance to cover the risks set forth in this
paragraph.
HQ and Client each hereby waive any and all rights of recovery against
the other, or against the directors, licensors, officers, agents, servants and
employees of the other, for loss of or damage to its property or the property of
others under its control, to the extent such loss or damage is covered by any
insurance policy.
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If the HQ Business Center is made unusable, in whole or in part, by
fire or other casualty not due to negligence of Client, HQ may, at its option,
terminate the Agreement upon notice to Client, effective upon such casualty, or
may elect to repair, restore or rehabilitate, or cause to be repaired, restored
or rehabilitated, the HQ Business Center, without expense to Client, within
ninety (90) days or within such longer period of tie as may be required because
of events beyond HQ's control. The Monthly Base Services Fee s shall be abated
on a per diem basis for the portions of the Office that are unusable.
6. DEFAULT. Client shall be deemed to be in default under this Master
Agreement and all executed Office Agreements: (a) if Client defaults in the
payment of the Monthly Base Services Fee or other sums due or (b) if Client
defaults in the prompt and full performance of nay other provision of this
Master Agreement or any executed Office Agreements and any such default
continues in excess of five (5) business days after written notice by HQ.
Should Client be in default hereunder, HQ shall have the option to
pursue any one or more of the following remedies without any additional notice
or demand whatsoever and without limitation to HQ in the exercise of any remedy:
(1) HQ may, if HQ so elects, without any additional notice of
such election or demand to Client, either forthwith terminate this Agreement and
the license to use any portion of the HQ Business Center, and may enter into the
Office and take and hold possession of the contents thereof, without releasing
Client, in whole or in part, from the Client's obligations hereunder. In the
event of such termination, HQ may, at its option, declare the entire amount of
the Monthly Base Services Fee which would become due and payable during the
remainder of the term, to be due and payable immediately, in which event, Client
agrees to pay the same at once.
(2) Pursue any other remedy now or hereafter available to HQ.
HQ's exercise of any right or remedy shall not prevent it from exercising any
other right or remedy.
7. RESTRICTION ON HIRING. Client agrees that during the term of this
Master Agreement and within one (1) year of the termination of this Master
Agreement, neither Client nor any of it principals, employees or affiliates will
hire directly or as an independent contractor, any person who is at that time,
or was during the term of this Agreement, an employee of HQ. In the event of a
breach of any obligation of Client contained in this paragraph, Client shall be
liable to HQ for, and shall pay to HQ, on demand, liquidated damages in the sum
of $25,000.00 for each employee with respect to whom such breach shall occur, it
being mutually agreed that the actual damage that would be sustained by HQ as
the result of any such breach would be, from the nature of the case, extremely
difficult to fix and that the aforesaid liquidated damage amount is fair and
reasonable.
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8. MISCELLANEOUS.
A. All amendments to this Agreement shall be in writing and
signed by al parties. Any other attempted amendment shall be void. The
invalidity or unenforceability of any provision hereof shall not affect the
remainder hereof.
B. All waivers must be in writing and signed by the waiving
party. HQ's failure to enforce any provision of this Agreement or its acceptance
of fees shall not be a waiver and shall not prevent HQ from enforcing any
provision of this Agreement in the future. No receipt of money by HQ shall be
deemed to waive any default of Client or to extend, reinstate or continue the
term hereof.
C. All Schedules and Addenda attached hereto are hereby
incorporated herein by this reference. The laws of the State in which the HQ
Business Center is located shall govern this.
D. All parties signing this Agreement as a partnership or
co-signing individuals shall e jointly and severally liable for all obligations
of Client.
E. Neither Client nor anyone claiming by, through or under
client shall assign this Master Agreement and Office Agreements or permit the
use of any portion of te HQ Business Center by any person other than Client,
provided, however, Client may assign this Master Agreement and Office Agreements
to an affiliated corporation of Client. In the event of any such permitted
assignment, Client shall not thereby be relieved of any of its obligations under
this Master Agreement or any Office Agreement.
F. The Rules and Regulations of the Building and of HQ as
defined on Schedule "C" hereto and any additional schedules that may be attached
hereto are expressly made a part of this Agreement and Client expressly
covenants and agrees to abide by al of such Rules and Regulations and such
additional terms, as well as such reasonable modifications to such Rules and
Regulations as may be hereafter adopted by HQ.
G. All notices hereunder shall be in writing. Notices to
Client shall be deemed to be duly given if mailed by registered or certified
mail, postage prepaid, overnight mail service or hand delivered with proof of
deliver addressed to Client at:
Russell Adler, Esq.
Regenesis Holdings, Inc.
1555 N. Park Dr.
Weston, Florida 33326
Phone # (954) 212-3244
Facsimile #_____________
6
<PAGE>
Notice to H shall be deemed to be duly given if mailed by registered or
certified mail, postage prepaid, overnight mail service or hand delivered with
proof of delivery addressed to HQ at the Building and as follows:
HQ Business Centers
666 5th Avenue, 37th FL.
New York, New York 10103
Attn: Center Manager
H. THIS MASTER AGREEMENT AND THE OFFICE AGREEMENTS ARE NOT
INTENDED TO CREATE A LEASE OR ANY OTHER INTEREST IN REAL PROPERTY IN FAVOR OF
THE CLIENT, BUT MERELY CREATES A REVOCABLE LICENSE IN ACCORDANCE WITH THE TERMS
HEREOF. This Master Agreement and a Office Agreement grant client the license to
use the HQ Business Center and the Office for the specific purposes herein set
forth without diminution of the legal possession or control thereof by HQ and
shall be revocable at the option of HQ upon the destruction of the HQ Business
Center or the breach by Client of any term or condition herein set forth. This
Master Agreement and Office Agreement are subject and subordinate to any
underlying lease or contract of the Building or of the premises comprising the
office or the HQ Business Center as such lease or contract may be amended from
time to time (such underlying lease or contract together with any amendments, is
hereinafter referred to as the "Master Lease"). An Office Agreement shall
terminate simultaneously with the termination of the corresponding HQ Business
Center operation for any reason. Client is not a party to nor shall Client have
any rights under the Master Lease.
I. Client acknowledges that each HQ Business Center will
comply with U.S. Postal Service regulations regarding Client mail and, upon
termination of this Agreement, it will be Client's responsibility to notify all
parties of termination of the use of the above described address, assigned
telephone number, telex and facsimile numbers. Of a period of thirty (30) days
after the termination of this Agreement, HQ will, at Client's written request
and cost, provide Client's new telephone number and address to all incoming
callers and will hold or forward to Client once a week all mail, packages, and
facsimiles.
J. HQ may assign this Agreement and/or any fees hereunder and
Client agrees to attorney to any such assignee.
K. In the event any dispute arises between HQ and Client
concerning this Master Agreement or any Office Agreement and the rights and
obligations hereunder HQ shall have the option, but not the obligation, of
submitting the matter to arbitration on an expedited basis, pursuant to the
procedure established by the American Arbitration Association in the
metropolitan area in which the Faculty is located. The decision of the
arbitrator shall be binding on the parties. The non-prevailing party as
determined by the
7
<PAGE>
arbitrator shall pay the prevailing parties attorneys' fees and costs of the
arbitration. Furthermore, if a court decision prevents or HQ elects not to
submit this matter to arbitration, then the non-prevailing party as determined
by the court shall pay the prevailing parties reasonably attorneys' fees and
costs.
L. This agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
HG Business Centers
By: OMNIOFFICES, INC .
By:____________________________
Authorized Signature
_______________________________
Print Name
Its:___________________________
CLIENT:
REGENESIS HOLDINGS, INC.
By: /s/ Lawrence Gallo
----------------------------
Authorized Signature
Lawrence Gallo
----------------------------
Print Name
Its:_____________________________
IF AN INDIVIDUAL OR PARTNERSHIP:
By:____________________________
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Where available
SCHEDULE "A" SCHEDULE "B"
Base Services Additional Services
o Furnished Executive Office Word Processing Services
o Furnished and Decorated Reception Area Secretarial Services
o Professional Reception, Massage Center, Facsimile Services
and Office Manager Copy and Binding Services
o Use of Furnished, and Audio-Visual Outgoing Mail & Express Delivery
Equipped Conference Rooms, 8 hours Services
per month at no charge Additional Office Furniture
o Prestigious Business Address Specialized Equipment
o Business Identify on Building Lobby Printing & Office Supplies
Directory* Miscellaneous Purchasing Services
o Facsimile Number for Client's Use Catering & Beverage Services
o Mail and Package Receipt Paging Services
o Utilities and Janitorial Service Telephone Equipment
o Building Operating Expenses Specialized Telephone Services
o Access to International Network of Excess Conference Room Usage
Conference Other Client Requested Services"
Rooms
*Where available
</TABLE>
<PAGE>
SCHEDULE "C"
RULES AND REGULATIONS
1. Client's employees and guests will conduct themselves in a
businesslike manner, proper business attire will be worn at all times, the noise
level will be kept to a level so as not to interfere with or annoy other clients
and Client will abide by HQ's directives regarding security, keys, parking and
other such matters common to all occupants.
2. Client agrees to use chair mats and desk pads in the Office(s) and
any damage from failure to use same will be the responsibility of Client. Client
will not affix anything to the windows, walls or any other part of the Office(s)
or the HQ Business Center or make alterations or additions to the Office(s) or
the HQ Business Center without the prior written consent of HQ.
3. Client will not prop open any corridor doors, exit doors or door
connecting corridors during or after business hours.
4. Client can only use public areas with the consent of HQ and those
areas must be kept neat and attractive at all times.
5. All corridors, halls, elevators and stairways shall not be
obstructed by Client or used for any purpose other than aggress and ingress.
6. No advertisement or identifying signs, other than provided by HQ, or
other notices shall be inscribed, painted or affixed on any part of the
corridors, doors or public areas.
7. Client shall not without HQ's prior written consent, store or
operate in the Office(s) or the HQ Business Center any computer (excepting a
personal computer) or any other large business machine, reproduction equipment,
heating equipment, stove, radio, stereo equipment or other mechanical
amplification equipment, vending or coin operated machine, refrigerator or
coffee equipment, or conduct a mechanical business therein, do any cooking
therein, or use or allow to be used in the Building, oil burning fluids,
gasoline, kerosene for heating, warming or lighting. No article deemed hazardous
on account of fire or any explosives shall be brought into the HQ Business
Center. No offensive gasses, odors or liquids will be permitted. No firearms
will be permitted.
8. The electrical current shall be used for ordinary lighting purposes
only unless written permission to do otherwise shall first have been obtained
from HQ at an agreed cost to Client.
<PAGE>
9. If client requires any special installation or wiring for electrical
use, telephone equipment or otherwise, such wiring shall be done at Client's
expense by the personnel designated by HQ.
10. Client may not conduct business in the hallways, reception area or
any other area except in its designated Office(s) without the prior written
consent of HQ.
11. Client will bring no animals other than seeing-eye dogs in the
company of blind persons in the Building.
12. Client shall not remove furniture, fixtures or decorative material
from the Office(s) without the written consent of HQ and such removal shall be
under the supervision and regulations of the HQ Business Center.
13. Client will not use the HQ Business Center for manufacturing or
storage of merchandise except as such storage may be incidental to general
office purposes.
14. Client will not occupy or permit any portion of the HQ Business
Center to be occupied or used for the manufacture, sale, gift or use of liquor,
narcotics or tobacco in any form.
15. Client will not use the Office(s) for lodging or sleeping or for
any immoral or illegal purposes.
16. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows of the HQ Business Center by Client nor shall any
changes be made on existing locks or the mechanisms thereof.
17. Client shall, before leaving the Office(s) unattended of an
extended period of time, close and securely lock, all doors and shut off all
lights and other electrical apparatus. Any damage resulting from failure to do
so shall be paid by Client.
18. Canvassing, soliciting and peddling in the Building are prohibited
and Client shall not solicit other clients for any business or other purpose
without the prior written approval of HQ.
19. All property belonging to Client or any employee, agent or invitee
of Client shall be at the risk of such person only and HQ shall not be liable
for damages thereto or for theft or misappropriation thereof.
20. If Client does not remove any property belonging to Client from the
HQ Business Center by the end of the term, at the option of HQ, Client shall be
conclusively presumed to have conveyed such property to HQ under this Agreement
as a bill of sale
<PAGE>
without further payment or credit by HQ to Client and HQ may remove the same and
Client shall pay HQ all costs of such removal upon demand.
21. Smoking shall be prohibited in all public areas, including
conference and training rooms. No smoking shall be permitted at any time in any
area of the HQ Business Center (including open offices and workstations);
provided however, with the prior written consent of HQ, smoking shall be
permitted in Client's Office(s), but only with the door closed, and then only
cigarette smoking will be permitted as long as client provides an air filter
device acceptable to HQ, unless the entire Building has been designated non-
smoking, in which case smoking is not permitted in the Office(s). Cigar and pipe
smoking are prohibited in all areas of the HQ Business Center.
HQ reserves the right to make such other rules and regulations as in
its judgment may from time to time be needed for the safety, care and
cleanliness of the offices. HQ shall have no responsibility to Client for the
violation or non-performance by any other HQ clients of any of the Rules and
Regulations but shall use reasonable efforts to uniformly enforce all Rules and
Regulations.
<PAGE>
HQ BUSINESS CENTERS
OFFICE SERVICE AGREEMENT
This Agreement is dated May 12, 1999 entered into in 666 5th, NYC (Center - City
& State) for the HQ (Center) located at 666 5th Avenue, 37th FL, New York, New
York 10103 (Center Address) by and between OMNI OFFICES, INC. (hereinafter "HQ")
and REGENESIS (hereinafter "Client").
HQ and Client agree that HQ shall grant to Client for and in consideration of
the agreements and fee(s) set forth herein and in the Master Services Agreement
dated May 12, 1999, a license to use the Office(s) as from time to time
designated by HQ and, in common with HQ's other clients. Client's license to use
HQ's Business Center facilities and services, shall be in accordance with the
terms hereof and the Master Services Agreement. All of the terms and conditions
of the Master Services Agreement shall be included in and shall control this
Agreements. This Agreement shall be attached to and become part of the Master
Services Agreement.
I. BASIC TERMS. Stated below are the basic terms of this Agreement and all
provisions of the Master Services Agreement are to be read in accord
therewith.
A. Base Service: HQ's Complete Executive Office Program,
including the use of executive office complete with
professional administrative staff and such other inclusive
services are defined in Schedule "A" (attached to the Master
Office Service Agreement).
B. Additional Services: Access to additional business services
for purchase as needed by Client, including secretarial,
administrative, telecommunications support and such other
services as are defined in Schedule "B" (attached to the
Master Office Service Agreement).
C. HQ Business Center Fifth Ave.
D. Address: 666 Fifth Avenue.
E. Office number(s): 374213, having a maximum occupancy capacity
of 4 person(s).
F. Commencement Date: June 1, 1999.
G. Initial Term: 12 mo.
H. End of Initial Term: 5/31/00.
<PAGE>
I. Monthly Base Office Fees: $4,626.
J. Refundable Services Retainer: $7,389.
K. Automatic Annual Anniversary Renewal Increase of 6%.
L. Client represents and warrants to HQ that there are no agents,
brokers, finders or other parties except none with whom Client
has dealt who are or who may be entitled to any commission or
fee with respect to this Agreement unless noted in this
section. (If Broker, see attached Addendum.)
M-a. Based upon a twelve, six, or three month term, and upon the
Ending of the Initial Term (as stated above), or any extension
thereof, the term of this Agreement and the license herein
granted shall be automatically extended for the same period of
time as the Initial Term, upon the same terms and conditions
as contained herein, unless either party gives notice to the
other in writing to the contrary at least sixty (60) days
prior to the End of Initial Term if Client has licensed the
use of two (2) or less offices of ninety (90) days if Client
has licensed the use of three (3) or more offices.
OR
M-b. Based upon a one (1) month term, and upon the Ending of
Initial Term (as stated above), this Agreement and the license
herein granted shall be automatically extended for the same
period of time as the Initial Term, upon the same terms and
conditions as contained herein, unless either party gives
notice to the other in writing to the contrary at least thirty
(30) days prior to the End of the Initial Term.
II. ADDITIONAL TERMS.
A. Client will take possession of office on 5/12/99, at a
provided rate.
B. Non-refundable fees $545.
C. Two phones @ $250 p/mo.
D. One fax line @ $50 p/mo.
This Agreement may be executed in two ro more counterparts, each of which shall
be deemed to be an original but all of which together shall constitute one and
the same Instrument.
<PAGE>
HQ BUSINESS CENTERS CLIENT:
BY: OMNI OFFICES, INC.
REGENESIS HOLDINGS, INC.
By: ___________________________ By: /s/ Lawrence Gallo
Authorized Signatory Authorized Signatory
______________________________ Lawrence Gallo
Print Name Print Name
Its: ___________________________ Its:____________________________
IF AN INDIVIDUAL OR PARTNERSHIP
By: ____________________________
OFFICE LEASE
FOR
INTERCONTINENTAL PROFESSIONAL CENTER
THIS LEASE is dated as of May 10, 1999 by and between FINANCE TEAM OF
AMERICA and or assigns, a Florida corporation, having an office at Weston,
Broward County, Florida ("Landlord"), and REGENESIS HOLDINGS, INC. having an
office at Weston, Florida ("Tenant").
I. DEMISE OF PREMISES
Landlord hereby leases to Tenant and Tenant leases from Landlord the
Premises located in the Building, together with nonexclusive right to use, in
common with Landlord and others, the following portions of the Building and
Land: the entrance foyer and lobby, the corridors and lavatories on which the
Premises are situated and the exterior sidewalks and driveways.
II. SUMMARY OF THE TERMS
As used in this Lease, the following terms shall have the following
meanings:
A. Premises: That part of the Building outlined on the attached Plan
showing the Premises, called Building D, Suite 103, Section 1.
B. Building: The Building Intercontinental Professional Center, on the
Land, shall have an address of 1555 North Park Drive, Suite 103, Weston, Florida
33326, as shown on the attached plan.
C. Land: The real property shown on the Land and Building Plan.
D. Office Park: If indicated on the Land and Building Plan, the office
park, including land and buildings, of which the Land and Building are a part.
E. Building Manager: Eric Castro at _________________________________
or such other Person as Landlord may designate.
F. Commencement Date: The later of May 10, 1999 (the expected
Commencement Date), or that date on which the Premises are substantially
completed pursuant to Section 1 of the Lease.
G. Termination Date: August 10, 1999 - Thereafter, provided Tenant is
not in default under the terms, covenants and conditions of this lease and
Landlord agrees, Tenant shall have the option to renew this Lease for three
additional Months upon the same terms and conditions contained herein. Tenant
shall provide Landlord with written notice to exercise this renewal option at
least 15 day(s) prior to any Termination Date.
1
<PAGE>
H. Lease Month: A 30 day period, the first of which shall commence on
the Commencement Date if it is the first day of a week, otherwise, on the first
day of the week next following the Commencement Date, and each subsequent Lease
month shall begin on successive anniversaries of the commencement of the first
Lease Year.
I. Term: A period commencing on the Commencement Date and expiring at
midnight on the Termination Date, unless sooner terminated as provided in this
Lease.
J. Base Rent and Expenses & Monthly Installments of Base Rent and
Expenses:
<TABLE>
<CAPTION>
Base Rent and Monthly Installments
Lease Year Expenses Per Annum* of Base Rent & Expenses*
(*expenses subject to annual adjustment)
<S> <C> <C> <C> <C>
1999-2000 $12,000.00 $4,000.00
</TABLE>
It being understood that the Base Rent commences at $20.00 per sq.
K. Usable Square Feet: 2,000.00 Rentable Square Feet (1.15 FACTOR):
2,000
L. Tenant's Proportionate Share of the Building and Common Areas:
M. Intentionally Omitted.
N. Base Stop: $4.00 per square foot of rentable Building Area.
O. Security Deposit: $4,000. First month's rent due at time of
occupancy.
P. Landlord's mailing Address: 1555 N. Park Drive, Suite 101, Weston,
Florida 33326.
Q. Tenant's Mailing Address:
Prior to Commencement Date: __________________
As of Commencement Date: The Premises.
R. Normal Business Hours: The hours from 8:00 a.m. to 6:00 p.m. Monday
through Friday and 8:00 a.m. to 1:00 p.m. on Saturday, except recognized
holidays. Tenant shall have access to the demised premises 24 hours per day.
S. State: The State of Florida
2
<PAGE>
T. Parking Spaces: Tenant shall be entitled to the nonexclusive use in
common with Landlord and others of four parking spaces per 1000 useable square
feet in the outdoor parking area which is shown on the Land and Building Plan.
Landlord reserves the right to modify the parking area layout or control, assign
parking spaces, and/or to do other things in the parking area that Landlord, in
its discretion, deems in the best interest of the building. Landlord should not
be liable for any damage to, or any theft of any vehicle or its contents in the
parking area.
U. Broker: NONE
V. Permitted Use: In addition to general office purposes: None. The
Premises shall be used for general offices and shall not be used for any retail,
manufacturing, warehouse or any other use.
W. Radon Gas: Radon gas is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of Radon that
exceed Federal and State guidelines have been found in buildings of Florida.
Additional information regarding radon and radon testing may be obtained.
III. ATTACHMENTS
The attachments listed below are incorporated in this Lease and are to
be constructed a part hereof:
1. General Terms, Covenants and Conditions
2. Plan showing the premises
3. Rules and Regulations
4. Expense Escalation
5. Lease Guarantee
6. Exhibit A
3
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease or
have caused this Lease to be executed.
LANDLORD: TENANT:
Finance Team Of America Regenesis Holding, Inc.
By:______________________________ By: /s/ Russell Adler
--------------------------
Russell Adler
-----------------------------
(Print Name)
By: /s/ , President Its: /s/
------------------------------ --------------------------
(Title)
Witnessed: Witnessed:
- --------------------------------- -----------------------------
4
<PAGE>
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts or stairways of the Building shall
not be obstructed or used for any purpose other than ingress and egress to and
from the Tenant's premises.
2. Nothing shall be attached to the outside walls or windows of the Building. No
curtains, blinds, shades, or screens shall be used in connection with any
exterior window or door of the Tenant's premises, except as prior approved by
Landlord as an acceptable Building standard.
3. No sign, advertisement, object, notice or other lettering shall be exhibited,
inscribed, painted or affixed on any part of the outside, or inside if visible
from the outside, of the Tenant's premises or the Building without the prior
consent of the Landlord.
4. The restrooms and other plumbing fixtures shall not be used for any purposes
other than those for which they were constructed. No Tenant shall bring or keep
any inflammable, combustible, explosive or hazardous fluid, material, chemical
or substance in or about the Tenant's premises without Landlord's prior consent.
5. No Tenant shall mark, paint, nail, tape or drill into any part of the
Building except the premises, and then only with the prior consent of Landlord.
No Tenant shall install any resilient tile or similar floor covering in the
Tenant's premises except in a manner approved by Landlord.
6. No bicycles, vehicles or animals of any kind shall be brought into the
Tenant's premises (except as may be required by handicapped persons). No cooking
shall be done or permitted in the Building by any tenant without the approval of
Landlord, except as is customary for general office purposes (such as the use of
microwave ovens and coffee machines). No Tenant shall cause any unusual or
objectionable odors to emanate from the tenant's premises.
7. No Tenant shall create, or permit to be created, any nuisance, or interfere
with other tenants or occupants of the Building or neighboring buildings or
Premises.
8. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows, nor shall any changes be made in locks or the mechanism
thereof. Each Tenant shall upon termination of its tenancy deliver to Landlord
all keys of stores, offices and restrooms obtained by such Tenant.
9. Landlord shall have the right to prohibit any advertising by any tenant
which, in Landlord's reasonable opinion impairs the reputation of the Building.
10. If the Tenant's premises become infested with vermin, such Tenant, at its
sole cost and expense, shall cause its premises to be exterminated, from time to
time, to the
5
<PAGE>
satisfaction of Landlord and shall employ such exterminators therefor as shall
be approved by Landlord.
11. No premises shall be used, or permitted to be used for lodging or sleeping,
or for any illegal purpose.
12. The requirements of Tenants will be attended to only upon application at the
office of the Building Manager, Building employees shall not be required to
perform any work outside of their regular duties, unless under specific
instructions from the office of Building Manager.
13. Canvassing, soliciting and peddling in the Building are prohibited and each
Tenant shall cooperate in seeking their prevention.
14. In the delivery or receipt of merchandise, freight or other matter, only
hand trucks or other means of conveyance equipped with rubber tires, rubber side
guards and such other safeguards as Landlord may require shall be used.
15. With respect to work being performed by a Tenant in its premises with the
approval of Landlord, the Tenant shall refer all contractors, contractor's
representatives and installation technicians to the Building Manager for its
supervision, approval and control prior to the performance of any work or
services. This provision shall apply to all work performed in the Building
including installation of telephones, electrical devices and attachments.
16. Each Tenant and all of Tenant's Representatives shall observe and comply
with the driving and parking signs and markers on the Land and the Office Park
and Landlord shall not be responsible for any damage to any vehicle towed
because of noncompliance with parking regulations.
17. No radio or television antenna, loudspeaker, music system or other device
shall be installed on the roof or exterior walls of the Building or on common
walls with adjacent tenants.
18. No material shall be placed in the trash boxes or receptacles in the
Building unless such material may be disposed of in the ordinary and customary
manner of removing and disposing of trash and garbage and will not result in a
violation of any Laws governing such disposal. All garbage and refuse disposal
shall be made only through entry-ways provided for such purposes and at such
times as Landlord shall delegate.
19. Intentionally Omitted.
20. Tenant shall pay to Landlord the costs incurred by Landlord for extra or
unusual cleaning required because of the condition or nature of the Premises.
6
<PAGE>
21. No vending machines of any kind shall be installed in the Tenant's premises,
except by Landlord upon the Tenant's request. Only Landlord may install vending
machines in the Building and Landlord shall receive all of the revenue derived
therefrom.
7
Exhibit 10.5
EMPLOYMENT AGREEMENT
AGREEMENT dated this 1st day of April, 1999, between REGENESIS
HOLDINGS, INC., a Florida corporation having its principal place of business at
444 Brickell Ave. suite 400 Miami, Florida 33131 (hereinafter the "Company"),
and Mitchell B. Sandler (hereinafter the "Employee").
WHEREAS, the Company desires to employ the Employee because of his special
knowledge and skills; and,
WHEREAS, the Employee desires to work for the Company;
NOW, THEREFORE, in consideration of the foregoing, ten dollars paid in hand, and
other good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the following is agreed:
1. DUTIES.
The Company hereby employs Mitchell B. Sandler as vice-president and
Secretary having such powers and duties in those capacities as set forth from
time to time by the Board of Directors (the "Board") in the By-laws of the
Company or otherwise. Employee shall devote his best efforts to the Business of
the Company.
2. COMPENSATION.
As compensation for his services to the Company, in whatever capacity
rendered, the Company shall pay to Employee $135,000 per annum, payable in
monthly installments of $11,250 per month. This salary shall be paid on such
dates during the month as other salaried employees are paid during the term of
this Agreement which is three years. The accrual of this salary shall be deemed
to have commenced on March 1, 1999.
In addition, Employee shall be entitled to the following: medical
insurance coverage, including major medical and dental coverage equivalent to
that provided to other key employees of the Company; such disability coverage as
is maintained on other key employees, and, the Company will provide errors and
omissions coverage for Employee as an officer and director of the corporation.
Employee shall be entitled to such amount of vacation and sick days and
personal days as are allowed other members of senior management. Additionally,
Employee shall be entitled to all holidays provided to other key employees.
Further, Employee shall receive a stock grant of 150,000 shares of the
Company's common stock and an option to purchase 150,000 shares at $.25 per
share. The 150,000 shares and options shall be registered upon a Form S-8 as
soon as practical.
Furthermore, Employee shall receive additional compensation for those
corporate finance transactions which are brought to the Company by Employee,
said compensation to be paid at the closing of such transactions. Such
compensation shall be negotiated in good faith prior to each such transaction
and if the parties cannot decide on said compensation, then the Company shall
<PAGE>
not undertake such transaction(s). If the parties do not reach agreement and the
Company proceeds with such transaction(s), then Employee shall be compensated
according to the custom in the industry as determined by a sole arbitrator
chosen in accordance with the with the then prevailing rules of the American
Arbitration Association.
3. EXPENSES
The Employee may incur $2,500 per year reasonable expenses for
promoting the business of the Company, including expenses for travel,
entertainment and similar items. The Company will reimburse the Employee for all
such expenses upon the presentation by the Employee from time to time, of an
itemized account justifying each expenditures. Such reimbursement shall be
provided within 10 working days of such presentation by Employee. Additional
expenses must be approved in advance by the Board of Directors of the Company.
4. RESERVED
5. NOTICE
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and by registered mail, and mailed to the parties
at the following addresses:
COMPANY: at the principal offices of the Company
EMPLOYEE: at his last known residence.
6. TERMINATION
This Agreement may be terminated prior to three years from the date
first written above in any one of the following manners:
1. The death of Employee; or,
2. the failure of the Company, as evidenced by filing
under the Bankruptcy Act for liquidation, or the making
of an assignment for the benefit of creditors.
3. At the end of the term as set forth herein above.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Florida.
If any provision of this Agreement is declared void, such provision shall be
deemed severed from this agreement, which shall otherwise remain in full force
and effect.
8. BINDING EFFECT
This Agreement is binding upon the parties hereto and upon successors
in the interest to the Company. This Agreement shall not be amended or otherwise
modified except by further express agreement in writing or executed by both
parties hereto. Any waiver of any breach of this Agreement shall be made in
writing and shall be applicable only to such breach and shall not be construed
to waive any subsequent or prior to breach other than the specific breach so
waived.
<PAGE>
9. SUPERCEDES EARLIER AGREEMENTS
This Agreement supersedes all earlier agreements between the parties
hereto.
10. ARBITRATION
Any dispute arising hereunder shall be resolved by arbitration before a
sole arbitrator under the prevailing rules of the American Bar Association. The
decision of arbitrator shall be binding upon the parties hereto and enforceable
at the law before any court of competent jurisdiction. The place of Arbitration
shall be Broward County, Florida
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
REGENESIS HOLDINGS, INC.
/s/ Mitchell B. Sandler By: /s/ Russell Adler
- --------------------------- ----------------------------
Mitchell B. Sandler Russell Adler
Chairman
EMPLOYMENT AGREEMENT
BY AND BETWEEN REGENESIS HOLDINGS CORPORATION
AND
RUSSELL ADLER
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of February 15, 1999 by and between REGENESIS HOLDINGS CORPORATION, a Florida
corporation (the "Company") and RUSSELL ADLER ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement
to assure the Company of the services of Employee and to set forth the
respective rights and duties of the parties hereto;
WHEREAS, the Company (a) is a holding company and currently has no
operating subsidiaries (b) intends to invest its available resources in one or
more new business ventures, (such activities, present and future, being
hereinafter referred to as the "Business").
NOW THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee agree
as follows:
ARTICLE I
1.1 Employment and Title. The Company hereby employs Employee, and
Employee hereby accepts such employment, as Chairman of the Board, all upon the
terms and conditions set forth herein.
1.2 Services.
(a) During the term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith the duties of Chairman of the
Company under the direction of the Board of Directors of the Company (the "Board
of Directors") or the Executive Committee of the Board of Directors (the
"Executive Committee"). Employee agrees to use his best efforts for the benefit
of the Company. The Company acknowledges that Employee is, and has been,
involved in various projects and activities (i.e. Attorney, Racing Team), some
of which provide indirect benefit to the Company. The Company further
acknowledges that such projects and activities have not adversely affected
Employee's performance of his duties and responsibilities; and nothing herein
shall restrict or prohibit Employee's involvement in such projects and
activities, provided that such projects and activities do not compare with, or
unduly interfere with, in the sole discretion of the Executive Committee,
Employee's duties and responsibilities hereunder. Employee shall be vested with
such authority as is generally commensurate with the position of Chairman of the
Board, as further outlined below.
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(b) Employee shall be the person primarily responsible for
insuring that the management of the Company operates within and institutes the
various directives of the Board of Directors. Employee will work and consult
with, as well as keep fully informed, the Board of Directors and the Executive
Committee as to all pertinent aspects of the Company's planning, operations, and
general business activities. As appropriate, Employee, in coordination with the
President and Chief Executive Officer, will communicate and report to the
Executive Committee and the Board of Directors on a periodic basis as to all
pertinent prospects and other such information reasonably required by the Board
of Directors to fulfill its duties to the Company's stockholders.
1.3 Location. The principal place of employment and the location of
Employee's principal office shall be in South Florida; provided, however,
Employee shall, when requested by the Board of Directors, or may, if he
determines it to be reasonably necessary, temporarily perform outside of South
Florida such services as a re reasonably required for the proper execution of
his duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other
that he/it has full power and authority to enter into and perform this Agreement
and that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Each party represents that
no consent or approval of any third party is required for his/its execution,
delivery and performance of this Agreement or that all consents or approvals of
any third party required for his/its execution, delivery and performance of this
Agreement have been obtained.
1.5 Sole Discretion. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its Chairman.
ARTICLE II
Term
2.1 Term The term of Employee's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") and shall continue
through the term of the contract year following the fourth anniversary of the
Commencement Date (the "Scheduled Termination Date") unless earlier terminated
pursuant to the provisions of this Agreement.
ARTICLE III
Compensation
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3.1 Base Salary. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base a salary of not less than $140,400, which base salary shall accrue
monthly (prorated for periods less than a month) and shall be paid in equal
bi-monthly installments, in arrears. The base salary will be adjusted annually
for changes in the cost of living and will be reviewed annually, or, more
frequently, when appropriate, by the Board of Directors or the Compensation
Committee of the Board of Directors, as the case may be, in its sole discretion.
3.2 Incentive Compensation. The Company may pay Employee, during the
Term of this Agreement, a performance/incentive bonus, based upon either: (i)
the attainment of the annual sales and profits levels to be set forth in Exhibit
A, to be attached hereto upon completion, which has been prepared after review
of a report and recommendations of an independent consultant or when
appropriate, by the Board of Directors or the Compensation Committee of the
Board of Directors, as the case may be, in its sole discretion.
3.3 Non-Qualified Stock Options. Upon the execution of this Agreement,
and subject to the provisions of Section 3.6, the Company shall grant to
Employee non-qualified options to acquire Five Hundred Thousand (500,000) shares
of its common stock (the "Option Shares"), subject to the following terms and
conditions:
(a) The option price per Option Share will be $.25.
(b) The Option Shares shall vest in full upon grant.
(c) The Option Shares shall expire (unless exercised in
accordance with the terms of this Section 3.4) on December 31, 2004. Vested
Option Shares shall be exercisable by Employee, in whole or in part, on or
before such expiration date by payment in full, in cash or by check, to the
Company of the aggregate option price for the Option Shares so acquired.
3.4 Additional Compensation.
(a) S-8 Share Grants. Upon being elected as Chairman, the
Employee shall receive 300,000 S-8 Shares, to be registered in the Company's
next registration statement, and certain additional grants if any, shall be
determined by the Board of Directors or the Compensation Committee of the Board
of Directors, as the case may be, in its sole discretion.
(b) Registered Stock Grants. The Company may grant Employee,
during the Term of this Agreement, unregistered shares of its Common Stock,
which grants, if any, shall be determined by the Board of Directors, as the case
may be, in it sole discretion.
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(c) Commission. The Company will pay Employee a commission
(payable in cash or in unregistered shares of Common Stock, at the Employee's
option) for each corporate finance transaction and acquisition consummated by
the Company or any Affiliate of the Company during the Term hereof. For purposes
of this Section 3.5(b). The commissions shall be based upon the consideration
(whether such consideration is in the form of cash, stock, notes, bonds,
debentures, reserved production payments or other reserved interests or any
other thing of value, or any combination of the foregoing) actually paid or
agreed to be paid by the Company or any Affiliate of the Company in connection
with an acquisition, shall be paid to Employee within sixty (60) days of the
closing of the acquisition, and shall be in an amount not less than one percent
(1%) of the total consideration. The term "Affiliate" as used in this Agreement
includes any individual, corporation, partnership, trust, estate or other legal
entity controlling, controlled by or under common control with the Company, with
the concept of control in such context meaning the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of another, whether through the ownership or voting securities, by
contract or otherwise, and shall also include any employee, officer, director,
or agent of the Company acting for or in behalf of the Company.
3.5 Effect of Changes in Capitalization.
(a) If the number of outstanding shares of common stock of the
Company is increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of any
merger, share exchange, consolidation, reorganization, recapitalization,
reclassification, stock split, combination of shares, exchange of shares, stock
dividend or other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration by the
Company, a proportionate and appropriate adjustment shall be made by the Company
with respect to the number of Option Shares then outstanding under Section 3.4,
so that the proportionate interest of Employee immediately following such event
shall, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in the number of Option Shares shall not change the
aggregate option price payable with respect to the then unexercised Option
Shares, but shall include a corresponding proportionate adjustment in the option
price per Option Share.
(b) Adjustments under this Section 3.6 relating to Option
Shares or securities of the Company shall be made by the Board of Directors,
whose determination in that respect shall be final and conclusive. No fractional
shares or units of other securities shall be issued pursuant to any such
adjustment and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding upward to the nearest whole share or unit.
3.6 Employee's Legal Fees. Employee may, and the Company has encouraged
the Employee to, engage competent legal counsel for advice and guidance with
respect to this Agreement, including, without limitation, advice as the federal
income tax consequences of this Article III. The Company shall reimburse
Employee for all
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reasonable legal fees incurred by Employee in connection with the negotiation
and execution of this Agreement. Further, during the term of this Agreement, and
any extension hereof, in the event an action is filed against Employee,
individually, based upon allegations involving Employee's performance of his
duties hereunder, the Company shall reimburse Employee for all reasonable legal
fees incurred by Employee in defense thereof.
3.7 Relocation Costs. The Company agrees to reimburse Employee for
reasonable moving expenses incurred by Employee in connection with any
relocation required by the Company (including the costs of any temporary rental
accommodations), subject to requirements for acceptable documentation and any
applicable Internal Revenue Service reporting requirements. Such reimbursement
shall include the Company's purchase of Employee's residence located in Florida
as determined by the average of appraisals performed by two qualified
appraisers, one selected by the Company and one selected by the Employee.
3.8 Benefits. Employee shall be entitled, during the Term hereof, to
the same medical, hospital, dental and life insurance coverage and benefits as
are available to the Company's most senior executive officers on the
Commencement Date together with the following additional benefits:
(a) A Company automobile of a type, model and style
satisfactory to Employee;
(b) Reimbursement of all operating expenses of the Company
automobile;
(c) Comprehensive medical coverage, including dependent,
dental and disability coverage, paid fully by the Company;
(d) The Company shall purchase and maintain "Key Man" Life
insurance on Employee in an amount equal to the aggregate balance of all Company
obligations which the Employee has guaranteed plus $500,000, the beneficiary and
owner of which shall be the Company;
(e) The Company shall purchase Term Life insurance on Employee
in an amount equal to the aggregate balance of $500,000, the beneficiary and
owner of which shall be designated by Employee;
(f) Long-term disability insurance in an amount, adjusted
annually, equal to Employee's prior year base salary and incentive compensation,
if any, excluding compensation earned through Company stock options or other
securities; the beneficiary and owner of which policy shall be the Company,
which agrees that it shall continue Employee's compensation so long as the
Company receives payments or benefits from said policy, including continuation
of said compensation beyond termination of this Agreement;
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(g) All fees, dues and expenses at:
(i) Two South Florida county clubs of Employee's
choice;
(ii) Two (2) Professional Sports Programs of
Employee's choice.
(h) The Company's normal vacation allowance for all employees
who are executive officers of the Company, but not less than four (4) weeks
annually;
(i) An Officers and Directors Indemnity Agreement, in the form
to be attached hereto as Exhibit C.
3.9 Withholding. Any and all amounts payable under this
Agreement, including, without limitation, amounts payable under this Article III
and Article VII, are subject to withholding for such federal, state and local
taxes as the Company, in its reasonable judgment, determines to be required
pursuant to any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be furnished with
an office at the principal executive offices of the Company, and at such other
location as agreed to by Employee and the company, and other working facilities
and secretarial and other assistance suitable to his position and reasonably
required for the performance of his duties hereunder. The Company shall
reimburse Employee for all of Employee's reasonable expenses incurred while
employed and performing his duties under and in accordance with the terms and
conditions of this Agreement, subject to Employee's full and appropriate
documentation, including, without limitation, receipts for all such expenses in
the manner required pursuant to Company's policies and procedures and the
Internal Revenue Code of 1986, as amended (the "Code") and applicable
regulations as are in effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise, and
at its own expense, life disability and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examination s to be conducted by such physicians(s)
as the Company or as such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
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Illness or Incapacity
5.1 Right to Terminate. If, during the Term of this Agreement, Employee
shall be unable to perform in his duties hereunder for a period exceeding nine
(9) consecutive months by reason of illness or incapacity, this Agreement may be
terminated by the Company in its sole discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of ninety (90)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to replace
Employee temporarily in the capacity described in Article 1 hereof; provided,
however, that if Employee returns to work from such illness or incapacity within
the nine (9) month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity described in
Article I hereof with all rights, duties and privileges attendant thereto.
5.3 Rights Prior to Termination. Employee shall be entitled to his full
remuneration and benefits hereunder during such illness or incapacity unless and
until an election is made by the Company to terminate this Agreement in
accordance with the provisions of this Article.
5.4 Determination of Illness or Incapacity. For purposes of this
Article V, the term "illness or incapacity" shall mean Employee's inability to
substantially perform his duties hereunder due to physical or mental illness as
determined by the Board of Directors, based upon medical documentation of same.
ARTICLE VI
Confidentiality
6.1 Confidentiality. During the Term of this Agreement and thereafter,
Employee agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know how", methods of
doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Employee shall not use (other than in
connection with his employment), in any way whatsoever, such trade secrets
except as authorized in writing by the Company. Employee shall, upon the
termination of his employment, deliver to the Company any and all record, books,
documents or any other materials whatsoever (including all copies thereof)
containing such trade secrets, which shall be and remain the property of the
Company.
6.2 Non-Removal of Records. All documents, papers, materials, notes,
books, correspondence, drawings and other written and graphic records relating
to the Business
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of the Company which Employee shall prepare or use, or come into contact with,
shall be and remain the sole property of the Company and, effective immediately
upon the termination of the Employee's employment with the Company for any
reason, shall not be removed from the Company's premises without the Company's
prior written consent.
ARTICLE VII
Termination
7.1 Termination for Cause. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" in any of the following
circumstances:
(a) Employee has committed any fraud, misappropriation or
similar act against the Company;
(b) Employee has been proven to have engaged in illegal
activities which, individually, or in the aggregate, have a material adverse
effect on the Company.
A Termination for Cause under this Section 7.1 shall be
effective upon the date set forth in a written notice of termination delivered
to Employee and removal of Employee's liability for any obligations of the
Company or guaranty of any Company obligations, whether such Company obligation
is non-contingent or contingent.
7.2 Termination Without Cause. This Agreement and the employment of the
Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto, provided
Employee's liability for any litigation of the Company or guaranty of any
Company obligation, whether such Company obligation is non-contingent or
contingent, has been removed; or
(b) Upon Employee's death.
A Termination Without Cause under Section 7.2(a) hereof shall
be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall not be less than ninety (90) days after the
given of such notice. A Termination Without Cause under 7.2(d) hereof shall be
automatically effective upon the date of the death of the Employee.
7.3 Effect of Termination For Cause. If Employee's employment is
terminated For Cause:
(a) Employee shall be entitled to accrued base salary under
Section 3.1 through the date of termination;
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(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions of
Section 4.1 hereof; and,
(c) Employee shall be entitled to any commissions on
acquisitions or agreements for acquisitions entered into prior to termination,
whether such acquisitions are consummated or are to be consummated after the
date effective termination date.
7.4 Effect of Termination Without Cause. If Employee's employment is
terminated Without Cause:
(a) Employee shall be entitled to compensation under Section 3
through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions of
Section 4.1 hereof;
(c) Employee shall be entitled to receive a one-time, lump sum
severance payment equal to two and nine point nine tenths (2.99) times the total
amount of the annual base salary payable under Section 3.1 hereof, which amount
shall be paid upon termination;
(d) Employee shall be entitled to receive all benefits as
would have been awarded under Section 3.8 hereof through the Scheduled
Termination Date, which benefits shall be awarded as and when the same would
have been awarded under the Agreement had it not been terminated;
(e) Employee shall be entitled to any commissions on
acquisitions or agreements for acquisitions entered into prior to termination,
whether such acquisitions are consummated or are to be consummated after the
date effective termination date; and
(f) Except as provided in Article XI, this Agreement shall
thereupon be of no further force or effect.
7.5 Termination Upon Change of Control. Upon a "Change of Control" (as
such term is defined in Section 7.6 herein) of the Company during the Term
hereof, Employee may, at his sole discretion, declare this Agreement terminated
and receive a one-time, lump sum severance payment equal to two and ninety-nine
hundreds (2.99) times the total amount of the annual base salary payable under
the terms of Section 3.1 of this Agreement upon the date of such Change of
Control, if within three (3) years of the Change of Control.
(a) Employee's employment hereunder is terminated prior to the
Scheduled Termination Date Without Cause; or
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(b) Employee elects to terminate his employment with the
Company in the event (i) he is removed from the office of Chairman of the
Company or (ii) the Company fails to afford Employee the power and authority
generally commensurate with the position o f Chairman or (iii) the Company
requires Employee to relocate his residence; and
(c) Employee's liability for any obligation of the Company or
guaranty of any Company obligation, whether such Company obligation is
non-contingent or contingent, has been removed.
7.6 Change of Control. For purposes of this Section 7.5 of this
Agreement, a Change of Control shall be deemed to have occurred in the event of:
(a) The acquisition by any person or entity, or group thereof
acting in concert, of "beneficial" ownership (as such term is defined in
Securities and Exchange Commission Act of 1934, as amended) (the "Exchange
Act"), of securities of the Company which, together with securities previously
owned, confer upon such person, entity or group the voting power, on any matters
brought to a vote of shareholders, of twenty-five percent (25%) or more of the
then outstanding shares of capital stock of the Company; or
(b) The sale, assignment or transfer of assets of the Company
or any subsidiary or subsidiaries, in a transaction or series of transactions,
if the aggregate consideration received or to be received by the Company or any
such subsidiary in connection with such sale, assignment or transfer is greater
than twenty-five percent (25%) of the book value, determined by the Company in
accordance with generally accepted accounting principles, of the Company's
assets determined on a consolidated basis immediately before such transaction or
the first of such transactions; or
(c) The merger, consolidation, share exchange or
reorganization of the Company (or one or more subsidiaries of the Company) as a
result of which the holders of all of the shares of capital stock of the Company
as a group would receive less than twenty-five percent (25%) of the voting power
of the capital stock or other interests of the surviving or resulting
corporation or entity; or
(d) The adoption of a plan of liquidation or the approval of
the dissolution of the Company; or
(e) The commencement (within the meaning of SEC Rule 14d-2
under the Exchange Act) of a tender or exchange offer which, if successful,
would result in a change of control of the Company; or
(f) A determination by the Board of Directors of the Company,
in view of then current circumstances or impending events, that a Change of
Control of the Company has occurred or is imminent, which determination shall be
made for the specific purpose of triggering the operative provisions of this
Agreement.
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7.7 Limitations on Change of Control Compensation. In the event that
the lump-sum payment payable to Employee under Section 7.5 hereof ("Severance
Benefits"),or any other payments or benefits received by Employee from the
Company (whether payable pursuant to the terms of this Agreement, or any other
plan, agreement or arrangements with the Company or any corporation affiliated
with the Company within the meaning of Section 1504 of the Code, in the opinion
of tax counsel selected by the Company acceptable to Employee, constitute
"parachute payments" within the meaning of Section 280G(b)(2) of the Code and
the present value of such "parachute payments" equals or exceeds three times the
average of the annual compensation payable to Employee by the Company (or an
Affiliate) and includable in Employee's gross income for federal income tax
purposes for the five (5) calendar years preceding the year in which a change in
ownership or control (as hereinafter defined) of the Company occurred ( "Base
Amount"), such Severance Benefits shall be reduced to an amount the present
value of which (when combined with the present value of any other payments or
benefits otherwise received or to be received by Employee from the Company (or
an Affiliate) that are deemed "parachute payments" is equal to 2.99 times the
Base Amount, notwithstanding any other provision to the contrary in this
Agreement. The Severance Benefits shall not be reduced if (i) Employee shall
have effectively waived his receipt of enjoyment of any such payment or benefit
which triggered the applicability of this Section 7.7 or (ii) in the opinion of
such tax counsel, the Severance Benefits (in their full amount or as partially
reduced, as the case may be) plus all other payments or benefits which
constitute "parachute payments" within the meaning of Section 280G(b)(2) of the
Code are reasonable compensation for the services actually rendered, within the
meaning of Section 280G(b)(4) of the Code and such payments are deductible by
the Company. The Base Amount shall include every type and form of compensation
includable in Employee's gross income in respect of his employment by the
Company (or an Affiliate), except to the extent otherwise provided in temporary
or final regulations promulgated under Section 280G(b) of the Code. For purposes
of this Section 7.7, a "change in ownership or control" shall have the meaning
set forth in Section 280G(b) of the Code and any temporary or final regulations
promulgated thereunder. The present value of any non-cash benefit or any
deferred cash payment shall be determined by the Company's independent auditors
in accordance with the principles of Section 280G of the Code.
Employee shall have the right to request that the Company obtain a
ruling from the Internal Revenue Service ("IRS") as to whether any or all
payments or benefits determined by such tax counsel are, in the view of the IRS,
"parachute payments" under Section 280G. If a ruling is sought pursuant to
Employee's request, no Severance Benefits payable under this Agreement in excess
of the Section 280G limitations shall be made to Employee until after fifteen
(15) days from the date of such ruling, however, Severance Benefits shall
continue to be paid during the time up to the amount of that limitation. For
purposes of this Section 7.7, Employee and the Company shall agree to be bound
by the IRS's ruling as to whether payments constitute "parachute payments" under
Section 280G. If the IRS declines, for any reason, to provide the ruling
requested, the tax counsel's opinion provided with respect to what payments or
benefits constitute "parachute payments" shall control and the period during
which the Severance Benefits may be deferred shall be extended
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to a date fifteen (15) days from the date of the IRS's notice indicating that no
ruling would be forthcoming.
In the event that Section 280G, or any successor statute is repealed,
this Section 7.7 shall cease to be effective on the effective date of such
repeal. The parties to this Agreement recognize that final regulations under
Section 280G of the Code may affect the amounts that may be paid under this
Agreement and agree that, upon issuance of such final regulations, this
Agreement may be modified as in good faith deemed necessary in light of the
provisions of such regulations to achieve the purposes of this Agreement, and
that consent to such modification shall not be unreasonably withheld.
ARTICLE VIII
Non-Competition and Non-Interference
8.1 Non-Competition. Employee agrees that during the Term hereof and,
in the case of a Termination For Cause, for a period of six (6) months
thereafter, Employee will not, directly, indirectly, or as an agent on behalf of
or in conjunction with any person, firm, partnership, corporation or other
entity, own, manage, control, join, or participate in the ownership, management,
operation, or control of, or be financially interested in or advise, lend money
to , or be employed by or provide consulting services to, or be connected in any
manner with any similar business in which the Company is engaged as of the date
of termination and which is located within 50 miles of any Company facility or
operation within the United States of America.
8.2 Non-Interference. Employee agrees that during the Term hereof and,
in the case of a Termination For Cause, for a period of six (6) months
thereafter, Employee will not, directly, indirectly or as an agent on behalf of
or in conjunction with any person, firm, partnership, corporation or other
entity, induce or entice any employee of the Company to leave such employment or
cause anyone else to do so.
8.3 Severability. If any covenant or provision contained in Article
VIII is determined to be void or unenforceable in whole or in part, it shall not
be deemed to affect or impair the validity of any other covenant or provision.
If, in any arbitral or judicial proceeding, a tribunal shall refuse to enforce
al of the separate covenants deemed included in this Article VIII, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceedings to the extent necessary to permit the
remaining separate covenants to be enforced in such proceedings.
ARTICLE IX
Remedies
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9.1 Equitable Remedies. Employee and the Company agree that the
services to be rendered by Employee pursuant to this Agreement, and the rights
and interests granted and the obligations to be performed by Employee to the
Company pursuant to this agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Employee of any of the terms of this Agreement will cause
the Company great and irreparable injury and damage. Employee hereby expressly
agrees that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of Articles
VI and VIII of this Agreement, both pendente lite and permanently, against
Employee, as such breach would cause irreparable injury to the Company and a
remedy at law would be inadequate and insufficient. Therefore, the Company may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction in the matter restraining any further violation.
9.2 Rights and Remedies Preserved. Nothing in this Agreement except
Section 10.11 shall limit any right or remedy the Company or Employee may have
under this Agreement or pursuant to law for any breach of this Agreement by the
other party. The rights granted to the parties herein are cumulative and the
election of one shall not constitute a waiver of such party's right to assert
all other legal remedies available under the circumstances.
ARTICLE X
Miscellaneous
10.1 No Waivers. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 Notices. Any notice to be given to the Company and Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or certified
mail, postage prepaid, and shall be addressed as follows:
If to the Company: Regenesis Holdings Corporation
444 Brickell Avenue, Suite 400
Miami, Florida 33131
Attention: Secretary
Telephone: (305) 358-9708
Telecopy: (305) 358-4720
If to Employee: Russell Adler
8881 N. Lake Dasha Drive
Plantation, Florida 33324
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<PAGE>
AND a Copy to: Russell B. Adler, Esquire
444 Brickell Avenue, Suite 400
Miami, Florida 33131
Attention: Secretary
Telephone: (305) 358-9708
Telecopy: (305) 358-4720
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
10.3 Severability. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
10.5 Entire Agreement. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
10.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida without reference
to the conflict of law principles thereof.
10.7 Section Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
14
<PAGE>
10.8 Further Assurances. Each party hereto shall cooperate and shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
10.9 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be read and construed as though in the
singular in all cases where they would so apply.
10.10 Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall be deemed one original.
10.11 Arbitration. the parties hereto agree that any dispute concerning
or arising out of the provisions of the Agreement shall be resolved by
arbitration in accordance with the rules of the American Arbitration
Association. Such arbitration shall be held in Broward County, Florida and the
decision of the arbitrator(s) shall be conclusive and binding on the partes and
shall be enforceable in any court of competent jurisdiction. The arbitrator may,
in his or her discretion, award attorneys' fees and costs to such party as he or
she sees fit in rendering his or her decision. Notwithstanding the foregoing, if
any dispute arises hereunder as to which the Company desires to exercise any
rights or remedies under Section 9.1 hereof, the Company may, in its discretion,
in lieu of submitting the matter to arbitration, bring an action thereon in any
court of competent jurisdiction in Florida, which court may grant any and all
relief available in equity or at law. In any such action, the prevailing party
shall be entitled to reasonable attorneys' fees and costs as may be awarded by
the court.
ARTICLE XI
Survival
11.1 Survival. The provisions of Articles III {3.5(c)}, VI, VII, VIII,
IX and X, of this Agreement shall survive the termination of this Agreement
whether upon, or prior to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
ATTEST: REGENESIS HOLDINGS CORPORATION,
a Florida corporation,
By: /s/ Mitchell Sandler
---------------------------------
Title: DIRECTOR/PRESIDENT
____________________________
Secretary
WITNESS: EMPLOYEE
____________________________ /s/ Russell B. Adler
------------------------------------
RUSSELL B. ADLER
15
Exhibit 10.7
EMPLOYMENT AGREEMENT
AGREEMENT dated this 18th day of April, 1999, between REGENESIS
HOLDINGS, INC., a Florida corporation having its principal place of business at
345 South State Road 7, Margate, FL 33066 (hereinafter the "Company"), and
LAWRENCE GALLO (hereinafter the "Employee").
WHEREAS, the Company desires to employ the Employee because of his special
knowledge and skills; and,
WHEREAS, the Employee desires to work for the Company;
NOW, THEREFORE, in consideration of the foregoing, ten dollars paid in hand, and
other good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the following is agreed:
1. DUTIES.
The Company hereby employs Lawrence Gallo as President having such
powers and duties in those capacities as set forth from time to time by the
Board of Directors (the "Board") in the By-laws of the Company or otherwise.
Employee shall devote his best efforts to the Business of the Company.
2. COMPENSATION.
As compensation for his services to the Company, in whatever capacity
rendered, the Company shall pay to Employee $150,000 per annum, payable in
monthly installments of $12,500 per month. This salary shall be paid on such
dates during the month as other salaried employees are paid during the term of
this Agreement which is one year.
In addition, Employee shall be entitled to the following: medical
insurance coverage, including major medical and dental coverage equivalent to
that provided to other key employees of the Company; such disability coverage as
is maintained on other key employees, and, the Company will provide errors and
omissions coverage for Employee as an officer and director of the corporation.
Employee shall be entitled to such amount of vacation and sick days and
personal days as are allowed other members of senior management. Additionally,
Employee shall be entitled to all holidays provided to other key employees.
Further, Employee shall receive a stock grant of 250,000 shares of the
Company's common stock and an option to purchase 150,000 shares at $.25 per
share. The 250,000 shares and options shall be registered upon a Form S-8 as
soon as practical.
Furthermore, Employee shall receive additional compensation for those
corporate finance transactions which are brought to the Company by Employee,
said compensation to be paid at the closing of such transactions. Such
compensation shall be negotiated in good faith prior to each such transaction
<PAGE>
and if the parties cannot decide on said compensation, then the Company shall
not undertake such transaction(s). If the parties do not reach agreement and the
Company proceeds with such transaction(s), then Employee shall be compensated
according to the custom in the industry as determined by a sole arbitrator
chosen in accordance with the with the then prevailing rules of the American
Arbitration Association.
3. EXPENSES
The Employee may incur up to $2,500 per month in reasonable expenses
for promoting the business of the Company, including expenses for travel,
entertainment and similar items. The Company will reimburse the Employee for all
such expenses upon the presentation by the Employee from time to time, of an
itemized account justifying each expenditures. Such reimbursement shall be
provided within 10 working days of such presentation by Employee. Additional
expenses must be approved in advance by the Board of Directors of the Company.
4. RESERVED
5. NOTICE
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and by registered mail, and mailed to the parties
at the following addresses:
COMPANY: at the principal offices of the Company
EMPLOYEE: at his last known residence.
6. TERMINATION
This Agreement may be terminated prior to one year from the date first
written above in any one of the following manners:
1. The death of Employee; or,
2. The failure of the Company, as evidenced by filing
under the Bankruptcy Act for liquidation, or the making
of an assignment for the benefit of creditors.
3. At the end of the term as set forth herein above.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Florida.
If any provision of this Agreement is declared void, such provision shall be
deemed severed from this agreement, which shall otherwise remain in full force
and effect.
8. BINDING EFFECT
This Agreement is binding upon the parties hereto and upon successors
in the interest to the Company. This Agreement shall not be amended or otherwise
modified except by further express agreement in writing or executed by both
parties hereto. Any waiver of any breach of this Agreement shall be made in
writing and shall be applicable only to such breach and shall not be construed
to waive any subsequent or prior to breach other than the specific breach so
waived.
<PAGE>
9. SUPERCEDES EARLIER AGREEMENTS
This Agreement supersedes all earlier agreements between the parties
hereto.
10. ARBITRATION
Any dispute arising hereunder shall be resolved by arbitration before a
sole arbitrator under the prevailing rules of the American Bar Association. The
decision of arbitrator shall be binding upon the parties hereto and enforceable
at the law before any court of competent jurisdiction. The place of Arbitration
shall be Broward County, Florida
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
REGENESIS HOLDINGS, INC.
/s/ Lawrence Gallo By: /s/ Russell Adler
- -------------------------- -------------------------------
Lawrence Gallo Russell Adler
Chairman
Exhibit 10.8
EMPLOYMENT AGREEMENT
AGREEMENT dated this 18th day of April, 1999, between REGENESIS
HOLDINGS, INC., a Florida corporation having its principal place of business at
345 South State Road 7, Margate, FL 33066 (hereinafter the "Company"), and JOEL
F. BROWNSTEIN (hereinafter the "Employee").
WHEREAS, the Company desires to employ the Employee because of his special
knowledge and skills; and,
WHEREAS, the Employee desires to work for the Company;
NOW, THEREFORE, in consideration of the foregoing, ten dollars paid in hand, and
other good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the following is agreed:
1. DUTIES.
The Company hereby employs Joel F. Brownstein as Chief Financial
Officer and Treasurer having such powers and duties in those capacities as set
forth from time to time by the Board of Directors (the "Board") in the By-laws
of the Company or otherwise. Employee shall devote his best efforts to the
Business of the Company.
2. COMPENSATION.
As compensation for his services to the Company, in whatever capacity
rendered, the Company shall pay to Employee $135,000 per annum, payable in
monthly installments of $11,250 per month. This salary shall be paid on such
dates during the month as other salaried employees are paid during the term of
this Agreement which is one year.
In addition, Employee shall be entitled to the following: medical
insurance coverage, including major medical and dental coverage equivalent to
that provided to other key employees of the Company; such disability coverage as
is maintained on other key employees, and, the Company will provide errors and
omissions coverage for Employee as an officer and director of the corporation.
Employee shall be entitled to such amount of vacation and sick days and
personal days as are allowed other members of senior management. Additionally,
Employee shall be entitled to all holidays provided to other key employees.
Further, Employee shall receive a stock grant of 200,000 shares of the
Company's common stock and an option to purchase 150,000 shares at $.25 per
share. The 200,000 shares and options shall be registered upon a Form S-8 as
soon as practical.
Furthermore, Employee shall receive additional compensation for those
corporate finance transactions which are brought to the Company by Employee,
said compensation to be paid at the closing of such transactions. Such
compensation shall be negotiated in good faith prior to each such transaction
<PAGE>
and if the parties cannot decide on said compensation, then the Company shall
not undertake such transaction(s). If the parties do not reach agreement and the
Company proceeds with such transaction(s), then Employee shall be compensated
according to the custom in the industry as determined by a sole arbitrator
chosen in accordance with the with the then prevailing rules of the American
Arbitration Association.
3. EXPENSES
The Employee may incur up to $2,500 per month in reasonable expenses
for promoting the business of the Company, including expenses for travel,
entertainment and similar items. The Company will reimburse the Employee for all
such expenses upon the presentation by the Employee from time to time, of an
itemized account justifying each expenditures. Such reimbursement shall be
provided within 10 working days of such presentation by Employee. Additional
expenses must be approved in advance by the Board of Directors of the Company.
4. RESERVED
5. NOTICE
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and by registered mail, and mailed to the parties
at the following addresses:
COMPANY: at the principal offices of the Company
EMPLOYEE: at his last known residence.
6. TERMINATION
This Agreement may be terminated prior to one year from the date first
written above in any one of the following manners:
1. The death of Employee; or,
2. The failure of the Company, as evidenced by filing
under the Bankruptcy Act for liquidation, or the making
of an assignment for the benefit of creditors.
3. At the end of the term as set forth herein above.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Florida.
If any provision of this Agreement is declared void, such provision shall be
deemed severed from this agreement, which shall otherwise remain in full force
and effect.
8. BINDING EFFECT
This Agreement is binding upon the parties hereto and upon successors
in the interest to the Company. This Agreement shall not be amended or otherwise
modified except by further express agreement in writing or executed by both
parties hereto. Any waiver of any breach of this Agreement shall be made in
writing and shall be applicable only to such breach and shall not be construed
to waive any subsequent or prior to breach other than the specific breach so
waived.
<PAGE>
9. SUPERCEDES EARLIER AGREEMENTS
This Agreement supersedes all earlier agreements between the parties
hereto.
10. ARBITRATION
Any dispute arising hereunder shall be resolved by arbitration before a
sole arbitrator under the prevailing rules of the American Bar Association. The
decision of arbitrator shall be binding upon the parties hereto and enforceable
at the law before any court of competent jurisdiction. The place of Arbitration
shall be Broward County, Florida
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
REGENESIS HOLDINGS, INC.
/s/ Joel F. Brownstein By: /s/ Russell Adler
- ----------------------------- --------------------------------
Joel F. Brownstein Russell Adler
Chairman
Exhibit 10.9
EMPLOYMENT AGREEMENT
AGREEMENT dated this 1st day of April, 1999, between REGENESIS
HOLDINGS, INC., a Florida corporation having its principal place of business at
1555 Northpark Drive, suite 103 Weston, Florida 33324 (hereinafter the
"Company"), and Marc Jelaso (hereinafter the "Employee").
WHEREAS, the Company desires to employ the Employee because of his special
knowledge and skills; and,
WHEREAS, the Employee desires to work for the Company;
NOW, THEREFORE, in consideration of the foregoing, ten dollars paid in hand, and
other good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the following is agreed:
1. DUTIES.
The Company hereby employs Marc Jelaso as Director of Marketing having
such powers and duties in those capacities as set forth from time to time by the
Board of Directors (the "Board") in the By-laws of the Company or otherwise.
Employee shall devote his best efforts to the Business of the Company.
2. COMPENSATION.
As compensation for his services to the Company, in whatever capacity
rendered, the Company shall pay to Employee $125,000 per annum. This salary
shall be paid on such dates during the month as other salaried employees are
paid during the term of this Agreement which is three years.
In addition, Employee shall be entitled to the following: medical
insurance coverage, including major medical and dental coverage equivalent to
that provided to other key employees of the Company; such disability coverage as
is maintained on other key employees, and, the Company will provide errors and
omissions coverage for Employee as an officer and director of the corporation.
Employee shall be entitled to such amount of vacation and sick days and
personal days as are allowed other members of senior management. Additionally,
Employee shall be entitled to all holidays provided to other key employees.
Further, Employee shall receive a stock grant of 100,000 shares of the
Company's common stock and shall be included in the Employee Option Plan.
Furthermore, Employee shall receive additional compensation for those
corporate finance transactions which are brought to the Company by Employee,
said compensation to be paid at the closing of such transactions. Such
compensation shall be negotiated in good faith prior to each such transaction
<PAGE>
and if the parties cannot decide on said compensation, then the Company shall
not undertake such transaction(s). If the parties do not reach agreement and the
Company proceeds with such transaction(s), then Employee shall be compensated
according to the custom in the industry as determined by a sole arbitrator
chosen in accordance with the with the then prevailing rules of the American
Arbitration Association.
3. EXPENSES
The Employee may incur $1,500 per year reasonable expenses for
promoting the business of the Company, including expenses for travel,
entertainment and similar items. The Company will reimburse the Employee for all
such expenses upon the presentation by the Employee from time to time, of an
itemized account justifying each expenditures. Such reimbursement shall be
provided within 10 working days of such presentation by Employee. Additional
expenses must be approved in advance by the Board of Directors of the Company.
4. RESERVED
5. NOTICE
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and by registered mail, and mailed to the parties
at the following addresses:
COMPANY: at the principal offices of the Company
EMPLOYEE: at his last known residence.
6. TERMINATION
This Agreement may be terminated prior to three years from the date
first written above in any one of the following manners:
1. The death of Employee; or,
2. The failure of the Company, as evidenced by filing
under the Bankruptcy Act for liquidation, or the making
of an assignment for the benefit of creditors.
3. At the end of the term as set forth herein above.
7. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of Florida.
If any provision of this Agreement is declared void, such provision shall be
deemed severed from this agreement, which shall otherwise remain in full force
and effect.
8. BINDING EFFECT
This Agreement is binding upon the parties hereto and upon successors
in the interest to the Company. This Agreement shall not be amended or otherwise
modified except by further express agreement in writing or executed by both
parties hereto. Any waiver of any breach of this Agreement shall be made in
writing and shall be applicable only to such breach and shall not be construed
to waive any subsequent or prior to breach other than the specific breach so
waived.
<PAGE>
9. SUPERCEDES EARLIER AGREEMENTS
This Agreement supersedes all earlier agreements between the parties
hereto.
10. ARBITRATION
Any dispute arising hereunder shall be resolved by arbitration before a
sole arbitrator under the prevailing rules of the American Bar Association. The
decision of arbitrator shall be binding upon the parties hereto and enforceable
at the law before any court of competent jurisdiction. The place of Arbitration
shall be Broward County, Florida
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first written above.
REGENESIS HOLDINGS, INC.
/s/ Marc Jelaso By: /s/ Russell Adler
- ------------------------ --------------------------
Marc Jelaso Russell Adler
Chairman
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