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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
Cereus Technology Partners, Inc.
(Formerly AIM Group, Inc.)
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(Name of Small Business Issuer in its charter)
Delaware 13-3773537
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
1000 Abernathy Road
(Suite 1000)
Atlanta, GA 30328
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(Address of principal executive (Zip Code)
offices)
Issuer's telephone number: (770) 668-0900
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Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
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(Title of Class)
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PART I
ITEM 1. BUSINESS.
BACKGROUND
Cereus Technology Partners, Inc. (the "Company" or "Cereus"), which was
named AIM Group, Inc. prior to December 1, 1999, has been engaged since July
1999 in providing business software application services in the Internet segment
of the information technology ("IT") industry. The Company has initially focused
on the acquisition of three organizations that provide services that are
designed to allow small to medium-sized companies with annual sales in the $50
million to $500 million range to outsource much of their business software needs
and IT requirements via Internet connectivity.
On July 30, 1999, the Company acquired The Reddy Group, Inc. and its
wholly-owned subsidiary, Cereus Bandwidth LLC (collectively, "Cereus
Bandwidth"), an Atlanta-based Internet Service Provider ("ISP") which has
developed and currently markets a variety of Internet, Intranet and e-commerce
services. The Company also has acquired two software sales and services
companies. On July 30, 1999, the Company acquired Enterprise Solutions Group,
Inc. ("ESG"), a West Palm Beach based business software applications consulting
firm, and on November 15, 1999, the Company acquired Client Server Solutions,
Inc. ("CSS"), an Atlanta based business software sales and services company. ESG
and CSS are focused on enterprise resource planning ("ERP") applications that
consist of integrated financial, administrative, payroll and human resource,
manufacturing, distribution, point-of-sale and inventory management software.
Those applications are supported by software that includes management
information systems ("MIS") and data base management of sales and marketing
information.
The Company plans to focus its near-term efforts on the integration of
Cereus Bandwidth, ESG and CSS and the expansion of the Company's development and
marketing of IT solutions to small and medium sized companies, with particular
emphasis on ERP software, application service provisioning ("ASP"), IT strategy,
Internet application and development services, business-to-business e-commerce
and training. The Company also plans in the future to acquire other businesses
engaged in activities related to Internet-related business software solutions.
The Company has been engaged since its incorporation in 1994 in the
development of specialized minerals and the operation of specialty materials
projects. The Company operates a surface modification facility in Arkansas for
industrial minerals used as fillers and is endeavoring to develop a cement
additive application for a silica/kaolinite rock mined on property leased
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by the Company in Arizona. The Company was incorporated under Delaware law on
March 24, 1994 for the purpose of acquiring, through a merger consummated on
March 31, 1995, all of the outstanding shares of capital stock of (i) HeatShield
Technologies, Inc. ("HTI"), a corporation formed in May 1991 for research and
development to exploit industrial minerals applications and markets, and its
wholly-owned subsidiaries United Minerals Corporation (Arkansas)
("UMC-Arkansas"), which was formed in March 1993 to construct a surface
modification plant in Malvern, Arkansas that commenced operations in April 1994,
and United Minerals Corporation (Arizona) ("UMC-Arizona"), which was formed in
March 1992 to engage in the surface mining and processing of Klannerite(R) at
the Viva Luz Mine in Mojave County, northern Arizona; and (ii) Advanced
Industrial Minerals, Inc. ("AIM"), a corporation formed in July 1981 that owned
the mineral rights to the Viva Luz Mine. Although the Company continues to be
engaged in the industrial minerals and specialty materials business and the
operation of its industrial filler surface modification plan, the Company plans
to sell such business during the year ended December 31, 2000 and to become
solely engaged in the development and marketing of ASP solutions and other IT
services.
INTERNET AND BUSINESS SOLUTIONS SOFTWARE BUSINESS
As stated above, the Company has since July 1999 been engaged in, and
plans in the future to become solely engaged in, the development and marketing
of ASP solutions and other IT business application software and consulting
services to small and medium-sized companies with $50 million to $500 million in
annual sales via Internet connectivity. The businesses of Cereus Bandwidth and
ESG, which the Company acquired on July 30, 1999, and the business of CSS, which
the Company acquired on November 15, 1999 are described below.
CEREUS BANDWIDTH
Cereus Bandwidth, which is based in Atlanta, Georgia and commenced
operations in 1996, has been primarily engaged in providing ISP and related
Internet consulting services to small and medium-sized businesses. Cereus
Bandwidth also has marketed its Internet access services to the "small
building," combined office and hotel and conference room markets. Prior to the
Company's acquisition of Cereus Bandwidth on July 30, 1999, Cereus Bandwidth's
revenues and number of customers amounted to approximately $44,000 with
approximately 250 customers in 1997, approximately $337,000 with approximately
500 customers in 1998, and approximately $290,000 with approximately 300
customers in the six months ended June 30, 1999. Cereus Bandwidth's net earnings
(loss) amounted to approximately $(1,500) in 1996, $(11,000) in 1997, $33,600 in
1998, and $1,600 in the six months ended June 30, 1999. During 1998,
approximately 60% of Cereus
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Bandwidth's revenues were attributable to the sale of its ISP services, and the
balance was attributable to the sales of other Internet-related consulting
services. ISP revenues are primarily derived from monthly subscription fees
charged to customers for services rendered. As of September 30, 1999, Cereus
Bandwidth had a total of 200 subscribers to its ISP and Internet-related
services. During 1998, no customer accounted for as much as 20% of Cereus
Bandwidth's revenues. Agreements entered into by Cereus Bandwidth with its
subscribers are terminable by the subscriber.
Cereus Bandwidth has been an international consulting company focusing
on business process integration, database development, network design and
implementation as well as secure Internet integration. While many organizations
focus on the highly visible components of the Internet, Cereus Bandwidth has
built its expertise on 'back-engine' applications. Today many small to
medium-sized business enterprises are struggling with the proper use and
application of the Internet and its many facets. Cereus Bandwidth has a
Internet, engineering and project management expertise that enables it to offer
critical development and support services to meet specific business needs. The
Company plans to further expand Cereus Bandwidth's capabilities to provide
access to packaged software services and products that will be offered by the
Company. Cereus Bandwidth has the ability to provide managed application
services that include high speed redundant Internet based access that allows
small to medium-sized businesses to focus on their core competency. Cereus
Bandwidth provides such businesses financial and human resource management
expertise with the continuing emergence of business utilization of the Internet
and its specific functional and targeting capabilities.
Cereus Bandwidth's target market has been small to medium-sized
organizations. Typical users of Internet services from Cereus will reflect a
broad range of Internet experience. There are those organizations who now find
it necessary to use the Internet for the first time and others that have begun
Internet activities, but have found them to be too technically demanding. A
growing market of clients are those that have developed their Internet success
to the point their current provider does not have the expertise and business
background to counsel them on making a significant jump to a much broader
application.
Cereus Bandwidth provides the opportunity to house client web sites on
Cereus Bandwidth's Web servers ("Web Hosting") and targets the web development
community with this and other high-end Web services. The ability to provide
audio, video, database, chat, E-Commerce and other Web services would be a
function of the web server. These server programs tend to be very expensive for
many individual Web developers or clients to afford and manage. Service and
maintenance for this service is based on a seven days a week, twenty-four hours
a day basis.
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Cereus Bandwidth presently provides dedicated access in the traditional
method of distributing Internet access. It consists of providing a single leased
line to a single client. Although this market has become competitive, management
believes there still remains significant potential when targeting certain
markets. Typically the small to medium- sized businesses do not receive the
marketing attention of the larger multi-national corporations.
ESG
ESG, which is based in West Palm Beach, Florida, was formed in February
1996 and is primarily engaged in the marketing and sale of accounting and human
resource software products (accounting for approximately 52% of ESG's revenues
in 1998), as well as the providing of consulting services relating to the
application of those products (accounting for approximately 48% of ESG's
revenues in 1998), to small and medium-sized businesses in the southeastern U.S.
and Caribbean markets. Prior to the Company's acquisition of ESG on July 30,
1999, ESG's revenues and number of customers amounted to approximately $247,000
and four customers in 1996, $603,000 and 12 customers in 1997, $1,305,000 and 30
customers in 1998, and $1,033,000 and 18 customers in the six months ended June
30, 1999. ESG's net earnings amounted to approximately $20,000 in 1996, $55,000
in 1997, $125,000 in 1998 and $255,000 in the six months ended June 30, 1999.
During 1998, no single customer accounted for as much as 10% of total revenues.
ESG's revenues are primarily derived from commissions paid by the publishers of
the software products it markets, as well as fees paid by its customers for its
consulting services. Of ESG's 1998 revenues, approximately 92% was attributable
to customers located in the southeastern U.S. and the balance of approximately
8% was attributable to customers located in the Caribbean. ESG is dependent upon
its agreements with four software publishers whose products it sells, and such
agreements are terminable by such software publishers upon 30 days prior notice.
No single software publisher accounted for as much as 10% of ESG's sales during
1998.
ESG is a certified "value added reseller" (VAR) with a number of
prominent software houses, and has experienced a gradual and consistent growth
in providing accounting software solutions with consulting implementation
services. Its clients include health care, manufacturing, service, international
and charitable organizations.
ESG has been primarily engaged in the offering of accounting and human
resource software solutions to small and medium sized companies. Previously,
custom programming generally went hand and hand with mainframe computers that
most businesses could not afford, or would install on a limited scaled down
mainframe version. This business decision often produced a very weak accounting
system that was a poor substitute for a financial management system. Programming
was most likely outsourced. Many
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applications were poorly written inviting enhancements that were another costly
add-on in this environment. The high powered, on-line PC and related modular
software has become an acceptable substitute for customized mainframe computing.
In many cases, it is as powerful as the mainframe, but provides greater
flexibility. Its time sharing aspect can be facilitated through networking
servers that gave rise to multiple hardware and software applications that are
natural for accounting systems. Report writers are now available for management
purposes to managers who can now operate a PC from their offices, and inquire as
to all facets of the business they are managing.
CSS
CSS, which was formed in 1996 and has offices in Atlanta, Georgia and
Miami and Tampa, Florida, has been engaged in the providing of computer
consulting services to small and medium sized businesses in the eastern U.S. and
to a much lesser extent in certain foreign markets. It (i) develops customized
financial, administrative, payroll and human resources, manufacturing,
distribution, point-of-sale and inventory management software and provides
related data base management and other computer consulting services; and (ii)
resells as a VAR packaged accounting and project management software products.
Prior to the Company's acquisition of CSS on November 15, 1999, CSS' sales and
number of customers amounted to approximately $1,174,000 and 15 customers in
1996, $3,126,000 and 30 customers in 1997, $4,921,000 and 45 customers in 1998,
and $3,216,000 and 50 customers in the nine months ended September 30, 1999. Net
earnings (loss) amounted to approximately $328,000 in 1996, $492,000 in 1997,
$575,000 in 1998 and $(644,000) in the nine months ended September 30, 1999.
CSS' revenues has been derived primarily from (i) agreements entered
into with customers that purchase its computer consulting services (accounting
for approximately 84% of revenues in 1998) and (ii) mark-ups earned in
connection with its VAR activities (accounting for approximately 16% of revenues
in 1998). No single customer accounted for as much as 20% of CSS' revenues in
1998. Of CSS' revenues in 1998, approximately 85% was attributable to sales in
the U.S. and approximately 15% were attributable to foreign countries including
Germany, Canada and Australia. CSS' most significant sources of packaged
software products in 1998 were Epicor Software Corporation (formerly Platinum
Software Corporation) and Microsoft Corporation, which accounted for 90% and
10%, respectively, of CSS' VAR revenues in 1998. The Company is dependent upon
its agreements with approximately five sources of packaged software products,
which agreements may be terminated by such sources upon 30 days prior notice.
CSS specializes in the resale of Epicor (formerly Platinum) financial
management software products, development services and leading edge electronic
commerce. CSS provides clients with
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options for software implementation, consulting and development services
including system selection and screening, application development, project
management and professional services, business analysis and development of
system requirements, and Web based application development. Included in CSS'
staffing are specialists recruited as consultants with the knowledge base to
solve growing business requirements.
CSS has established expertise in ERP software implementations with such
application partners as Epicor's Platinum SQL Accounting, Advanced Distribution
and Manufacturing systems, Proamics' Project Tracking and other integrated
partners.
CSS emphasizes the furnishing of consulting services to and servicing of
small to medium sized organizations as well as reselling packaged accounting and
project management software solutions. CSS is currently represented with offices
and home-based consultants in major cities across the nation including Atlanta,
Dallas, Hartford, Raleigh, Fort Lauderdale, Tampa and Miami. While the primary
focus of CSS will be in the eastern United States, specialty software
applications such as food distribution management software applications are
planned to be national in scope.
CSS has developed a comprehensive aggregation of financial, project
management and business application software to support business operations in
multiple industries. The market segment primarily targeted by CSS represents
companies with sales in the range of $50 million to $500 million. Products and
services offered by CSS include ERP solutions, development services, secure
business applications, customized business applications and E-Commerce software.
ERP Solutions. The implementation of an ERP system involves a complex
agenda, from selection and system design, to installation, maintenance and
upgrade. The scope of ERP implementation encompasses the client's entire work
cycle, from prospect and customer management through order fulfillment and
delivery. CSS specializes in financial management, distribution production,
quality control, asset management, human resources management, sales force and
marketing automation, and E-Commerce. Through VAR relationships with Epicor
Software Corporation (formerly Platinum Software Corporation), Clientele,
Proamics Corporation, and InterWorld, CSS provides a full range of ERP
solutions. Using Business Process Re-engineering ("BPR"), CSS analyzes a
company's current business operations. Applying best practices available, along
with industry expertise, enhancements are defined that are intended to
strategically position the customer to implement these ERP systems.
Development Services. CSS offers development services ranging from early
stage project management to detailed customized implementation. CSS's developers
customize
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applications to fit current and future needs. A comprehensive picture is built
describing the client's business processes. This system guides the developers to
construct and maintain efficient, productive and user friendly solutions.
Secure Business Applications. CSS uses browser independent technology to
implement secure business applications for corporate Intranets and Internet
commerce. Using server-side application development technologies, CSS offers
high performance web based database applications, while maintaining all of the
benefits of the client server architecture.
Customized Business Applications. CSS' goal is to design customized
business applications to satisfy its clients' changing demands. CSS provides
customized implementation E-Commerce solutions, custom programming, product
interfaces and workflow management through Intranet services or Intranet
development.
E-Commerce Software. E-commerce is the process of two or more companies
making business transactions via computer and some type of network. This
includes business-to-business, business-to-consumers, business-to-government and
the digitalization of the financial industry. Despite the broad scope that
defines E-Commerce, on-line retailing is the focus of this process. This form of
E-Commerce utilizes the Web as a tool to sell goods, services and information to
consumers. CSS, in conjunction with Cereus Bandwidth, offers the implementation
and customization of the software to meet the changing demands of companies
across a broad spectrum of industries worldwide. CSS and Cereus Bandwidth, in
collaboration with InterWorld Corporation, a leading provider of
enterprise-class Internet commerce software, provide Internet commerce solutions
to their customers. Utilizing E-Commerce, a company will connect to a vast
network of small businesses, government agencies, large corporations and
independent contractors with the ability to communicate seamlessly across any
computer platform, internally integrating a company's functions with electronic
ordering that transmits information automatically not only to production, but
also to billing, shipping inventory systems and then storing this essential data
for instantaneous retrieval and electronic transmission.
CSS' services and expertise in the product installation area include
product interfaces to Legacy Systems and project management and professional
services. CSS' services in the area include assistance in software evaluation
and requests for proposal, end user, management/outsourcing information
technology departments, network & database administration, data conversions,
custom programming, custom development in visual basic and Web based application
development.
CONSOLIDATION OF ACQUIRED COMPANIES AND BUSINESS STRATEGY
The Company's business strategy is to provide IT solutions
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to small and medium-sized companies with annual sales in the $50 million to $500
million range, serving as a single-source, Web application service provider with
expertise in ERP software development, ASP, IT strategy, Internet application
and development services, business-to-business e-commerce and training.
The Company currently is focusing its efforts in its IT solutions
business on the integration of its recently acquired companies. The Company's
near term goals are to (i) ensure that all services and programs of the three
acquired companies continue on a scheduled course so that the newly organized
AIM organization meets its contractual obligations and secures its current
customer base and (ii) integrate the three technology organizations in order to
ensure maximum productivity and utilization. This strategy is designed to pull
together all business application software, Internet related activities as well
as marketing and sales personnel to capitalize on the market strengths of each
individual organization.
The Company intends to focus its marketing and sales resources on the
consolidation and expansion of its market presence in the southeastern United
States, with specific emphasis on Alabama, Georgia, Florida and North Carolina.
Once the southeastern U.S. is considered a maximized serviced market, expansion
into other geographic markets will be the focus, such as the mid-Atlantic and
northeastern business metropolitan areas. In addition to geographic focus, the
Company intends to further develop vertical market expertise in retail, food
distribution and healthcare. The Company is one of the leading ASPs in the
southeastern United States, with clients that include Airtran Airways, Citrix
Systems, DHL, GE Capital, Home Shopping Network, Intermedia Communications,
Paxson Communications, Rolex and Trane Corporation.
The Company believes it is well positioned to participate in the
expanding business of providing ASP services, which make it possible for clients
to access and use leading software packages without all of the costs of owning
and managing the IT infrastructure that would otherwise be required. American
business is undergoing a major change in how corporate software is purchased and
used. Customers now desire the latest software applications to gain a
competitive edge, but do not have the technical and financial resources to
support such complex expansion. Many companies, particularly in the mid-market
range, seek service organizations that will provide a transition path, both
economically and structurally, to achieve these goals. These customers now find
the ASP business solutions very acceptable due to three converging facts: (i)
the mass adoption of the Internet as a viable and secure information
transmission medium, (ii) increased server processing power and (iii) easier
access to complex application server software. Today, high quality software is
available via real-time access from centrally hosted data centers where rentable
software is accessed over
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high-speed networks for the Internet. As opposed to the old practice in which
corporate software was purchased and managed internally, the new ASP environment
permits the outsourcing via the Internet of corporate software that is leased.
The Company believes that customers using ASP services may experience increased
efficiencies as well as significant cost savings due to the reduction of
internal IT staffing, computer hardware capital expenditure and network
connections as well as the ability to lease only those modules that are
applicable to the customer's business operations.
The Company emphasizes customer training in connection with its
marketing of IT Services. The Company's current customer training curriculum,
which focuses primarily on business software applications, also educates
clientele on the opportunities available utilizing Internet-related technology
as well as new Internet applications available to support their software and
general business practices.
The Company has introduced an application service provider program
consisting of a wide range of business applications software and Internet
solutions. Under the program, companies will be able to lease both business
software applications as well as Internet capabilities. The Company's plan is to
create a total solution which allows customers to rent or lease application
services.
The Company currently operates a National Data Center ("NDC") located in
Atlanta, Georgia. This facility supports the ongoing services for its business
applications and Internet business units. The NDC is operational 7 days a week,
24 hours a day and has the ability to host database structures of all sizes as
well as provide redundancy for those organizations seeking secure data backup.
The Company has high-speed communications capabilities in place for its
customers.
In order for the Company to be able to furnish a broad range of services
and products to its customers, it has initiated new alliance partnerships with
major business application software publishers. Lawson Software recently
selected the Company to represent its product lines in the southeast as well as
selected U.S. cities. Acuity Financial Software, a business application software
of the Sage Group, provides to the Company an additional enhancement of
financial and project management software that addresses specific needs of
current and future customers. The Company also has entered into a marketing
alliance with Firstware Technologies, Inc., pursuant to which the Company
markets that company's web-based relationship management applications and
hosting, consulting and integration services.
In addition to the above business application software alliances, the
Company plans to continue to build upon alliance relationships previously
established by the companies that the Company recently acquired. Included in
this group is IBM
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Corporation ("IBM"), for whom the Company remarkets IBM's full inventory of
hardware and software services and by whom Cereus was selected to be an IBM
testing partner. The role of Cereus Bandwidth has been to test new IBM products
for functional viability and usage by the to-be-targeted end-user group. In
addition, Cereus Bandwidth was designated as a Microsoft Solution Provider, a
status achieved through a strict process of technical testing and resource
staffing. It is the goal of the Company to expand these alliance relationships
as well as create new business partnerships to enhance its service and product
capabilities.
COMPETITION
The Internet-related and IT services market is very competitive and the
number of competitors is rapidly increasing. The substantial growth and
potential market size of the Internet market have attracted many start-ups as
well as extensions of existing businesses from different industries. In the
market for Internet-enabled application software and network solutions, the
Company competes on the basis of performance, price, software functionality and
overall network design. Potential competitors include certain of the "big five"
accounting firms and previously affiliated consulting firms, systems consulting
and implementation firms, service groups of computer equipment companies,
facilities management companies, general management consulting firms and
programming companies.
The Company believes that the breadth of its services and capabilities
and focus on small to medium-sized business customers results in its possessing
a favorable competitive position. For example, the Company is able to perform
the complete set of services required for enabling e-business, which includes
strategic management and IT consulting, enterprise applications, enterprise and
network integration, application hosting and custom business solutions.
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INDUSTRIAL MINERALS AND SPECIALTY MATERIALS BUSINESS
SURFACE MODIFICATION OF INDUSTRIAL FILLERS
GENERAL
The Company's surface modification plant, which commenced operations in
April 1994, is in Malvern, Arkansas. The plant processes mineral fillers used by
the plastics and elastomer industries. The process is surface modification with
silane, resulting in improved mechanical, electrical and physical properties of
the end products. Typical fillers treated include clay, mica, alumina
trihydrate, wollastonite, magnesium hydroxide and microspheres. The plant's
surface modification treatments are marketed under the Uni-Kote(R) label.
The Company serves the filler surface modification needs of a customer
either by (i) acquiring the appropriate industrial filler itself, modifying the
surface of the filler as called for and then delivering the resulting finished
product to the customer; or (ii) acting as a "toll" processor, in which case the
customer delivers the industrial filler to be surface modified to the Company.
Delivering or "tolling" industrial fillers for surface modification is an
attractive alternative for many companies, as the technology is complicated and
requires the use of chemicals that involve environmental and health risks. In
addition, many users need small quantities of surface modified fillers that do
not warrant the construction and operation of a facility for that purpose.
The gross profit margin for the Company's toll processor surface
modification business is approximately 80%, as compared to approximately 25% for
the finished product surface modification business. The toll processor business
is more profitable because there is a lower cost of sales due to (i) no cost of
minerals, (ii) the silane is purchased by the customer in many cases and (iii)
there is no cost of packaging in many cases. The percentage of the Company's
total sales represented by toll processor operations (as opposed to finished
product sales) amounted to 2% in 1997, 4% in 1998 and 2% in the nine months
ended September 30, 1999.
Composites containing surface modified fillers are used in the
electronics, transportation, construction materials and appliance industries.
Surface modified fillers can decrease the amount of resin used in a composite,
providing cost savings, improved performance and enhanced safety for the end
user.
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PLANT CAPACITY
The Malvern surface modification facility has an estimated capacity of
treating approximately 7,200 tons of customer filler per year on a two-shift,
five day per week basis. During 1997, 1998 and the first nine months of 1999,
the Company operated on a one-shift per day basis and treated approximately
1,900, 1,600 tons and 1,400, respectively, of customer fillers. The Company
attributes the decline to the reduction in orders by a major customer. The plant
currently has two mixing and packaging lines.
CUSTOMERS
Approximately 87% of the Company's sales of surface modified fillers in
1998 and the first nine months of 1999 were surface modified alumina
trihydrate. Other minerals modified by the Company include magnesium hydroxide,
microspheres, talc and nepheline syenite. During 1996, 1997, 1998 and the first
nine months of 1999, a subsidiary of Laport P.L.C. ("Laport"), a British
plastics compounder and the Company's major customer, accounted for
approximately 83%, 67%, 61% and 60%, respectively, of the Company's sales
revenues. The loss of that customer, to whom the Company sells finished
products and does not act as a toll processor, would have a materially adverse
effect on the Company. The Company has no long-term contractual arrangement
with that customer and no assurance can be given as to the amount of future
sales that may be made by the Company to that customer.
Pursuant to a contract dated March 25, 1997, and amended on September
13, 1997, with a subsidiary of Martin Marietta Materials, Inc. ("Martin
Marietta"), the Company serves as the northern United States distributor of
magnesium hydroxide produced by Martin Marietta. The Company serves as Martin
Marietta's exclusive U.S. agent to surface treat the flame retardant and smoke
suppression products with silane at the Company's surface modification facility.
MARKETING AND DISTRIBUTION
The Company sells its surface modified fillers through sales
representatives and Company employees. The Company advertises occasionally in
trade journals and magazines. In addition, the Company will from time to time
exhibit its products at industry conferences and trade shows. The Company is
dependent upon its customers' inclusion of the Company's products in the
customers' typical plastics and rubber formulations in order to obtain sales.
Due to its limited financial resources, the Company has not been able to
increase its research and development spending to facilitate customer use of its
products. To date, the Company has provided over 1,000 samples of its products
to over 200 companies. Management believes that due to the long sales cycle
which sometimes can extend over 3-4 years, many of its earlier
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efforts to obtain sales are still pending.
RAW MATERIALS
Minerals purchased and used by the Company as industrial fillers in its
surface modification business include alumina trihydrate and magnesium
hydroxide, which are excellent flame retardants; wollastonite, which is used in
electrical reinforcement, car bumpers and automobile assemblies; nepheline
syenite, which is a strengthening agent for plastic; microspheres or glass
bubbles, which are used for light weight high performance applications in
aerospace; and clay and mica, which are used for filler applications in plastics
and rubbers.
Of the over 300 primary kinds of silanes that exist, the Company
purchases and uses approximately 20 of them as coupling agents that are added to
the filler in the surface modification process. The Company purchases the
silanes used by it in its surface modification operations from several sources
and believes that readily available alternative sources are available.
COMPETITION
The Company's surface modification products are sold in highly
competitive markets which are influenced by price, profit performance, customer
location, service and general economic conditions. The Company competes with
other mineral suppliers and toll processors in the filler surface modification
industry. Many of such companies are substantially larger and more diversified
that the Company. The Company estimates that during 1998, a total of
approximately 100,000 tons of surface modified magnesium hydroxide, alumnia
trihydrate, wollastonite, calcined kaolin, silica, mica, feldspar, talc, calcium
carbonate and microspheres were produced in the United States. Of that amount,
the Company estimates that its shipments of approximately 1,600 tons of such
surface modified minerals constituted approximately 2% of the U.S. production.
The Company's products tend to apply to the higher value end of the potential
market. As such, the volumes tend to decrease as opposed to the commodity type
treated minerals such as silica, talc and calcium carbonates.
The Company's relatively small size constitutes a competitive advantage
in certain respects. Many of the Company's competing producers of surface
modified fillers are large and vertically integrated and generally do not engage
in the production of small amounts of surface modified fillers that are custom
tailored to the customer's needs. The processing of such small orders serves as
a potentially significant source of the Company's toll processing business.
Furthermore, manufacturers of proprietary high performance composites often
prefer not to have a potential competitor surface modifying its materials.
The silane surface modified fillers produced by the Company are used in
the low volume, high performance end of the plastic
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reinforced composite business, as opposed to the lower value, low performance
end of the business.
BUSINESS STRATEGY AND OPPORTUNITIES
The Company's goals in the filler surface modification business are to
(i) diversify its customer base by developing additional market applications
such as filled resin systems and further development of surface modification
technology of additional filler materials; (ii) expand production by serving
such market applications for new customers; and (iii) secure upstream sources of
raw materials by consummating supply and distribution agreements with such new
customers, such as the agreements entered into during 1997 with Martin Marietta.
On March 4, 1999 the Company received approval for certification of Registration
to ANSI/ISO/ASQ Q9002-1994 ("ISO-9002 Certification") by American Certification
Corporation. This certification is a rating to the industry that United Minerals
Corporation - Arkansas, a wholly-owned subsidiary of the Company, conforms with
the production of consistent high quality, value-added ISO-9002 silane surface
modified fillers and toll processing of custom products. Management believes
this ISO-9002 Certification will add customer value and create a potential
benefit by increased sales revenues.
During 1998, the Company was successful in developing a new treated line
of clay products for wire and cable plastic compounding applications. Current
marketing efforts are underway to further develop this potential new business.
The Company has received a written report by an independent laboratory that this
new clay product meets or exceeds standards set in the industry by other
existing products presently selling in the marketplace.
PROCESSING AND MARKETING OF KLANNERITE(R)
The Viva Luz Mine in Mojave County, northern Arizona. New Mexico &
Arizona Land Company ("NMAL"), the owner of the approximately 80 acre track on
which the Viva Luz Mine is located, originally leased the property for mining
purposes on March 1, 1984, (the "Lease") and the Lease was assigned to HTI and
certain affiliates on October 8, 1991 and conveyed to UMC (Arizona) during 1998.
The Mining Lease, which expires in March 2004, is subject to a further term in
perpetuity provided the property is in operation and is generating minimum
royalties. The Lease permits the exploration of the property and removal of the
mineral over the remaining term and calls for the payment of a production
royalty of 5% of the total consideration obtained for the mineral less
transportation costs, subject to a minimum royalty of $5,000 per year.
The geology of the Viva Luz Mine is that of a zone system of
hydrothermally altered rocks. The mine is located directly on a
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natural fault which acted as the natural plumbing system for hot, corrosive
waters which eliminated a majority of impurities, producing the distinctive and
unique white rock that is a pure, uniform, porous rock that has the trade name
Klannerite(R). In the 1950s, the white sandy mineral was used as roofing
granules because of its insulating capabilities.
ORE RESERVES
The Viva Luz Mine is a cristobalite, quartz and Kaolinite deposit with
proven and probable ore reserves. The deposit is classified into three different
grades, K1, K2 and K3. Based on the independent ore reserve report of Rio
Services, Inc., dated May, 1992, the highest grade of K1 has an estimated
mineral deposit of approximately 262,000 short tons (i.e., 2,000 lbs) of proven
reserves and 78,000 short tons of probable reserves, for a total of
approximately 340,000 short tons of proven and probable reserves, and the two
lower grades, K2 and K3, have a total estimated reserve of approximately
1,350,000 short tons of probable reserves.
The term "ore reserve" for the above purposes means that part of a
mineral deposit which could be economically and legally extracted or produced at
the time of the reserve determination. "Proven reserves" means reserves for
which (i) quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes, and grade and/or quality are computed from the results
of detailed sampling, and (ii) the sites for inspections, sampling and
measurement are spaced so closely and the geologic character is so well defined
that size, shape, depth and mineral content of the reserves are
well-established. "Probable Reserves" means reserves for which quantity and
grade and/or quality are computed from information similar to that used for
proven reserves, but the sites for inspection, sampling and measurement are
farther apart or are otherwise less adequately spaced. The degree of assurance,
although lower than that for proven reserves, is high enough to assume
continuity between points of observation.
The mineral deposit outcrops at the surface and most of the overburden
has been removed. Thirteen six-inch dry rotary holes were drilled to block out
an ore reserve and verify the quality of the rock. Hole depths ranged from 100
to 240 feet, and samples were collected using an air cyclone and splitter, every
five feet through the ore zone. Thirteen cross sections were constructed in
AutoCad and used to calculate the above proven ore reserves. An estimated 82% of
the mineral is recoverable in the mining and beneficiation process. The loss in
the recovery process was taken into account in calculating the above ore reserve
data.
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KLANNERITE(R) DEVELOPMENTAL ACTIVITIES
During the 1980s and early 1990s, the efforts of several industrial
corporations to develop commercially viable uses for Klannerite(R) were not
successful. No sales of Klannerite(R) have been made since 1995. In February
1997, the Company's former management announced its intention to write-off a
portion of the approximate $4 million carrying value of the Viva Luz Mine lease,
which consisted of the property's purchase price of approximately $3.9 million
and pre-paid royalties. The announcement stated that management had anticipated
that Klannerite(R) would have greater potential commercial applications as an
industrial mineral filler in the paint-coatings and plastics compounding
industries and as an energy saving coating, but that the Company had experienced
disappointing results in its testing of those applications. The announcement
further stated that the Company had limited financial resources to pursue the
research and development of commercial applications of the mineral. Following
the change in the members of the Board of Directors and appointment of current
management of the Company in March 1997, the Company announced in April 1997
that the previously proposed write-off was premature and would not be
implemented and that efforts would be made to identify viable commercial
applications for the mineral.
During 1997, several independent tests performed in accordance with
American Society for Testing and Materials Standards ("ASTM") concluded that
calcined Klannerite(R) serves as an excellent pozzolan, which is an additive for
Portland cement. Pozzolans serve to improve the performance of concrete by
eliminating undesirable alkali ractions with aggregate and decreasing
permeability. Pozzolans may also lower the cost of the product and, because they
partially substitute cement which releases great quantities of CO2 during
manufacture, pozzolan use decreases global warming. For this environmental
reason, the State of Pennsylvania mandates pozzolan use in all concrete road
construction. The Company has concluded, based on various independent tests and
a preliminary feasibility study, that Klannerite(R) has a commercially viable
application as a white pozzolan in the cement industry and that additional
research and development may result in the identification of other commercially
viable applications.
The Company believes that a market exists for a high performance
pozzolan, especially in the southwest where aggregates are of poor quality, and
for white cement applications everywhere.
The Company plans to market the property in combination with the
construction of a new pozzolan processing facility, which essentially will be a
crushing, calcining and grinding operation. The Company estimates that the cost
to construct a 50,000 ton/year facility will approximate $4 million and that an
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additional $1 million will be required to construct roads, extra silos, and
office and covered raw storage for environmental purposes. Depending on the
specifications, the FOB sales price of pozzolan will be $74 to $104/ton.
MARKETING
Recently, the State of Arizona, Department of Transportation accepted
Klannerite(R) as meeting within their specifications for a type 2 cement
application, ASTM C 618 tested and passed. A market study shows that initial
sales for this project should be 25,000 tons/year, and grow to 50,000 tons/year
in 4 years.
COMPETITION
The pozzolan market can be divided into three sectors based on price: a)
low cost pozzolan, selling for about $35 per ton delivered, and dominated by fly
ash and blast furnace slag; b) mid priced pozzolan, selling for about $80 per
ton delivered, and dominated by calcined shales and tuffs; and c) high priced
pozzolan, selling for about $160 per ton or more, delivered, and dominated by
silica fume and calcined kaolin. The higher priced pozzolans have better
performance characteristics. Klannerite will compete in the $80 per ton market.
EMPLOYEES
The following sets forth information regarding the persons employed and
consultants retained by the Company in its Internet and Business Solutions
Software Business and its Industrial Minerals Specialty Materials Business. None
of the Company's employees are covered by collective bargaining agreement. At
November 30, 1999, the Company had a total of 91 employees, of whom 74 were
full-time employees.
Internet and Business Solutions Software Business. At November 30, 1999,
the Company had a total of 65 full-time employees in its Internet and business
solutions software business, including 8 sales and marketing personnel, 25
software consultants representatives, 20 programmers and developers and 12
general, administrative and financial personnel. In addition, as of that date,
the Company retained 17 part-time programmers/developers/consultants under
contract.
Industrial Minerals and S pecialty Materials Business. At November 30,
1999, the Company employed 10 full-time employees in its industrial minerals and
specialty materials business, of whom one is employed in Coral Springs, Florida
and 9 are employed at the Company's Malvern Surface Modification Facility.
Activities at the Viva Luz Mine are conducted under contract with a third party.
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FACTORS AFFECTING FUTURE OPERATING RESULTS INVESTOR INTERESTS
This Form 10-SB contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and other similar
expressions or variations of such words are intended to identify these
forward-looking statements. Additionally, statements concerning future matters
such as the development of new products, services, alliances, technologies and
other statements regarding matters that are not historical fact are
forward-looking statements. Forward-looking statements involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements.
Factors that could cause or contribute to such differences include, but
are not limited to: (i) the fact that the Company historically has incurred net
losses, had a deficit in retained earnings of approximately $2.2 million and a
working capital deficit of approximately $600,000 at September 30, 1999, and may
not be able to operate profitably in the future; (ii) the Company's very limited
history in the information technology, Internet-related and business solutions
software business; (iii) the possible unavailability to the Company of adequate
financial resources to fund its operations and planned growth; (iv) the highly
competitive and speculative nature of the IT and Internet-related industry and
the very rapidly changing technology in both computer hardware and software
systems relating to that industry; (v) the fact that the ASP industry is in its
infancy and no assurance can be given that the Company's ASP services will
achieve market acceptance; (vi) the Company's dependence upon third party
suppliers to provide key components for the Company's ASP services as well as
its software vendor relationships which are non-exclusive and subject to
termination; (vii) the security risks associated with the secure transmission of
confidential information in the Company's ISP and ASP activities; (viii) the
creditworthiness of the Company's clients; (ix) the Company's dependence upon
key personnel and its ability to attract and retain key employees; (x) the risks
associated with the Company's planned growth, both internal and through the
acquisition of other companies, and the fact that the Company may not be able to
effect acquisitions of other companies on favorable terms; (xi) the risks
associated with the operations of the Company's industrial minerals and
specialty materials business, including its dependence upon economic conditions
in its customers' businesses, possible exposure resulting from the presence of
free silica in certain products, the highly competitive nature of the industrial
filler and specialty materials businesses, impact of government regulation,
extraction and processing risks and the possible inadequacy of insurance, the
commercial viability of Klannerite, and possible loss of the Company's major
industrial filler customer; (xii) the fact that no assurance can be given as to
whether or on what terms the Company will be able to sell its industrial
minerals and specialty materials business; and (xiii)
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the risks associated with possible critical system failures that could result
from Year 2000 compliance issues.
Additional factors that could adversely affect the market for the
Company's common stock include (i) the limited historical public market for the
common stock; (ii) the regulatory burdens imposed upon trading in the Company's
common stock currently as a result of its having a market price below $5.00 per
share; (iii) the potential dilutive consequences of there being outstanding
options, warrants and convertible securities entitling their holders to purchase
approximately 980,000 shares of common stock at a price of less than $4.00 per
share; and (iv) the Company's intention to not declare any dividends on its
common stock in the foreseeable future.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSES OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
financial statements contained in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1998 and Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1999.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the amount and
percentage of net sales of certain items included in the Company's Statement of
Operations:
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
% of % of
1998 Sales 1997 Sales
---- ----- ---- -----
<S> <C> <C> <C> <C>
Net Sales $2,085,398 100.0% $2,316,472 100.0%
Cost of Sales 1,546,904 74.2 1,795,780 77.5
Gross Profit 538,494 25.8 520,692 22.5
General and Admin. Expense 503,816 24.2 575.973 24.9
Selling and Mktg. Expense 109,016 5.2 157,781 6.8
Interest Expense 204,009 9.8 189,872 8.2
Depreciation and Amort. 73,259 3.5 79,829 3.4
---------- ----------
Total Expenses 890,100 42.7 1,003,455 43.3
Net Loss $(351,606) (16.9) $ (482,763) (20.8)
========== ===========
Imputed Non-cash PfdStkDiv $ (67,500) $ 0
========== ==========
Loss Avail. to Com. Shares $(419,106) $ (482,763)
========== ===========
Loss Per Share $ (0.32) $ (0.37)
========== ===========
Weighted Avg. Shares Out. 1,325,016 1,319,414
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended September 30,
-------------------------------
% of % of
1999 Sales 1998 Sales
---- ----- ---- -----
<S> <C> <C> <C> <C>
Net Sales $2,441,816 100.0% $1,632,686 100.0%
Cost of Sales 1,753,800 71.8 1,169,433 71.6
Gross Profit 688,016 28.2 463,253 28.4
General and Admin. Expense 980,005 40.1 388,903 23.8
Selling and Mktg. Expense 30,484 1.2 74,350 4.6
Interest Expense 133,171 5.5 150,388 9.2
Depreciation and Amort. 93,930 3.8 58,201 3.6
---------- ----------
Total Expenses 1,237,590 50.7 671,842 41.1
Net Loss $ (549,574) (22.5) $ (162,939) (10.0)
=========== ===========
Imputed Non-cash PfdStkDiv $ 0 $ 0
========== ==========
Loss Avail. to Com. Shares $ (549,574) $ (162,939)
=========== ===========
Loss Per Share $ (0.305) $ (0.123)
=========== ===========
Weighted Avg. Shares Out. 1,799,794 1,323,702
========== ==========
</TABLE>
YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
Sales for 1998 decreased $231,074, or 10%, to $2,085,398 compared to
$2,316,472 for 1997. The gross margin in 1998 increased $17,802, or 3.4%, to
$538,494 compared to $520,692 for 1997. The sales decreases reflected a slight
decline in sales from the Company's largest customer along with continued
pricing pressures in the industry. The gross margin improvement is due mainly to
cost reductions obtained from major material suppliers.
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The Company's core business products are sold to customers for use as
fillers in resin matrices. The majority of sales were of surface modified
minerals sold to the plastics compounding industry; approximately 3.6% of 1998
sales were made as a toll processor of customers' materials. A small portion of
sales were production size samples for customers' evaluation.
Selling and administration expenses decreased in 1998 to $612,832, or
29.4% of sales, compared to $733,754, or 31.7% of sales, for 1997. The decrease
of $120,922 is due to continuing cost reduction and containment efforts
primarily in personnel and head office related expenses.
Interest charges for 1998 increased to $204,009, or 9.8% of sales, from
$189,872, or 8.2% of sales, for the comparable period in 1997. This increase was
due to additional financing required for working capital. Depreciation and
amortization declined slightly to $73,259 in 1998 from $79,829 for the prior
year. The decrease is due to less capital spending and certain assets becoming
fully depreciated in 1998.
The Net loss in 1998 was $351,606, or 16.9% of sales, which represents a
loss of $0.32 per share, compared with a net loss of $482,763, or 20.8% of
sales, which represented a loss of $ 0.37 per share, based on the weighted
average number of shares outstanding during the respective periods. (The $0.32
per share loss takes into consideration an "Imputed Non-Cash Preferred Stock
Dividend" of $67,500.) The net loss for 1998 includes approximately $55,000 in
non-recurring expenses relating to a proposed acquisition that was not
consummated during 1998. Approximately $36,000 of this amount was for legal
expenses with the balance, $19,000, for travel and various organizational
expenses.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
Net sales of the Company for the nine months ended September 30, 1999
amounted to $2,441,816, an increase of $809,130 from the net sales of $1,632,686
for the nine months ended September 30, 1999. A total of $662,000 or 82% of the
increase was attributable to the two companies acquired by the Company during
the third quarter of 1999. The net sales for these acquisitions during the third
quarter was $662,000. The balance of the increase, $147,130, was due to
increased sales for the surface treatment of fire retardant materials during the
nine months ended September 30, 1999 compared to the comparable period in 1998.
Net sales for this product line increased 9% compared to the 1998 period.
Cost of products sold amounted to $1,753,800 and $1,169,433 for the nine
months ended September 30, 1999 and 1998, respectively, resulting in a gross
margin of $688,016 or 28% of
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<PAGE> 22
net sales for the first nine months of 1999 compared to $463,253 or 28% of net
sales for the comparable period in 1998. The increase in cost of products sold
is primarily attributable to the two acquisitions completed during the third
quarter of 1999. Costs of products sold from the acquisitions was $470,063 with
a gross margin of $191,937 or 29% of net sales. These amounts account for 80%
and 85% of the overall increases in costs of sales and gross margin. The balance
of the increases was due to increased sales in the minerals processing division
of the Company.
Selling and administrative expenses for the nine months ended September
30, 1999 were $1,010,489, or 41% of net sales, compared to $417,603, or 26% of
net sales, in the nine months ended September 30, 1998. Of the $592,886 increase
in the 1999 period approximately $120,000 or 5% of net sales is due to major
expenses related to the closing of ESG and Reddy during the third quarter of
1999. In addition, $200,000 of the increase in selling and administrative
expenses was attributable to the stock compensation expense recognized in the
first quarter of 1999 for the hiring of the Company's Chief Operating Officer.
This significant non-cash expense was 8% of net sales. Other acquisition related
expenses contributing to this increase include legal, accounting, and
shareholder professional services, travel, and corporate office relocation to
Atlanta, GA.
Interest expenses were $133,171, or 5% of net sales, in the nine months
ended September 30, 1999 compared to $150,388, or 9% of net sales, for the
comparable period in 1998. There were several reasons for the decline including
the following: Higher interest costs in the 1998 period due to additional
financing required such as an inventory loan and higher interest costs on
receivables financing; a decline in convertible notes interest during the second
and third quarter of 1999 due to conversion of $450,000 principal amount of debt
to common stock which resulted in an approximate interest savings of $16,000;
and lastly, the reduction of $100,000 in debt in the third quarter of 1999 for a
noteholder who chose to exchange this debt owed for 25,000 shares of common
stock in connection with the Company's private placement offering of common
stock completed during the third quarter of 1999.
Depreciation and amortization expenses were $93,930 and $58,201,
respectively, for first nine months of 1999 and 1998. The increase of $35,729
was due to the initial recording of goodwill amortization and depreciation from
the two acquisitions in the third quarter of 1999. Together this amounted to
approximately $47,000. Offsetting this was higher interim depreciation expense
occurring during the first nine months of 1998 that was adjusted down during the
fourth quarter of 1998.
Primarily as a result of the above, the Company incurred a net loss of
$549,574, or $.305 per share, in the nine months ended September 30, 1999,
compared to a net loss of $162,939, or
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<PAGE> 23
$.123 per share, in the nine months ended September 30, 1998.
LIQUIDITY AND SOURCES OF CAPITAL
The Company had a negative cash flow from operations of $218,660 and
$342,998, respectively, in the third quarter of 1999 and first nine months of
1999, compared to a negative cash flow from operations of $17,209 and $64,681,
respectively, for the comparable periods in 1998. The negative cash flow for the
1999 periods was primarily attributable to the net cash losses incurred and a
large increase in accounts receivable balances as a result of the two
acquisitions completed during the third quarter of 1999. There was an overall
net increase in cash at September 30, 1999 compared to June 30, 1999 of $20,582.
This was due mainly to the $2,300,000 of net proceeds raised from the Company's
private placement of 624,750 shares of common stock at a price of $4.00 per
share. A significant portion of this was used for investing activities such as
the two acquisitions ($1,550,000), redemption of preferred stock ($375,000),
property and equipment purchases ($54,859), and other investments ($101,992). As
of September 30, 1999, the Company had a working capital deficit of $591,055,
which was approximately $180,000 less than the working capital deficit at June
30, 1999.
In order to increase available cash to meet expenses in the short term,
the Company continued its factoring arrangement for its minerals subsidiary
only, which provides for cash advances against invoices to customers during the
period in which such invoices are outstanding. Generally, the cost of factoring,
similar to interest rates on short term borrowings, is payable on the amounts
outstanding and customer payments are then applied directly to advances.
Factoring, while not increasing working capital, does provide liquidity of
receivables. It is the intention of management to discontinue the use of
factoring as soon as practicable.
On May 7, 1999, the Company commenced a private offering of a minimum of
600,000 shares and a maximum of 1,500,000 of common stock at a price of $4.00
per share. On July 30, 1999, the Company consummated its sale of the minimum
amount of the offering for a total proceeds of $2,400,000, which were primarily
used to fund the cash portion of the Company's purchase price for its
acquisition of Cereus and ESG on July 30, 1999. From that date through September
15, 1999, the Company sold an additional 24,750 shares of common stock for
additional proceeds of $99,000. Giving effect to the placement agent's 8%
selling commission and 2% non-accountable expense allowance paid by the Company,
the Company received a total net proceeds from the private offering of
$2,302,100.
On July 30, 1999, the Company acquired 100% of the issued and
outstanding capital stock of ESG for a total purchase price of $1,950,000,
consisting of the payment of $550,000 in cash at closing, the issuance of a
promissory note in the amount of
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<PAGE> 24
$250,000 which bears interest at 3% per annum and the issuance of 383,333 shares
of the Company's common stock based on a $3.00 share price, with 191,666 of
those shares being held in escrow for distribution on the following schedule:
50% on July 30, 2000 and 50% on July 30, 2001.
On July 30, 1999, the Company acquired 100% of the issued and
outstanding capital stock of Cereus Bandwidth. The total purchase price was
$2,000,000 consisting of the payment of $1,000,000 in cash at closing and the
issuance of 333,333 shares of common stock, based on a $3.00 share price, with
such shares being held in escrow for distribution on the following schedule: 50%
on July 30, 2000 and 50% on July 30, 2001. Cash paid by the Company in
connection with the acquisitions of ESG and Cereus Bandwidth was raised in the
consummation on July 30, 1999 of the minimum amount of the Company's private
offering of common stock discussed above.
During late October and November 1999, the Company issued a total of
$750,000 principal amount of 15% Subordinated Convertible Notes (the
"Convertible Notes") that mature one year from date of issuance. The Convertible
Notes are convertible into shares of the Company's common stock at a price of
$3.75 per share, subject to adjustment. The Convertible Notes automatically
convert in the event the Company's common stock trades above $6.25 for any 20
consecutive trading days in the future. Purchasers of the Convertible Notes
received warrants (the "Warrants") to purchase a number of shares of common
stock equal to either (i) 0.5 times the number of shares into which their Notes
are convertible if the Notes are repaid or converted within 30 days of purchase,
(ii) 1.0 times the number of shares into which their Notes are convertible if
the Notes are repaid or converted between 30 and 90 days after closing and (iii)
1.5 times the number of shares into which their Notes are convertible if the
Notes are repaid or converted subsequent to 90 days after purchase. The Warrants
are exercisable over a period of three years following purchase of the Notes at
a exercise price of $4.00 per share. The Convertible Notes are secured by 1,100
shares of preferred stock of Netsurfer, Inc. owned by the Company.
On November 15, 1999 the Company consummated its acquisition of CSS
pursuant to a definitive agreement dated May 5, 1999. The purchase price of
$5,175,000 consisted of (i) $400,000 in cash, (ii) 983,333 shares of common
stock, (iii) promissory notes in the amount of $1,325,000 bearing interest at 8%
per annum, $1,149,000 of which are due in six months and $176,000 of which are
due in four months, and (iv) promissory notes in the amount of $500,000 bearing
interest at 3% per annum and payable 50% in twelve months and the remaining
balance in twenty four months. The cash portion of the purchase price was
generated by the sale of $750,000 principal amount of the Company's 15%
Subordinated Convertible Notes in a private placement.
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<PAGE> 25
Year 2000 Issue
The Company continued during the third quarter of 1999 monitoring its
program to ensure that all significant computer systems are substantially Year
2000 compliant by the year ending December 31, 1999. Specifically, the
information technology systems primarily used by the company are deemed to be
substantially compliant. For example, the primary computer software applications
supporting the accounting and financial reporting systems are vendor supplied
and have been certified as Year 2000 compliant by such vendors. In addition,
critical automated equipment and machinery used by the Company's minerals
processing subsidiary does not have internal date sensitive chips or software
that require Year 2000 updates.
During the current quarter of 1999 efforts have continued in contacting
key suppliers and customers regarding each other's plans to handle key Year 2000
issues. The majority of the responses received has been positive and has
indicated that most have addressed the issue with a plan and testing. The
Company has also been contacted by most of its larger vendors and customers on
its readiness for Year 2000.
The Company will continue to monitor the impact of the Year 2000 issue
on its operation and test any software updates or compliance resolutions where
appropriate. However, no guarantee can be assumed that some problems caused by
the Year 2000 issue will not occur either in interacting with third parties or
with the Company's internal systems.
ITEM 3. DESCRIPTION OF PROPERTY.
Executive Offices. In September 1999, the Company relocated its
executive offices to 6,000 square feet of space leased in an office building
located in Atlanta, Georgia at an annual rental of $173,750 under a lease
expiring on September 15, 2004.
Internet and Business Solutions Software Solutions Business. The Company
plans to enter into a new lease for 8,000 additional square feet in the above
referenced office building in Atlanta, Georgia on January 1, 2000 for an annual
rental of $220,800 under a lease expiring December 31, 2004. The Company also
leases 3,800 square feet of office space in West Palm Beach, Florida at an
annual rental of $72,200 under a lease expiring in April 2004.
Industrial Minerals and Specialty Materials Business. UMC (Arkansas)
owns a 9,050 square foot industrial building in Malvern, Arkansas which contains
the Company's surface modification facility. The building includes 1,850 square
feet of laboratory and office space and is situated on 3.75 acre site. The
Company has a collateral mortgage on the property that had a principal balance
of approximately $46,000 at September 30, 1999.
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UMC (Arizona) leases the Viva Luz Mine, which is located on an 80 acre
site located in Mojave County, Arizona, pursuant to a lease that expires in
March 2004. The lease, which calls for the payment of a production royalty of 5%
of the gross consideration obtained for the mineral mined less transportation
costs, subject to a minimum royalty payment of $5,000 per year, provides for a
further term in perpetuity as long as the property is in operation and is
generating minimum royalties.
In the opinion of management of the Company, its properties are
adequately covered by insurance.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
The following table sets forth certain information, as of November 30,
1999, concerning the beneficial ownership of the Company's Common Stock by each
stockholder known by the Company to be the beneficial owner of more than 5% of
the Company's outstanding shares of Common Stock, by each of the directors, and
by all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Number of Percent of Common
Shares of Stock
Common Stock(1) Outstanding
--------------- -----------------
<S> <C> <C>
Dr. Audrey L. Braswell(2)...................... 368,322 8.87%
William Boynes Jr.............................. 337,145 8.27%
Michael Griffith............................... 337,145 8.27%
Ronald Roswell, Jr. ........................... 333,333 8.18%
Paul R. Arena(3)............................... 269,740 6.46%
L. Joseph Artime............................... 164,043 4.02%
K. Pramod Reddy .............................. 150,000 3.68 %
Peyton H. Park ................................ 133,333 3.27%
Ronald Roswell, Sr. ........................... 50,000 1.23%
Ernest W. Purcell(4)........................... 15,416 *
Leigh S. Zoloto(5)............................. 5,809 *
All officers and
Directors as a group
(11) persons................................. 2,164,286 52.25%
</TABLE>
* Less than 1.0%
(1) A person is deemed to be the beneficial owner of Common Stock that can be
acquired by such person within 60 days upon the exercise of options and
convertible securities.
26
<PAGE> 27
Each beneficial owner's percentage ownership is determined by assuming
that options and convertible securities held by such person (but not those
held by any other person) and which are exercisable within 60 days have
been exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.
(2) Includes 71,429 shares into which $150,000 principal amount of Convertible
Promissory Notes owned by him are convertible and 3,333 shares subject to
options. Does not include 28,334 shares subject to options not exercisable
within 60 days.
(3) Includes 13,333 shares into which $50,000 principal amount of Convertible
Promissory Notes and 71,429 shares into which $150,000 principal amount of
Convertible Promissory Notes owned by him are convertible, (142,858 shares
into which $300,000 principal amount of Convertible Promissory Notes are
owned by Northern Federal Minerals LLC, 50% of the outstanding interests
of which are owned by Mr. Arena) and 11,667 shares subject to options.
Does not include 66,667 shares subject to options not exercisable within
60 days.
(4) Includes 3,333 shares subject to options. Does not include 13,333 shares
subject to options not exercisable within 60 days.
(5) Includes 3,333 shares subject to options. Does not include 40,000 shares
subject to option snot exercisable within 60 days.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following sets forth information regarding the Company's directors
and executive officers and certain of its significant employees:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Paul R. Arena 41 Chairman of the Board, President, Chief Executive
Officer and director
William Boynes, Jr. 32 Vice President - Consulting Services and Chief
Operating Officer and director
K. Pramod Reddy 28 Vice President - Technology, Chief Technical Officer
and director
</TABLE>
27
<PAGE> 28
<TABLE>
<S> <C> <C>
Ronald Roswell, Jr. 38 Vice President - Sales and director
Michael D. Griffith 38 Vice President - Sales
L. Joseph Artime 45 Vice President - Business Alliances
Peyton H. Park 38 Vice President - Internet Operations
Ronald Roswell, Sr. 60 Vice President - Business Development
Leigh S. Zoloto 45 Chief Financial Officer, Secretary and Treasurer
Ernest W. Purcell 46 Director
</TABLE>
Paul R. Arena has been Chairman of the Board and Chief Executive Officer
of AIM since March 27, 1997. He served as President of AIM from March 27, 1997
through July 31, 1999 and resumed service in that capacity on October 31, 1999.
He previously served as Vice President-Business development of the Company from
September 1995 to August 1996 and from May 1991 to August 1995 held the
positions he has presently, with the exception of President from May 1995 to
August 1996. He has been a director of the Company since 1994. Prior thereto, he
held the positions he has presently with one of the Company's subsidiaries since
May of 1991. From June of 1990 to August of 1991, Mr. Arena was a financial
business consultant. From February of 1988 to January of 1990, he was a Senior
Vice President and partner of Gulfstream Financial Associates, a subsidiary of
the Kemper Group.
William Boynes, Jr. has been a director and the Vice President -
Consulting Services and Chief Operating Officer of the Company since the
Company's acquisition of CSS on November 15, 1999. Previously, he had served as
the Chief Operating Officer and a founder of CSS that began operations in
January 1996. Mr. Boynes was formerly a Regional Consulting Manager for Platinum
Software Corporation from August 1993 to December 1995. From May 1986 to July
1993 he was a business systems consulting manager for Arthur Anderson & Co.
K. Pramod Reddy has served as director, Chief Technology Officer, and
Vice President Technology of the Company since August 1999. He had previously
served as the President of The Reddy Group, Inc. and Cereus Bandwidth from June
1997 until such affiliated companies were acquired by AIM on July 30, 1999. From
February 1993 to August 1996, Mr. Reddy was a Project Engineer and Manager for
LawGibb Group (formerly Law Companies).
Ronald Roswell Jr., CPA has been the Vice President - Sales of the
Company since August 1999 and was formerly President and founder of ESG, which
was formed in February 1996. In May 1993, Mr. Roswell formed Accounting Systems
Consultants, Inc., which
28
<PAGE> 29
was the predecessor company to ESG. Prior thereto, Mr. Roswell was a controller
for L'Angel Products, Inc. from July 1991 to May 1993 and he was an audit and
tax specialist for Arthur Andersen & CO. from May 1985 to May 1991. He is a
Certified Public Accountant and a Microsoft Certified Professional.
Michael D. Griffith has been the Vice President - Sales of the Company
since its acquisition of CSS on November 15, 1999. Previously, he had served as
the President and one of the founders of CSS, which began operations in January
1996. Prior thereto, he was the Eastern Region Channel Business Manager for
Platinum Software Corporation from January 1995 until January 1996. From
February 1994 until January 1995 he served as Product Director and was
responsible for all reseller product initiatives for Collier Consulting, Inc.
L. Joseph Artime has been the Vice President - Business Alliances of the
Company since November 15, 1999. Previously, he had served as the Vice President
- - - Latin American Business Development and a partner of CSS since September 1996.
Prior thereto, Mr. Artime was an account executive for Dun & Bradstreet software
from May 1995 to June 1996 and before that held several positions during his
tenure with ADP, Inc. which included: Director National Accounts from June 1993
to April 1995; Major Accounts Sales Executive from July 1989 to June 1993;
National Accounts Manager from July 1988 to June 1989; Regional Sales Executive
from July 1987 to June 1988 and; District Manager from July 1985 to June 1987.
Mr. Artime was a Key Account Representative for Motorola from June 1981 to May
1985.
Peyton H. Park, P.E. has served as Vice President - Internet Operations
of the Company since August 1999. He previously held a similar position within
Cereus Bandwidth where he was also a major owner since June 1997. Mr. Park was
formerly a Senior Engineer and Project Manager with Law Engineering from
September 1986 to June 1997. The Atlanta Business Chronicle named Cereus
Bandwidth as one of the top 15 ISPs in Atlanta in 1997 and 1998. Currently, Mr.
Park has established a firm expertise in the latest Internet technologies
including transport, applications, security, management and electronic commerce.
Mr. Park is a Professional Engineer-Industrial Engineering and graduated with a
Bachelors of Science degree of Industrial Engineering form North Carolina State
University in 1986. In addition, Mr. Park is Certified Senior Engineer, a
Certified Project Manager, a Construction Technologist certified by the
Construction Specifications Institute and he is a specialist in many computer
operating systems and languages.
Ronald Roswell Sr., CPA has been the Vice President - Business
Development of the Company since August 1999. Since 1986, Mr. Roswell has been
the President and owner of Shenhill Enterprises, a financial consulting firm.
From 1978 to 1986, Mr. Roswell was the President and owner of BTU Insulation Co.
and
29
<PAGE> 30
from 1969-1978 he held the positions of Vice President, Treasurer and General
Manager of Cox Enterprises, Inc. where he established on-line-time-sharing
computer systems for production and business applications for newspapers and was
responsible for mergers and acquisitions. Prior thereto, he was a Senior
Accountant at the accounting firm of Haskins and Sells from 1961 to 1969 and was
a specialist in MIS systems and banking audits. He is a Certified Public
Accountant and is either a past or present director of several organizations
including Flagship Banks, Palm Beach County Golf Association, Alcohol and Drug
Abuse Council of Palm Beach County and Cox Pension Plans.
Leigh S. Zoloto has been Chief Financial Officer, Secretary and
Treasurer of the Company since June 1996. Prior thereto, he was the Controller
and Director of Information Systems for a subsidiary of Westinghouse Electric
Corporation from November 1988 to May 1996. From August 1986 to July of 1988 he
was a Financial Systems Consultant for Cullinet Software, Inc. Previously, he
was the Regional Controller from September 1981 to March of 1986 for National
Medical Care, Inc., which was a subsidiary of W.R. Grace & Co.
Ernest W. Purcell has been a Vice President for the investment banking
firm of Houlihan, Lokey, Howard & Zukin since February 1997. Previously, he was
a Vice President and Senior Associate with Valuemetrics, Inc. from October 1989
to January 1997. From May 1987 to August of 1989, Mr. Purcell was a Vice
President/Partner of Southern Freightways, Inc. He has been a director of the
Company since March 27, 1997.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the
compensation paid or awarded to current executive officers of the Company during
each of the years ended December 31, 1996, 1997 and 1998.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------
Awards Payouts
------------------------ ---------------------
Securities
Other Restricted Underlying All
Annual Stock Options/ LTIP Other
Salary Bonus Compensation Award(s) SARs Payouts Compensation
Name and Year ($) ($) ($) ($) (#) ($) ($)
Principal Position (b) (c) (d) (e) (f) (g) (h) (i)
- - ------------------ --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul R. Arena 1998 $110,000 $8,000 $0 None N/A None None
Chairman, CEO & 1997 $97,200 $0 $0 None N/A None None
President(1) 1996 $96,000 $0 $0 None N/A None None
Leigh S. Zoloto 1998 $80,130 $6,250 $0 None N/A None None
Chief Financial 1997 $75,250 $0 $0 None N/A None None
Officer 1996 $68,000 $0 $0 None N/A None None
</TABLE>
(1) Mr. Arena was appointed Chairman, CEO and President on March 27, 1997.
He previously served as Vice President-Business Development from
September 1995 to August 1996. From
30
<PAGE> 31
May 1991 to August 1995 he held the positions he has presently, with the
exception of President from May 1995 to August 1995.
The following Options Grants Table sets forth, for each of the named
executive officers, information regarding individual grants of options granted
in 1998 and their potential realizable value. Information regarding individual
option grants includes the number of options granted, the percentage of total
grants to employees represented by each grant, the per-share exercise price and
the expiration date.
OPTION GRANTS TABLE
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
% of Total Options
Number of Shares Granted to Directors, Exercise
Underlying Options Officers, Employees in Price Expiration
Name Granted (#)(1) Fiscal Year(2) ($/SH)(3) Date
---- -------------- -------------- --------- ----
<S> <C> <C> <C> <C>
Paul R. Arena 30,000 31.25% 3.00 12/27/08
Leigh S. Zoloto 15,000 15.62% 3.00 12/27/08
</TABLE>
- - ----------------
1 The options are non-qualified stock options granted on December 28, 1998
under the Company's 1997 Stock Option Plan that become exercisable
cumulatively as to 25%, 50%, 75% and 100% after the first, second, third
and fourth anniversaries, respectively, after the date of grant.
2 Based on options for a total of 96,000 shares granted to all directors,
officers and employees.
3 The exercise price is equal to the fair market value on the date of grant
of the option.
EXERCISE OF WARRANTS AND OPTIONS
During September, 1998, Leigh Zoloto exercised an option to purchase
3,333 shares of Common Stock at an exercise price of $0.90 per share. Under the
terms of the options, a portion of the exercised shares were used to pay for the
options exercised. Under these terms, 857 shares at a market value of $3.50 per
share were used to purchase the shares resulting in 2,476 shares being issued.
DIRECTORS
Directors are not compensated for their services as directors; however,
they are reimbursed for all reasonable expenses incurred in connection
therewith.
KEY MAN INSURANCE
During January 1999, a 10 year level term life insurance policy was
issued by The Travelers Companies in the amount of $1,000,000 on the life of the
Company's Chief Executive Officer.
31
<PAGE> 32
This policy is paid yearly at the option of the Company and inures 75% to the
benefit of the Company and 25% to the insured's estate. The Company intends to
maintain similar insurance policies on many of the key management individuals.
1997 STOCK OPTION PLAN
In September 1997, the Company's shareholders approved the adoption of
the Company's 1997 Stock Option Plan (the "Plan"), which is administered by the
Company's Board of Directors, and authorized a total of 250,000 shares of Common
Stock for issuance thereunder. The purpose of the Plan is to enable the Company
to attract and retain competent personnel by offering them the opportunity to
acquire a proprietary interest in the Company. As of November 30, 1999, options
for a total of 464,335 shares of Common Stock, exercisable at prices ranging
from $0.90 to $4.75 per share and held by a total of 19 optionees, were
outstanding under the Plan. On November 30, 1999, stockholders of the Company
approved an increase in the number of shares of Common Stock authorized for
issuance under the Plan from 250,000 to 3,000,000 shares.
NON-QUALIFIED STOCK OPTIONS
As of November 30, 1999, the Company had non-qualified options for a
total of 366,238 shares of Common Stock, exercisable at prices ranging from
$2.50 to $4.75 per share held by a total of 15 optionees. Non-qualified options
for a total of 73,667 shares of Common Stock, exercisable at $4.00 per share
with one individual are scheduled to be issued in connection with a finders fee
arrangement for several acquisitions the Company has engaged during 1999.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
On March 3, 1999, the Company issued a Promissory Note in the amount of
$100,000 to Dr. Audrey L. Braswell, a director of the Company. The loan was
ratified by the Board on March 26, 1999 and consisted of an unsecured note with
the principal balance and interest due on May 15, 1999 in the amount of
$106,000. The loan was repaid during the second quarter of the year.
During the second quarter of 1999, each of the three holders of the
Company's 10% Convertible Promissory Notes exercised an option to convert a
portion of their notes into Common Stock at a conversion price of $2.10 per
share. On May 18, 1999, Northern Federal Minerals LLC converted $150,000
principal amount of its note into Common Stock resulting in the issuance by the
Company of 71,429 shares and a reduction in the principal amount of the Note
from $450,000 to $300,000. On June 21, 1989 Mr. Bernard
32
<PAGE> 33
Kossar converted $150,000 principal amount of his note into Common Stock
resulting in the issuance by the Company of 71,429 shares and a reduction in the
principal amount of the note from $300,000 to $150,000. On June 22, 1989, Dr.
Audrey L. Braswell, a director of the Company, converted $150,000 principal
amount of his note into Common Stock resulting in the issuance by the Company of
71,429 shares and a reduction in the principal amount of his note from $300,000
to $150,000. The cumulative effect of these transactions was to reduce the
principal amount of the outstanding Series A Convertible Promissory Notes from
$1,050,000 to $600,000.
On July 30, 1999, the Company acquired all the outstanding capital stock
of ESG for a total purchase price of $1,950,000, consisting of $550,000 in cash,
a promissory note in the principal amount of $250,000 which bears interest at 3%
per annum and 383,333 shares of Common Stock based on a $3.00 per share price,
with 191,666 of those shares being held in escrow and scheduled to be
distributed to the extent of 50% on July 30, 2000 and 50% on July 30, 2001.
Ronald Roswell, Jr. was the President, founder and a principal stockholder of
ESG. He now serves as director and Vice President - Sales of AIM.
On July 30, 1999, the Company acquired all the outstanding capital stock
of Cereus Bandwidth. The total purchase price was $2,000,000, consisting of
$1,000,000 in cash and the issuance of 333,333 shares of Common Stock based on a
$3.00 per share price, with such shares held in escrow and scheduled to be
distributed to the extent of 50% on July 30, 2000 and 50% on July 30, 2001. K.
Pramod Reddy was the President, founder and a principal stockholder of Cereus
Bandwidth. He now serves as director, Chief Technology Officer and Vice
President of AIM.
On November 15, 1999, the Company acquired all the outstanding capital
stock of CSS with which it had entered into a definitive agreement on May 5,
1999. The purchase price of $5,175,000 was comprised of (i) $400,000 in cash;
(ii) 983,333 shares of common stock of the Company; (iii) promissory notes in
the amount of $1,325,000 bearing interest at 8% per annum, $1,149,000 of which
are due in six months and $176,000 of which are due in four months; and (iv)
promissory notes in the amount of $500,000 bearing interest at 3% per annum and
payable 50% in 12 months and the remaining balance in 24 months. Michael
Griffith, William Boynes, Jr. and L. Joseph Artime were the President, Chief
Operating Officer and Vice President, respectively, of CSS and were the
principal shareholders of CSS. Messrs. Griffith, Boynes and Artime are now the
Vice President - Sales, Vice President - Consulting Services and Vice President
- - - Business Alliances, respectively, of the Company.
33
<PAGE> 34
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
The Company's authorized capital consists of 50,000,000 shares of Common
Stock, par value $0.01 per share. The Company has reserved 3,000,000 shares of
Common Stock for issuance upon the exercise of options granted or to be granted
pursuant to the Company's 1997 Stock Option Plan (which includes 464,335 shares
of Common Stock issuable upon the exercise of stock options outstanding on
November 30, 1999), 255,714 shares of Common Stock issuable upon conversion of
the $600,000 principal amount of outstanding 10% Convertible Promissory Notes,
200,000 shares of Common Stock issuable upon conversion of the $750,000
principal amount of outstanding 15% Subordinated Convertible Notes and 199,905
shares issuable upon the exercise of outstanding warrants.
Holders of Common Stock are entitled to one vote for each whole share on
all matters to be voted upon by shareholders, including the election of
directors. Holders of Common Stock do not have cumulative voting rights in the
election of directors. All shares of Common Stock are equal to each other with
respect to liquidation and dividend rights. Holders of Common Stock are entitled
to receive dividends if and when declared by the Company's Board of Directors
out of funds legally available therefor under Delaware law. In the event of the
liquidation of the Company, all assets available for distribution to the holders
of the Common Stock are distributable among them according to their respective
holdings. Holders of Common Stock have no preemptive rights to purchase any
additional, unissued shares of Common Stock. All of the outstanding shares of
Common Stock of the Company are, and those to be issued pursuant to this
offering will be, fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 shares of preferred
stock, par value $0.01 per share. The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
Board of Directors, without further action by shareholders, and may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion and redemption rights,
and sinking fund provisions. The ability of the Board of Directors to issue
preferred stock could also be used as a means for resisting a change of control
of the Company, and therefore can be considered an "anti-takeover" device. The
future issuance of additional shares of preferred stock could adversely affect
the rights of the holders of the Common Stock and therefore, reduce the value of
the Common Stock.
34
<PAGE> 35
10% CONVERTIBLE PROMISSORY NOTES
The Company has outstanding $600,000 principal amount of 10% Convertible
Promissory Notes (the "Convertible Promissory Notes"). The Convertible
Promissory Notes, which are held by three holders and are unsecured, bear
interest at a rate of 10% per year, mature on December 31, 1999 and are
convertible at a price of $2.10 per share. Pursuant to the Convertible
Promissory Notes, as amended on November 13 1998, the Noteholders will be
required to convert their Convertible Promissory Notes if (i) the Company
completes the sale of $2,000,000 in an offering, (ii) the Company's Common Stock
on the predominant market for the stock averages in excess of $4.50 per share
for a 90-day period, and (iii) the Company's Common Stock on the predominant
market for the Company's stock maintains an average trading volume of 6,000
shares for the same 90-day period.
15% SUBORDINATED CONVERTIBLE NOTES
In late October and November 1999, the Company issued a total of
$750,000 principal amount of 15% Subordinated Convertible Notes which mature one
year from issuance (the "Convertible Notes"). The Convertible Notes which are
held by 10 holders, bear annual interest of 15% and are convertible into shares
of the Company's common stock at a price of $3.75 per share, subject to
adjustment for any stock split, reverse stock split, stock dividend or similar
transactions, including weighted average adjustments for future issuances of
equity or securities convertible into equity at a price per share which is lower
than the original conversion price. The Convertible Notes automatically convert
in the event the Company's common stock trades above $6.25 for any 20
consecutive trading days in the future. Purchasers of Convertible Notes also
received from the Company warrants the "Warrants") to purchase a number of
shares of common stock equal to either (i) 0.5 times the number of shares into
which their Notes are convertible if the Notes are repaid or converted within 30
days of purchase of such Notes, (ii) 1.0 times the number of shares into which
their Notes are convertible if such Notes are repaid or converted between 30 and
90 days after the purchase of such Notes and (iii) 1.5 times the number of
shares to which their Notes are convertible if such Notes are repaid or
converted subsequent to 90 days after purchase of such Notes. The Warrants are
exercisable for a period of three years following purchase of the Convertible
Notes at an exercise price of $4.00 per share. The Convertible Notes, which are
secured by 1,100 shares of preferred stock of Netsurfer, Inc. owned by the
Company, are pre-payable by the Company at any time without penalty. Holders of
common stock issuable upon conversion of the Convertible Notes will be entitled
to certain "piggy back" registration rights with respect to registered public
offerings by the Company in the future.
35
<PAGE> 36
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
The Company's Common Stock is quoted on the United States
Over-the-Counter Bulletin Board (the "Bulletin Board") operated by the National
Association of Securities Dealers under the trading symbol "CEUS." The Common
Stock was listed on the Vancouver Stock Exchange ("VSE"), from April 1, 1995 to
April 23, 1999. On April 7, 1999, the Company requested a voluntary delisting of
the Common Stock from the VSE following the inclusion of the Common Stock on
March 22, 1999 for quotation on the United States Over-the-Counter NASDAQ
Bulletin Board under the trading symbol "AIGU." The Bulletin Board trading
symbol was changed to "CEUS" on December 7, 1999.
The following table sets forth, for the periods indicated, the high and
low sales prices per share of the Common Stock as reported on the VSE prior to
April 1, 1999, and thereafter the high and low sales price quotations on the
Bulletin Board as adjusted to reflect the reverse one-for-three stock split
effected on August 21, 1998:
<TABLE>
<CAPTION>
1997 HIGH LOW
- - ----
<S> <C> <C>
First Quarter..................................................... $1.74 $.69
Second Quarter.................................................... .90 .30
Third Quarter..................................................... .84 .69
Fourth Quarter.................................................... 1.05 .45
</TABLE>
<TABLE>
<CAPTION>
1998
- - ----
<S> <C> <C>
First Quarter..................................................... $2.75 $.90
Second Quarter.................................................... 3.25 1.95
Third Quarter .................................................... 4.00 3.00
Fourth Quarter.................................................... 3.50 2.50
</TABLE>
<TABLE>
<CAPTION>
1999
- - ----
<S> <C> <C>
First Quarter..................................................... $5.00 $2.95
Second Quarter.................................................... 7.00 3.25
Third Quarter..................................................... 5.50 4.00
Fourth Quarter (through November 30, 1999)........................ 5.37 3.25
</TABLE>
As of October 20, 1999, there were approximately 460 holders of record
of the Company's Common Stock. The Company has never declared or paid dividends
on its Common Stock and does not plan to do so in the foreseeable future.
36
<PAGE> 37
ITEM 2 LEGAL PROCEEDINGS.
Not applicable
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
By letter dated June 23, 1998, the accounting firm of M.A.Cabrera &
Company, P.A. ("Cabrera") advised AIM Group, Inc. (the "Company") that Cabrera
decided to stop servicing public companies. Cabrera informed the Company that a
combination of factors lead it to that decision, including its limited
professional resources, the increased risk exposure and higher insurance costs.
By letter dated June 24, 1998, to the Company, Cabrera confirmed that the
client-auditor relationship between the Company and Cabrera had ceased.
Cabrera's independent auditor's report, dated March 13, 1998, included
in the Company's Annual Report on Form 10-KSB for the year ended December 31,
1997, stated that:
"The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Notes A
and B to the financial statements, the Company has incurred
continuing losses from operations, has insufficient cash flow from
operations, has substantial non-earning assets and is dependent on
very few customers. These items raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding
those matters are also discussed in Notes A and B. The financial
statements do not include any adjustments that might result from the
outcome of these uncertainties."
Cabrera's independent auditor's report, dated March 14, 1997, included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1996,
contained language substantially similar to that set forth above.
During the years ended December 31, 1996 and 1997 and the subsequent
interim period ended June 24, 1998, there were no disagreements between the
Company and Cabrera on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Cabrera, would have caused
it to make reference to the subject matter of disagreement in connection with
its report.
Effective September 17, 1998, the Company engaged Moore Stephens Frost,
PLC ("MSF") as the Company's new independent accounting firm. The Company's
Board of Directors approved the
37
<PAGE> 38
engagement on September 16, 1998. The Company did not consult with MSF regarding
any of the matters referred to in paragraphs (a)(2)(i) or (ii) of Item 304 of
Regulation S-B.
On December 10, 1999, MSF resigned as the Company's independent
accounting firm. MSF's independent auditor's report, dated February 19, 1999,
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, did not contain an adverse opinion or a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. The Company has had no disagreements with MSF on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to MSF's satisfaction, would
have caused it to make a reference to the subject matter of the disagreement in
connection with its report.
The Company presently is interviewing accounting firms with a view
toward the engagement of a new independent accounting firm prior to the end of
1999.
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES.
The following sets forth information relating to sales of securities by
the Company without registration under the Securities Act of 1933 (the "1933
Act") within the past three years:
38
<PAGE> 39
<TABLE>
<CAPTION>
Title of Amount of Total
Securities Securities Sales Nature of
Date or Period Sold Sold Price Transaction
-------------- ---- ---- ----- -----------
<S> <C> <C> <C> <C>
December 1997 Common Stock 23,809
shares $25,000 Private sale(1)
September 1998 Common Stock 3,333 Exercise of
shares $3,000 stock option(1)
December 30, 1998 Series A Convertible 150,000 $375,000 Private sale(1)
Preferred Stock shares
March 3, 1999 Promissory Note $100,000 $100,000 Borrowing(1)
Quarter ended Common Stock 214,287 $450,027 Conversion of
June 30, 1999 shares 10% Convertible
Promissory Notes(2)
July 30, 1999 Common Stock 624,750 $2,499,000 Private sale(1)
through September 15, shares
1999
October 29 through 15% Subordinated $750,000 $750,000 Private sale(1)
November 30, 1999 Convertible Notes
</TABLE>
- - -----------------
1 The above sales of securities were effected in reliance upon the exemption
from registration for private offerings of securities provided by Section
4(2) of the 1933 Act and/or Rule 506 of Regulation D thereunder.
2 The above sale of securities was effected in connection with the
conversion of other securities issued by the Company in reliance upon the
exemption from registration for exchanges of securities provided by
Section 3(a)(9) of the 1933 Act.
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<PAGE> 40
All of the above sales of securities were effected directly by the
Company without the use of any broker, agent or underwriter, except that the
firm of Dunwoody Brokerage Services, Inc. served as the non-exclusive private
placement agent in connection with the Company's above-listed private sales of
common stock from July 30, 1999 through September 15, 1999. That firm received
an 8% selling commission and 2% non-accountable expense allowance for sales
effected by the placement agent.
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. In its Certificate of
Incorporation, the Company has adopted the provisions of Section 102(b)(7) of
the Delaware General Corporation Law (the "Delaware Law"), which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for monetary damages
for breach of the director's fiduciary duty, except (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware law
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
a director will personally receive a benefit in money, property or services to
which the director is not legally entitled.
The Company has also adopted indemnification provisions pursuant to
Section 145 of the Delaware Law, which provides that a corporation may indemnify
any persons, including officers and directors, who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that such person was an officer, director, employee or agent of the corporation,
or is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided such officer, director, employee or
agent acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests and, with respect to criminal
proceedings, had no reasonable cause to believe that his conduct was unlawful. A
Delaware corporation may indemnify officers or directors in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is
40
<PAGE> 41
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against expenses (including attorney's
fees) that such officer or director actually and reasonably incurred.
The Company also maintains a directors' and officers' liability
insurance policy cumulatively providing a maximum of $3,000,000 of aggregate
coverage during each of the next three years.
PART F/S
Pursuant to Rule 12b-23 under the Securities Exchange Act of 1934, the
Company incorporates by reference in this report (i) the audited balance sheet
of the Company dated December 31, 1998 and the audited statements of income,
cash flows and changes in stockholders' equity of the Company for the years
ended December 31, 1997 and 1998, contained in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998; (ii) the unaudited interim
financial statements of the Company for the nine months ended September 30,
1999, contained in the Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1999; and (iii) the audited financial statements of
Enterprise Solutions Group, Inc. ("ESG") for the years ended December 31, 1997
and 1998 and the unaudited interim financial statements of ESG for the six
months ended June 30, 1999; (iv) the audited balance sheet of The Reddy Group,
Inc. ("Reddy") dated December 31, 1998 the audited statements of income and
retained earnings and cash flows of Reddy for the years ended December 31, 1997
and 1998, and the unaudited interim financial statements of Reddy for the six
months ended June 30, 1999; and (v) the pro forma financial information
contained in Amendment No. 1 to the Company's Current Report on Form 8-K filed
on October 11, 1999.
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<PAGE> 42
PART III
ITEM 1 INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Document
- - ----------- --------
<S> <C>
3(a) Certificate of Incorporation of the Registrant.
(Incorporated herein by reference to Exhibit 3(a) to the
Registrant's Registration Statement on Form S-4 ( File
No. 33-82468 )
3(b) Certificate of Amendment to Certificate of Incorporation of
the Registrant. (Incorporated herein by reference to
Exhibit 3(b) to the Registrant's Registration Statement
on Form S-4 (File No. 33-82468 ).)
3(c) Certificate of Amendment to Certificate of Incorporation of
the Registrant. (Incorporated herein by reference to
Exhibit 3(c) to the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1997.)
3(d) Certificate of Amendment to Certificate of Incorporation of
the Registrant. (Incorporated herein by reference to
Exhibit 3 to the Registrant's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1998.)
3(e) Certificate of Amendment to Certificate of Incorporation of
the Registrant. (Incorporated herein by reference to
Exhibit 3 to the Registrant's Form 8-K dated November
30, 1999.)
3(f) By-Laws of the Registrant. (Incorporated herein by reference
to Exhibit 3(c) to the Registrant's Registration Statement
on Form S-4 ( File No. 33-82468 ).)
4(a) Form of the Registrant's Warrant Certificate (Incorporated
herein by reference to Exhibit 4(b) to the Registrant's
Registration Statement on Form S-4 (File No.3382468).)
4(b) Form of the Registrant's Option Certificate. (Incorporated
herein by reference to Exhibit 4(c) to the Registrant's
Registration Statement on
</TABLE>
42
<PAGE> 43
<TABLE>
<S> <C>
Form S-4 ( File No. 33-82468 ).)
4(c) Certificate of Designation, Preferences and Rights of
Preferred Stock relating to the Registrant's Series A
Convertible Preferred Stock. (Incorporated by reference
to Exhibit 4 to the Registrant's Current Report on Form
8-K filed on January 5, 1999.)
10(a) Agreement and Plan of Merger dated as of August 3, 1994, by
and among Heatshield, AIM, AIM Group, Inc., Merger Sub-H
and L. P. (Incorporated herein by reference to Exhibit 2
to the Registrant's Registration Statement on Form S-4
(File No. 33-82468 ).)
10(b) Amendment No. 1 dated as of November 14, 1994, to the
Agreement and Plan of Merger dated as of August 3, 1994 by
and among Heatshield, AIM, AIM Group, Inc., Heatshield
Acquisition and Heatshield Funding Group. (Incorporated
herein by reference to Exhibit 2(b) to the Registrant's
Registration Statement on Form S-4 (File No. 33-82468).)
10(c) Amendment No. 2 dated as of November 30, 1994, to the
Agreement and Plan of Merger dated as of August 3, 1994 by
and among Heatshield, AIM, AIM Group, Inc., Heatshield
Acquisition and Heatshield Funding Group. (Incorporated
herein by reference to Exhibit 2(c) to the Registrant's
Registration Statement on Form S-4 (File No. 33-82468).)
10(d) AIM Group, Inc. 1994 Stock Option Plan. (Incorporated herein
reference to Exhibit 4(a) to the Registrant's Registration
Statement on Form S-4 (File No. 33-82468).)
10(e) Kaolinite Mining Lease and Agreement, dated March 1, 1984,
between Eterna-Tec Corp. as lessee and New Mexico and
Arizona Land Company as Lessor. (Incorporated herein by
reference to Exhibit 10(a) to the Registrant's
Registration Statement on Form S-4 (File No. 33-82468).)
10(f) Assignment Agreement, dated October 26, 1989, by and
between Eterna-Tec Corp.
</TABLE>
43
<PAGE> 44
<TABLE>
<S> <C>
and the Registrant pursuant to which Eterna-Tec
assigned to the Registrant the Kaolinite Lease.
(Incorporated herein by reference to Exhibit 10(b) to
the Registrant's Registration Statement on Form S-4
10(f) (File No. 33-82468).)
10(g) Lease Agreement, dated October 17, 1994, by and between
Merrick Venture Capital, Inc. and AIM Group, Inc.
(Incorporated herein by reference to Exhibit 10(pp) to the
Registrant's Registration Statement on Form S-4. (File
No. 33-82468).)
10(h) Form of Series A Convertible Promissory Note, as issued by AIM
Group, Inc. on November 13, 1995, December 20, 1995 and
February 2, 1996. (Incorporated herein by reference to
Exhibit 10(e) of the Registrant's Form 10-KSB for the year
ended December 31, 1996.)
10(i) Form of letter agreement amending Series A Convertible
Promissory Note, as entered into by AIM Group, Inc. and
each of the holders of the Series A Convertible
Promissory Notes on April 10,1997. (Incorporated herein
by reference to Exhibit 10(f) of the Registrant's Form
10-KSB for the year ended December 31, 1996.)
10(j) Form of letter agreement amending Series A Convertible
Promissory Note, as entered into by AIM Group, Inc. and
each of the holders of the Series A Convertible
Promissory Notes on April 10,1997. (Incorporated herein
by reference to Exhibit 10(g) to the Registrant's
Annual Report on Form 10-KSB for the year ended
December 31, 1997.)
10(k) 1997 Stock Option Plan of the Registrant, as amended on
November 30, 1999. (Filed herewith.)
10(l) Form of letter agreement amending Series A Convertible
Promissory Note, as entered into by the Registrant with
each of the holders of the Series A Convertible
Promissory Notes on March 24, 1998. (Incorporated
herein by reference to Exhibit 10(e) to the
Registrant's Annual Report on Form 10-KSB for the year
ended
</TABLE>
44
<PAGE> 45
<TABLE>
<S> <C>
December 31, 1998.)
10(m) Form of letter agreement amending Series A Convertible
Promissory Note, as entered into by the Registrant with
each of the holders of the Series A Convertible
Promissory Notes on November 13, 1998. (Incorporated
herein by reference to Exhibit 10(m) to the
Registrant's Annual Report on Form 10-KSB for the year
ended December 31,
1998.)
10(n) Promissory Note for $150,000 owed by United Minerals
Corporation to Audrey L. Braswell. (Incorporated herein
by reference to Exhibit 10(n) to the Registrant's Annual
Report on Form 10-KSB for the year ended December 31,
1998.)
10(o) Employment Agreement, effective February 15, 1999, between AIM
Group, Inc. and Theodore L. Lamb. (Incorporated herein by
reference to Exhibit 10(o) to the Registrant's Annual
Report on Form 10-KSB for the year ended December 31,
1998.)
10(p) Stock Option Agreement, dated November 24, 1998, between the
Registrant and R. Jerry Falkner. (Incorporated herein by
reference to Exhibit 10(p) to the Registrant's Annual
Report on Form 10-KSB for the year ended December 31,
1998.)
10(r) Agreement and Plan of Merger, dated as of May 3, 1999, by
and among the Registrant, AIM Solutions, Inc.,
Enterprise Solutions Group, Inc. and Ronald Roswell,
Jr. (Incorporated herein by reference to Exhibit 2A to
the Registrant's Current Report on Form 8-K dated July
30, 1999.)
10(s) Agreement and Plan of Merger, dated as of May 5, 1999, by
and among the Registrant, AIM Solutions, Inc., Client
Server Solutions, Inc., CSS Financial Software Sales,
Inc., Michael Griffith, William Boynes, Jr. and L.
Joseph Artime. (Incorporated herein by reference to
Exhibit 2A to the Registrant's Current Report on Form
8-K
</TABLE>
45
<PAGE> 46
<TABLE>
<S> <C>
dated November 15, 1999.)
10(t) Amended and Restated Agreement and Plan of Merger, dated as
of November 15, 1999, by and among the Registrant, AIM
Solutions, Inc., Client Server Solutions, Inc., CSS
Financial Software Sales, Inc., Todd Melioris, Chris A.
Brecher, Joseph Kozak, Michael Griffith, William Boynes,
Jr. and L. Joseph Artime. (Incorporated herein by
reference to Exhibit 2B to the Registrant's Current
Report on Form 8-K dated November 15, 1999.)
10(u) Employment Agreement, effective July 31, 1999, between the
Registrant and Paul R. Arena. (Filed herewith.)
10(v) Employment Agreement, effective November 15, 1999, between
the Registrant and L. Joseph Artime. (Filed herewith.)
10(w) Employment Agreement, effective November 15, 1999, between
the Registrant and William Boynes, Jr. (Filed herewith.)
Employment Agreement, effective November 15, 1999, between
10(x) the Registrant and Michael D. Griffith. (Filed
herewith.)
10(y) Employment Agreement, effective July 30, 1999, between the
Registrant and Peyton H. Park. (Filed herewith.)
10(z) Employment Agreement, effective July 30, 1999, between the
Registrant and K. Pramond Reddy. (Filed herewith.)
10(aa) Employment Agreement, effective July 30, 1999, between the
Registrant and Ronald Roswell, Sr. (Filed herewith.)
10(bb) Employment Agreement, effective July 30, 1999, between the
Registrant and Ronald Roswell, Jr. (Filed herewith.)
10(cc) Form of Note Purchase Agreement relating to 15% Convertible
Subordinated Notes of the Registrant and related forms
of 15% Convertible Subordinated Note and Warrant.
(Filed herewith.)
</TABLE>
46
<PAGE> 47
<TABLE>
<S> <C>
21 Subsidiaries of the Registrant. (Filed herewith.)
23(a) Consent of Moore Stephens Frost, PLC. (Filed herewith.)
23(b) Consent of Melamed Handy & Karp, LLP. (Filed herewith.)
23(c) Consent of Moore Stephens Tiller LLC. (Filed herewith.)
</TABLE>
ITEM 2 DESCRIPTION OF EXHIBITS.
The exhibits listed in the above index are either filed herewith or
incorporated herein by reference, as indicated above.
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<PAGE> 48
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
CEREUS TECHNOLOGY PARTNERS, INC.
(Formerly AIM Group, Inc.)
Date: December 16, 1999 By: /s/ Paul R. Arena
-----------------------------------------
Paul R. Arena
Chairman of the Board, President
and Chief Executive Officer
48
<PAGE> 1
Exhibit 10(k)
AIM GROUP, INC.
1997 STOCK OPTION PLAN
(as amended on November 30, 1999)
1. PURPOSES OF THE PLAN: The purposes of this Plan are:
* to attract and retain competent executives with outstanding
ability for positions of substantial responsibility;
* to provide additional incentive to corporate officers, key
employees, and members of the corporate Board of Directors,
and;
* to promote the success of the Corporation's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Board at the time of grant.
2. DEFINITIONS: As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board in accordance with Section 4
of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Code" means the U.S. Internal Revenue Code of 1986, as
amended.
(e) "Common Stock" means the Common Stock of the Corporation.
(f) "Corporation" means AIM Group, Inc.
(g) "Director" means a member of the Board.
(h) "Employee" means any key employee, including, without limitation,
Officers employed by the Corporation or any Subsidiary of the Corporation.
1
<PAGE> 2
Neither service as a Director nor payment of the director's fee by the
Corporation shall be sufficient to constitute "employment" by the Corporation.
An employee may serve as a Director of the Company and maintain his status as an
employee.
(i) "Exchange Act" means the U.S. Securities Exchange Act of
1934, as amended.
(j) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any other established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(k) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(l) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(m) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.
(n) "Officer" means a person who is an officer of the Corporation
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(o) "Option" means a stock option granted pursuant to the Plan.
(p) "Option Agreement" means an agreement between the Corporation
and an Optionee evidencing the terms and conditions of an individual option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
2
<PAGE> 3
(q) "Optioned Stock" means the Common Stock subject to an Option.
(r) "Optionee" means the holder of an outstanding Option granted
under the Plan.
(s) "Plan" means this 1997 Stock Option Plan.
(t) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(u) "Service Provider" means an Officer, Employee or non-employee
member of the Board.
(v) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(w) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN: Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of shares which may be
optioned and sold under the Plan is 3,000,000 Shares.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to a method of payment under
Section 9(c), the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan.
4. ADMINISTRATION OF THE PLAN:
(a) PROCEDURE:
(i) RULE 16b-3. If the Common Stock is registered under
Section 12 of the Exchange Act and to the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(ii) ADMINISTRATION: The Plan shall be administered by the
Board.
(b) POWERS OF THE ADMINISTRATOR: Subject to the provisions of the
Plan the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value in accordance with
the Plan;
3
<PAGE> 4
(ii) to select the Service Providers to whom Options may
be granted hereunder;
(iii) to determine the number of shares of Common Stock to
be covered by each Option granted hereunder;
(iv) to approve forms of Option Agreement for use under
the Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common
Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(viii) to modify or amend each Option (subject to Section
14(c) of the Plan);
(ix) to allow Optionees to satisfy withholding tax
obligations by electing to have the Corporation withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;
(x) to authorize any person to execute on behalf of the
Corporation any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION: The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY: Nonstatutory Stock Options may be granted to
Service Providers.
4
<PAGE> 5
Incentive Stock Options may be granted only to Service Providers who are
Employees.
6. LIMITATIONS:
(a) Each Option shall be designated in the attended Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Corporation and any Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the option with respect to such shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee
any right with respect to continuing the Optionee's relationship as an Officer,
an Employee or a Director of the Corporation, nor shall they interfere in any
way with the Optionee's right or the Corporation's right to terminate such
relationship at any time, with or without cause.
7. TERM OF PLAN: The Plan shall be effective on the date it is
approved by the shareholders of the Company and shall continue in effect for a
term of 10 years from such date, unless terminated earlier under Section 14 of
the Plan.
8. TERM OF OPTION: The term of each Option shall be stated in
the Option Agreement and shall be 10 years from the date of grant or such
shorter term as may be provided in the Option Agreement. Moreover, in the case
of an Incentive Stock Option granted to an Optionee who, at the time the
Incentive Stock Option is granted, owns Common Stock representing more than 10%
of the voting power of all classes of stock of the Corporation or any
Subsidiary, the term of the Incentive Stock Option shall be 5 years from the
date of grant or such shorter term as may be provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION:
(a) EXERCISE PRICE: The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than 10% of the
voting power of all classes of stock of the Corporation or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
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<PAGE> 6
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator, but shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(b) WAITING PERIOD AND EXERCISE DATES: At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) FORM OF CONSIDERATION: The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) previously acquired Shares having an aggregate Fair
Market Value on the date of exercise (determined in accordance with Section 2(k)
equal to the aggregate exercise price of all Options being exercised;
(iv) in the case of a Nonstatutory Stock Option, other
Shares which (A) in the case of Shares acquired upon exercise of an Option,
have been owned by the Optionee for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be
exercised;
(v) Shares as to which this Option is then being
exercised, in which case the Corporation is to retain so many shares that would
otherwise have been delivered by the Corporation upon that exercise of this
Option as equals the number of shares that would have been surrendered to the
Corporation if the purchase price had been paid with previously issued stock;
or
(vi) any combination of the foregoing methods of payment;
or
(vii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION:
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
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<PAGE> 7
granted hereunder shall be exercisable according to the terms of the Plan and
at such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Corporation has received:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Corporation or of a duly authorized transfer agent of the Corporation),
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Corporation shall issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for exercise under the
Option, meaning by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER: If an Optionee
ceases to be a Service Provider for cause, his or her Option shall immediately
become terminated and lapse and the Shares covered thereby shall revert to the
Plan. If an Optionee ceases to be a Service Provider, other than as a result of
having been dismissed for cause or upon the Optionee's death, the Optionee may
exercise his or her Option during the period specified by the Administrator or
within 30 days or such shorter period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of termination.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) DEATH OF OPTIONEE: If an Optionee dies while a Service Provider,
the Option may be exercised within one year after the death of Optionee, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent that the Option is vested on
the date Optionee ceased to be a Service Provider. If, at the time Optionee
ceased to be a Service Provider, the Optionee is not vested as to his or her
entire Option, the shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
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(d) BUYOUT PROVISIONS: The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS: Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed or in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE:
(a) CHANGES IN CAPITALIZATION: Subject to any required action by the
shareholders of the Corporation, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Corporation; provided, however, that conversion of any
convertible securities of the Corporation shall not be deemed to have been
"effected without receipt of consideration". Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Corporation
of Shares of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION: In the event of the proposed
dissolution or liquidation of the Corporation, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for an
Optionee to have the right to exercise his or her Option until 10 days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. To the extent
it has not been previously exercised, an Option will terminate immediately prior
to the consummation of such proposed action.
(c) MERGER OR ASSET SALE: In the event of a merger of the Corporation
with or into another corporation, or the sale of substantially all of the assets
of the Corporation, each outstanding Option shall be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
fully vest in and have
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the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option shall be
fully vested and exercisable for a period of 15 days from the date of such
notice, and the Option shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger
or sale of assets is not solely common stock of the successor corporation or
its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Option, for each Share of Optioned Stock subject to the Option, to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.
13. DATE OF GRANT: The date of grant of an Option shall be, for
all purposes, the date of which the Administrator make the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN:
(a) AMENDMENT AND TERMINATION: The Board shall amend the Plan
from time to time as required to comply with the requirements of Applicable
Laws. Additionally, in its sole discretion the Board may at any time amend,
alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL: If necessary to comply with Applicable
Laws, the Corporation shall obtain shareholder approval of any Plan amendment.
(c) EFFECT OF AMENDMENT OR TERMINATION: No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the
Corporation. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to options
granted under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES:
(a) LEGAL COMPLIANCE: Shares shall not be issued pursuant to the
exercise of an
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<PAGE> 10
Option unless the exercise of such Option and the issuance and delivery of such
Shares shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Corporation with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS: As a condition to the exercise of an
Option, the Corporation may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Corporation, such a
representation is required.
16. INABILITY TO OBTAIN AUTHORITY: The inability of the Corporation to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Corporation's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Corporation of any liability
in respect of the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained.
17. RESERVATION OF SHARES: The Corporation, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
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Exhibit 10(u)
EMPLOYMENT AGREEMENT
This Agreement to be effective July 31, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation and its wholly-owned
subsidiaries (the "Employer"), and Paul R. Arena, 7510 Colony Drive, Cumming,
Georgia 30041 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses including but not limited to internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising, (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee as a Director and Chief
Executive Officer of AIM Group, Inc., American Internet Media, Inc. and AIM
Solutions, Inc.; and Director, President and Chief Executive Officer of all
other subsidiaries (the "Company") of Employer, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Director and Chief Executive Officer
of AIM Group, Inc., American Internet Media, Inc. and AIM Solutions, Inc.; and
Director, President and Chief Executive Officer of all other subsidiaries of
Employer. Subject at all times to the direction of the Officers and Board of
Directors of Employer, Employee shall serve in these capacities to be in charge
of the overall operations of AIM Group, Inc. and subsidiaries including the
performance of such other general services and duties as the Board of Directors
shall determine. Employee shall serve in such other positions and offices of the
Employer and its affiliates, if selected, without any additional compensation.
Employee shall interrelate with outside sources and stimuli (conference,
journals, consultation, etc.) and remain aware and current of the opportunities,
both business and technical in nature particular to the field of Information
Technologies.
Employee shall have direct responsibility over the operations of AIM
Group, Inc. and subsidiaries stated in this Section 1.
To confer with the Directors and other Officers of the Corporation on
ideas and proposals to further define time opportunities and gain rationale to
propose to the Board of Directors a
<PAGE> 2
formal long term as well as immediate plan of both local, national, and
international business.
In the performance of all of the involved research and product/project
development stages and to be aware of other affiliates as well as outside
entities also involved in supporting the progress of the projects to completion.
Furthermore to be responsible for their being informed in a timely manner to
provide for the most efficient and straight forward coordination of efforts,
generally stated, to keep things going.
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote substantially all of his business time, attention, and
energies to the business of the Employer. Employee, during the term of this
Agreement, will not perform any services for any other business entity, whether
such entity conducts a business which is competitive with the business of
Employer or is engaged in any other business activity, provided, however, that
nothing herein contained shall be construed as (a) preventing Employee from
investing his personal assets in any business or businesses which do not compete
directly or indirectly with the Employer, provided such investment or
investments do not require any services on his part on the operation of the
affairs of the entity in which such investment is made and in which his
participation is solely that of an investor, (b) preventing Employee from
purchasing securities in any corporation whose securities are regularly traded,
if such purchases shall not result in his owning beneficially at any time more
than 5% of the equity securities of any corporation engaged in a business which
is competitive, directly or indirectly, to that of Employer, (c) preventing
Employee from engaging in any activities, if he receives the prior written
approval of the Board of Directors of Employer with respect to his engaging in
such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
Employee's employment hereunder shall be for a period of three one-year
terms to commence on the date hereof and end one year from date. Each one year
term shall be deemed a Contract Year.
5. COMPENSATION
(a) As full compensation ("Base Salary") for the performance of his duties
on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer, during the term hereof, shall pay
Employee a
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base salary at the rate of One-Hundred Sixty Eight Thousand Dollars
($168,000) per annum, payable semi-monthly; during the second-year term,
Employer shall pay Employee a base salary at the rate of Two-Hundred One
Thousand Dollars ($201,000) per annum, payable semi-monthly; during the
third-year term, Employer shall pay Employee a base salary at the rate of
Two-Hundred Forty One Thousand Dollars ($241,000) per annum, payable
semi-monthly. If this Agreement is renewed for a subsequent term or terms, base
salary shall be increased pursuant to; a) a minimum of Ten-Percent (10%) per
year (the "Minimum Increase"); or b) as the Board of Directors shall determine
if in excess to the Minimum Increase, payable semi-monthly beginning August 1,
2002 subject to the performance criteria as outlined in Section 1. Future salary
increases will be subject to mutual agreement in accordance with job
performance.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance including the conception of valuable or
unique inventions, processes, discoveries or improvements capable of profitable
exploitation.
(ii) Performance Bonus. Upon the proposed establishment of the
Employer's Performance Profit Sharing Plan (the "Plan"), Employee shall receive
a performance bonus of the pre-tax profit generated from the Employer
("additional compensation") as shall be determined by the Board of Directors of
AIM Group, Inc.
(iii) Incentive Stock Option. Employee shall also receive stock
options under Employer's parent AIM Group, Inc. ("AIM") 1997 Incentive Stock
Option Plan or such other Incentive Stock Option Plan then in existence (the
"ISO Plan") to purchase shares of AIM's Common Stock. The number of options to
be issued to Employee will be set forth by AIM's Board of Directors from time to
time at their sole discretion. Upon execution of this agreement the Employee
shall receive options at minimum, equal to 25,000 common shares of AIM Group,
Inc. exercisable at $4.75 per share in accordance with a 5 year exercise period
and a three year vesting period. During the second year of employment, the
Employee shall receive options provided the performance criteria is reached with
respect to target net revenues of $10 million and net profits of $1 million at a
minimum during the proceeding fiscal year of the Company, equal to one-half
percent (1/2%) of the number of outstanding common shares of AIM Group, Inc. at
the end of the first term exercisable at the price of the Common Stock on such
day of issuance, each subject the terms as more clearly defined within the ISO
Plan. In the event the Employee is terminated by Employer subsequent to a
merger, acquisition or sale transaction by the Employer, then any stock option
or warrants or similar securities held beneficially by the Employee shall
automatically become fully vested and exercisable.
(b) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
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<PAGE> 4
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer shall provide at its
sole expense to Employee, hospitalization, major medical, life insurance and
other fringe benefits on the same terms and conditions as it shall afford other
senior management employees. In addition, Employer will seek to provide key-man
term life insurance on Employee in the amount of One Million Dollars
($1,000,000) to inure Three-Quarters (75%) to the benefit of Employer and
One-Quarter (25%) to the benefit of the Employee's estate. Nothing herein shall
require Employer to obtain or maintain such coverage.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment; (ii) four (4)
weeks per annum up to seven (7) years of full-time employment; and (iii) five
(5) weeks per annum over seven (7) years of full-time employment.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided
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<PAGE> 5
in Section 5 or otherwise and without any additional compensation of any kind of
Employee.
9. NON-DISCLOSURE
(a) Employee acknowledges that the services to be rendered by him or
her to Employer are peculiar, special, unique and extraordinary, and that he may
during the term of his employment obtain confidential information of Employer's
method of doing business, secrets, customers, suppliers, formulae, and
processes, the use or revelation of which by Employee during Employee's
employment or after the termination of the employment hereunder, might, would or
could injure or cause injury to Employer's business. Accordingly, Employee
agrees to forever keep secret and inviolate any knowledge or information as to
any of Employer's secret articles, devices, formulae, processes, invention,
customers, suppliers, or discoveries and will not utilize the same for his
private benefit or indirectly for the benefit of others and will never disclose
such secret knowledge or information to anyone else. The foregoing shall not be
applicable to any information which now is or hereafter shall be in the public
domain in the context in which used provided the Employee does not release such
information without Employer's authorization.
(b) In addition, Employee agrees that all information received from principals
and agents of Employer will be held in total confidence for a period of two (2)
years following termination of employment.
10. NON-COMPETITION
In consideration of the Employee's employment with Employer, its
successors, present or future subsidiaries, or assigns during such time as may
be mutually agreeable, of the compensation provided herein, of the Employee's
Base Salary as an Employee and for other good and valuable consideration,
receipt and adequacy of which are hereby acknowledged, Employee agrees:
(a) That during the employment by Employer, Employee will not (i)
engage in a business that competes, directly or indirectly, with any of the
products, services or businesses of Employer; (ii) be or become a stockholder,
partner, owner, officer, director, employee or agent of, or consultant to, or
give financial or other assistance to, any person or entity engaged in or
considering engaging in any such business; (iii) seek in competition with the
business of Employer to procure orders from or do business with any customer of
Employer; (iv) solicit, or contact with a view to the engagement or employment
of, any person who is an employee of Employer; (v) seek to contract or engage
(in such a way as to adversely affect or interfere with the business of
Employer) any person or entity who has been contracted with or engaged to
manufacture, assemble, supply or deliver products, goods, materials or services
to Employer; or (vi) engage in or participate in any effort or act to induce any
of the customers, associates, consultants, partners, or employees of Employer to
take any action which might be disadvantageous to Employer; provided, however,
that nothing herein shall prohibit Employee from owning, as a passive investor,
in the aggregate not more than 5% of the outstanding publicly traded stock of
any corporation so engaged.
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<PAGE> 6
(b) That for a period of two years following termination of
Employee's employment, Employer shall, at its option, have the right to require
that the Employee not (i) engage in a business that competes, directly or
indirectly with any of the products sold or businesses conducted by any division
or subsidiary of Employer in which the Employee worked during the two (2) year
period prior to the termination of the Employee's employment by Employer; (ii)
be or become a stockholder, partner, owner, officer, director, employee or agent
of, or a consultant to, or give financial or other assistance to, any person or
entity engaged in or considering engaging in any such business; (iii) seek in
competition with the business of Employer to procure orders from or do business
with any customer of Employer with which Employee had contact during the two
years prior to termination of Employee's employment with Employer; (iv) solicit,
or contact with a view to the engagement or employment of, any person who is an
employee of Employer; (v) seek to contract or engage (in such a way as to
adversely affect or interfere with the business of Employer) any person or
entity who has been contracted with or engaged to manufacture, assemble, supply
or deliver products, goods, materials or services to Employer; or (vi) engage in
or participate in any effort or act to induce any of the customers, associates,
consultants, partners, or employees of Employer to take any action which might
be disadvantageous to Employer; provided, however, that nothing herein shall
prohibit Employee from owning, as a passive investor, in the aggregate not more
than 5% of the outstanding publicly traded stock of any corporation so engaged.
The foregoing restrictions shall apply to conduct and activities in any city,
county or state in the United States or in any foreign country in which any
Employer subsidiary or division in which Employee worked during the two years
prior to termination of Employee's employment with Employer sells products or
services or conducts business. Employer shall, if it exercises its option set
forth in this Section 10 (b), with respect to employment or consulting
activities, make the payments described in Section 10 (d) below to Employee. In
the event that the Employee would violate the provisions of this section
following termination of Employee's employment, Employer may, at its option,
extend the foregoing two (2) year period by the duration of the Employee's
violation.
(c) During Employee's employment by Employer and during the course
of the above-mentioned two (2) year period, Employee shall advise Employer in
writing of each and every bona fide offer subject to the restrictions set forth
in this Agreement which Employee receives and wishes to accept. Employees notice
shall be sufficiently detailed regarding the nature and scope of the offer and
the identity and business of the offeror to permit Employer to make an informed
decision whether to exercise its option hereunder, and shall include a copy of
the written offer from the offeror. Employee agrees to supplement the notice
with further information upon request by Employer.
(d) Employer shall have ten (10) business days following receipt of
Employee's written notification (and any requested supplement) to advise me of
its election, in its sole discretion, either; (i) to waive the non-competition
provisions of this Agreement, in which case Employee shall be free to accept
such offer subject to all the other terms and conditions of any agreements with
Employer relating to inventions and confidential information; or (ii) to insist
upon Employers full compliance with the provisions of this Agreement. If
Employer elects option (ii) with respect to an employment or consulting offer,
Employer shall
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<PAGE> 7
compensate Employee monthly in an amount equal to my latest monthly base pay as
an employee of the Employer in lieu of salary, benefits and all other
remuneration Employee would have received in connection with the proposed
employment or consulting for a period beginning on the date of Employees notice
as provided above and ending twenty-four (24) months from severance of
Employee's employment with Employer. The amount payable may be reduced as
provided herein. Monthly payments shall begin with the end of the month Employer
elects option (ii) above. In the event Employee receives an offer of temporary
or part-time employment or an offer to serve as consultant, the amount payable
pursuant to this Section 10(d) shall be the lesser of (a) my latest monthly base
pay or (b) the amount offered for temporary or part-time employment or
consulting. Payments for temporary employment or consulting shall only be paid
during the period for which Employee receives an offer of temporary employment
or consulting.
(e) The election by Employer of option (i) in Section 10(d) above
with respect to any one offer shall not be deemed a release or a waiver with
respect to any other offers which Employee may receive during the two-year
period of restriction. Payments pursuant to Section 10(d) above will be adjusted
if Employer exercises its option with respect to a subsequent offer of
employment or consulting which results in different payments. Payments ender
Section 10(d) will be based solely upon the most recent offer of employment or
consulting presented to Employer. In no event will compensation ender Section
10(d) exceed Employee's latest monthly base pay as an employee of Employer.
(f) If Employee accepts employment or performs services for any
business acceptable to Employer or not subject to the restriction set forth in
this Agreement during the two-year period of restriction, the amount of any
compensation to which Employee may later become entitled hereunder shall be
reduced by the amount by which compensation received for such employment or
services exceeds the base pay Employee would have received at Employer for a
period of time of the same duration as such employment or services. Employee
shall promptly advise Employer in writing upon seeking payment pursuant to
Section 10(d) of the dates such acceptable or unrestricted employment commenced
and terminated and the compensation received therefor. In such case, Employer
shall reduce future payments to Employee under Section 10(d) as provided herein.
Payments pursuant to Section 10(d) above shall also be reduced by an amount
equal to the amount paid to Employee by Employer under any other agreement, if
any, limiting Employee's right to subsequent employment.
(g) Notices shall be sent to Employer at most recent corporate
headquarters address, and to Employee at the most recent address Employer has
for Employee, or at such different address as either party shall have given
notice by certified mail, Return Receipt Requested. Refusal by either party to
accept a notice shall be deemed receipt of that notice.
(h) If any provision of this Section 10 should be adjudicated to be
invalid or unenforceable, such provision shall be deemed deleted herefrom with
respect, and only with respect, to the operation of such provision in the
particular jurisdiction in which such adjudication was made; provided, however,
that to the extent any such provision may be made
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<PAGE> 8
valid and enforceable in such jurisdiction by limitations on the scope of
activities, geographical area or time period covered, the parties agree that
such provision instead shall be modified and deemed limited to the extent, and
only to the extent, necessary to make such provisions enforceable to the fullest
extent permissible under the laws and public policies applied in such
jurisdiction, and in such limited form shall be fully enforceable. The parties
further agree to modify, re-execute and resubmit this Agreement to an
appropriate court if necessary to effect the purpose of this Agreement. This
Agreement shall be construed and enforced in accordance with the laws of the
State of Georgia.
(i) The Employee acknowledges and agrees that a breach of the
provisions of this Agreement by the Employee will cause serious and irreparable
damage to Employer that may be difficult to quantify and for which monetary
damages alone will not be adequate. Accordingly, the Employee agrees that if
Employer should bring an action to enforce its rights under this Agreement and
if Employer establishes that Employee has breached any of the Employee's
obligations under this Agreement, Employer shall be entitled to (i) temporary
and/or permanent injunctive relief without the need for posting a bond, and (ii)
reasonable attorneys' fees incurred by Employer in bringing and prosecuting any
action for breach. Nothing in this Agreement shall be construed to prohibit
Employer from pursuing any other legal or equitable remedy. Employee agrees that
in no event will Employer be liable to Employee for damages in connection with
Employer's enforcement of this Agreement in excess of the amounts specifically
provided herein. Employee agrees that Employer, or its assignee, may assign this
Agreement upon written notice to Employee.
(j) In consideration for Employees obligations under this Agreement,
Employer shall pay Employee upon termination of Employee's employment with
Employer, as supplemental severance pay in addition to all other normal
severance benefits, but in lieu of similar severance under any other
non-competition agreement, if any, with Employer, six months of Employee's
latest Base Salary as an Employee of Employer if termination occurs within the
first one-year term of Employment and three months of Employee's latest Base
Salary as an Employee of Employer thereafter.
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
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(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
This Agreement shall be construed and governed by the laws of the State of
Georgia.
Except as provided in Section 10, any controversy or claim arising under,
out of, or in connection with this Agreement or any breach or claimed breach
thereof, shall be settled by
9
<PAGE> 10
arbitration before the American Arbitration Association, in Atlanta, Georgia,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
IN WITNESS WHEREOF the parties have set their hands and seals this 31st day of
July, 1999.
On Behalf of Employer:
AIM GROUP, INC.
By:/s/ Theodore L. Lamb
------------------------------------
THEODORE L. LAMB, Director
/s/ Paul R. Arena
------------------------------------
PAUL R. ARENA, Employee
10
<PAGE> 1
Exhibit 10(v)
EMPLOYMENT AGREEMENT
This Agreement to be effective November 15, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation ("AIM Group"), and its
wholly-owned subsidiary AIM Solutions, Inc., a Delaware corporation (the
"Employer"), and L. Joseph Artime, an individual residing at 3611 Bridge Road,
Cooper City, Florida 33026 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses, including, but not limited to, internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of Product Marketing
of AIM Group; and a Vice President of Product Marketing of Employer. Subject at
all times to the direction of the Officers and Board of Directors of Employer,
Employee shall serve in these capacities with respect to the overall operations
of AIM Group and the operations of Employer, including the performance of such
other general services and duties as the Board of Directors shall determine.
Employee shall serve in such other positions and offices of the Employer and its
affiliates, if selected, without any additional compensation.
Subject to the ultimate control and responsibility of the Board of
Directors of Employer and of AIM Group as its sole stockholder, until the end of
the term hereof, as defined in Section 4 hereof, Employee shall have the right
to participate in the management of the business and affairs of the Employer and
shall participate directly in the formulation of and execution of both short-
and long- term corporate plans, including, without limitation, the hiring,
retention or termination of employees, the setting of compensation and fringe
benefits of employees other than himself, the expansion of the business and the
making of commitments for capital expenditures out of cash flow of the Employer.
AIM shall cooperate with Employee in seeking to maintain and increase the
Employer's profitability.
<PAGE> 2
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote substantially all of his business time, attention, and
energies to the business of the Employer. Employee, during the term of this
Agreement, will not perform any services for any other business entity, whether
such entity conducts a business which is competitive with the business of
Employer or is engaged in any other business activity, provided, however, that
nothing herein contained shall be construed as (a) preventing Employee from
investing his personal assets in any business or businesses which do not compete
directly or indirectly with the Employer, provided such investment or
investments do not require any services on his part on the operation of the
affairs of the entity in which such investment is made and in which his
participation is solely that of an investor, (b) preventing Employee from
purchasing securities in any corporation whose securities are regularly traded,
if such purchases shall not result in his owning beneficially at any time more
than 5% of the equity securities of any corporation engaged in a business which
is competitive, directly or indirectly, to that of Employer, or (c) preventing
Employee from engaging in any activities, if he receives the prior written
approval of the Board of Directors of Employer with respect to his engaging in
such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
(a) Term. Employee's employment hereunder shall be for a period of two
one-year terms (each one year term shall be deemed a Contract Year) to commence
on the date hereof and shall continue until the earlier of (A) the second
anniversary of the date hereof or (B) the occurrence of any of the following
events:
(i) the death or Total Disability of Employee ("Total Disability"
meaning the failure of Employee to perform his normal required services
hereunder at his office for a period of three (3) consecutive months, by
reason of Employee's mental or physical disability as so determined by a
licensed physician selected by the Employer satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto to terminate
Employee's employment hereunder;
(iii) the Employer's termination of Employee's employment hereunder,
upon thirty (30) days' prior written notice to Employee, for "Cause" when
it is reasonable to do
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<PAGE> 3
so; or
(iv) the Employee's termination of his employment hereunder for
"Good Reason."
(b) Certain Definitions.
(i) For purpose of this Agreement, "Cause" shall mean (A) the
repeated failure or refusal of Employee to follow the lawful directives of
the Employer or its designee (except due to sickness, injury or
disabilities), (B) gross inattention to duty or any other willful,
reckless or grossly negligent act (or omission to act) by Employee, which,
in the good faith judgment of the Board of Directors of the Employer,
materially injures the Employer, including the repeated failure to follow
the policies and procedures of the Employer (it being understood, however,
that neither conduct nor activities pursuant to Employee's exercise of his
good faith business judgment nor unintentional physical damage to any
property of Employer shall be a ground for such a determination by such
Board of Directors, (C) a material breach of this Agreement by Employee or
(D) the conviction of Employee of a felony crime involving moral turpitude
or an act of financial dishonesty against the Employer, after, with
respect to the matters addressed in clauses (A), (B) and (C) of this
subsection, written notice with specificity as to the conduct or
activities complained of and a reasonable opportunity is given to Employee
to cure the same.
(ii) For purposes of this Agreement "Good Reason" shall mean (A) any
assignment to Employee, without his consent, of any duties materially
different from those contemplated by, or any material limitation of the
powers of Employee in any respect not contemplated by, Section 1 hereof,
(B) any removal of Employee from or any failure to re-elect Employee to
any of the positions indicated in Section 1 hereof, except in connection
with termination of Employee's employment for Cause or Total Disability,
(C) a reduction in Employee's Base Salary, or any other material failure
by the Employer to comply with Section 5 hereof, or (D) any material
failure by the Employer to comply with subparagraph (iii) of Section 4(a)
hereof, after, with respect to the matters addressed in clauses (A), (B),
(C) and (D) of this subsection, written notice with specificity as to the
conduct or activities complained of and a reasonable opportunity is given
to Employer to cure the same.
(c) Notice of Termination. Any termination of Employee's employment by the
Employer or by Employee (other than termination for death) shall be communicated
by written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean (i) if
Employee's
3
<PAGE> 4
employment is terminated by his death, the date of his death, (ii) if
Employee's employment is terminated for Total Disability, thirty (30) days after
Notice of Termination is given (provided that Employee shall not have returned
to the performance of his duties on a full-time basis during such thirty (30)
day period), (iii) if Employee's employment is terminated for Cause, the date
specified in the Notice of Termination, and (iv) if Employee's employment is
terminated for any other reason, the date on which a Notice of Termination is
given; provided, however, that, in all instances, if within thirty (30) days
after any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
final judgment order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
(e) Exclusive Provisions. Employee may not be terminated by the Employer
and Employee may not terminate his employment hereunder except as provided in
this Section 4.
5. COMPENSATION
(a) As full compensation for the performance of his duties on behalf of
Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary ("Base
Salary") at the rate of One Hundred Twenty-Five Thousand Dollars ($125,000) per
annum, payable semi-monthly; provided, however, that in the event that the
aggregate gross revenues of Employer attributable to the combined businesses of
Client Server Solutions, Inc., and Enterprise Solutions Group, Inc.
(collectively, the "CSS Group") for the first Contract Year equal or exceed Six
Million Dollars ($6,000,000), Employee shall receive a bonus equal to
Twenty-Five Thousand Dollars ($25,000), which bonus shall be paid to Employee
within 45 days of the end of the first Contract Year, and Employer shall pay
Employee a revised Base Salary at the rate of One Hundred Fifty Thousand Dollars
($150,000) per annum for the second Contract Year. If the gross revenues of
Employer attributable to the CSS Group during the first Contract Year are less
than Six Million Dollars ($6,000,000), then Employee shall receive a bonus in an
amount to be calculated as set forth on Exhibit A hereto, which bonus shall be
paid to Employee within 45 days of the end of the second Contract Year and
Employee's Base Salary for the second Contract Year shall remain One Hundred
Twenty-Five Thousand Dollars ($125,000). If the parties agree to renew this
Agreement for a subsequent term or terms, base salary shall be increased from
its then current rate by the greater of; a) a minimum of Five-Percent (5%) per
year (the "Minimum Increase"); or b) as the Board of Directors shall determine
if in excess to the Minimum Increase, payable semi-monthly beginning January 1,
2001. Future salary increases will be subject to mutual agreement in accordance
with job performance. The Base Salary shall be payable in accordance with the
usual and customary payroll payment practices from time to time adopted by
Employer.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance, including the conception of valuable or
unique inventions, processes,
4
<PAGE> 5
discoveries or improvements capable of profitable exploitation.
(ii) Performance Bonus. Upon the proposed establishment of AIM
Group's Performance Profit Sharing Plan (the "Plan"), Employee shall receive a
performance bonus based upon the pre-tax profit generated from the Employer
("additional compensation") as shall be determined by the Board of Directors of
AIM Group. For each year of employment, in the event the Plan has not been
established by the end of that year and the CSS Group shows a "net pre-tax
profit" (as hereinafter defined) for that year, then Employee shall receive a
bonus equal to one month's salary. For purposes hereof, "net pre-tax profit"
shall mean the income of Employer attributable to the CSS Group before (a)
income and deductions not related to primary operations (i.e., gains or losses
on disposal of fixed assets and other miscellaneous unrelated items); (b) taxes
based on income; (c) discontinued operations; (d) cumulative effects of
accounting changes; and (e) extraordinary items, and shall in no event include
any allocation of corporate expenses by and between Client Server Solutions,
Inc. and CSS Financial Software Sales, Inc., and Enterprise Solutions Group,
Inc. and their direct and indirect parents (subject to adjustment), amortization
of goodwill or other intangible assets relating to the merger effected by the
Agreements and Plans of Merger of Client Server Solutions, Inc. and CSS
Financial Software Sales, Inc. with and into AIM Solutions, Inc. and of
Enterprise Solutions Group, Inc. with and into AIM Solutions, Inc. ("Mergers")
or interest expense related to the Mergers, all of which shall be determined in
accordance with generally accepted accounting principles consistently applied.
(c) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
(d) Employer shall maintain term life insurance on the life of the
Employee, to the extent that it is reasonable to do so, in the amount of
$1,000,000.00, with the Employer to receive 75% of any proceeds paid out under
the insurance policy and the Employee to have the right to designate the
recipient(s) of the remaining 25% of such proceeds. Premiums on this policy
shall be paid in the same proportion that the proceeds of the policy are to be
dispersed. Nothing herein shall require the Employer to retain such life
insurance coverage. However, the Employer intends to provide Employee with such
coverage as is afforded to other similarly situated employees of the Employer,
to the extent it is reasonable to do so.
(d) If Employee's employment shall be terminated upon the expiration of
the term of this Agreement as set forth in Section 1 hereof, the Employer shall
pay Employee his full Base Salary through the Date of Termination at the rate in
effect at that time.
(e) If Employee's employment shall be terminated by reason of his death,
the Employer shall pay to such person as Employee shall designate in a notice
filed with the Employer, or, if no such person shall be designated, to his
estate as a lump sum death benefit, his full Base Salary to the date of his
death in addition to any payments Employee's spouse,
5
<PAGE> 6
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan or life insurance policy presently maintained by the
Employer, and such payments shall fully discharge the Employer's obligations
hereunder.
(f) During any period that Employee fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Employee shall
continue to receive his full Base Salary and bonus payments until Employee's
employment is terminated for Total Disability pursuant to Section 4 hereof.
After termination due to Total Disability, Employee shall be paid 100% of his
Base Salary at the rate in effect at the time Notice of Termination is given
less, in each case, any disability payments otherwise payable by or pursuant to
plans provided by the Employer and actually paid to Employee in substantially
equal monthly installments over the remaining term hereof, and the Employer
shall have no further obligations to Employee under this Agreement.
(g) If Employee's employment shall be terminated for Cause, the Employer
shall pay Employee his full Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given and the Employer shall
have no further obligations to Employee under this Agreement.
(h) If (A) in breach of this Agreement, the Employer shall terminate
Employee's employment other than in the manner allowed pursuant to Section 4
hereof (a purported termination pursuant to Section 4 hereof which is disputed
and finally determined not to have been proper shall be a termination by the
Employer in breach of this Agreement) or (B) Employee shall terminate his
employment for Good Reason, then:
(i) the Employer shall pay Employee his full Base Salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and the amount, if any, with respect to any year then
ended which pursuant to the Plan would have accrued to Employee on the
basis of the Employer's performance but which has not yet been paid to
him; and
(ii) in lieu of any further salary payments to Employee for periods
subsequent to the Date of Termination, the Employer shall pay as severance
pay to Employee in substantially equal monthly installments until the
second anniversary of the date hereof an amount equal to the product of
(A) an amount equal to the sum of (i) the annual Base Salary at the
highest rate in effect during the twelve (12) months immediately preceding
the Date of Termination plus (ii) the highest annual bonus payments paid
or accrued pursuant to this Agreement, multiplied by (B) a fraction, the
numerator of which shall be the number of whole months remaining under the
term hereof and the denominator of which shall be twelve (12); and
(iii) all stock options granted to the Employee during the term
hereof (if any) shall become immediately exercisable and shall become
immediately vested.
(i) Employee shall not be required to mitigate the amount of any payment
provided
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<PAGE> 7
for in this Section 5 by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Section 5 be reduced by any
compensation earned by Employee as the result of employment by another employer
after the Date of Termination.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer, at its sole
expense, shall provide to Employee, hospitalization, major medical and other
fringe benefits on the same terms and conditions as it shall afford other
similarly situated employees. Nothing herein shall require Employer to maintain
such coverage.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment (including the
first year of employment hereunder); (ii) four (4) weeks per annum up to seven
(7) years of full-time employment; and (iii) five (5) weeks per annum over seven
(7) years of full-time employment.
(c) During the term of this Agreement, Employee shall have the same
right as other similarly situated employees to participate in all
profit-sharing, pension or retirement and incentive compensation or stock option
plans of Employer or its ultimate parent, if any, as are now or may hereafter be
established.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
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<PAGE> 8
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(c) Employee acknowledges that the services to be rendered by him or her to
Employer are peculiar, special, unique and extraordinary, and that he may during
the term of his employment obtain confidential information of Employer's method
of doing business, secrets, customers, suppliers, formulae, and processes, the
use or revelation of which by Employee during Employee's employment or after the
termination of the employment hereunder, might, would or could injure or cause
injury to Employer's business. Accordingly, Employee agrees to forever keep
secret and inviolate any knowledge or information as to any of Employer's secret
articles, devices, formulae, processes, invention, customers, suppliers, or
discoveries and will not utilize the same for his private benefit or indirectly
for the benefit of others and will never disclose such secret knowledge or
information to anyone else. The foregoing shall not be applicable to any
information which now is or hereafter shall be in the public domain in the
context in which used provided the Employee does not release such information
without Employer's authorization.
(d) In addition, Employee agrees that all information received from principals
and agents of Employer will be held in total confidence for a period of two (2)
years following termination of employment.
10. [Intentionally Blank]
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
8
<PAGE> 9
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. If Employee
should die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Employee's devisee,
legatee, or other designee or, if there be no such designee, to the Employee's
estate. Notwithstanding anything herein to the contrary, if Employee should die
during the term of this Agreement, Employee's devisee, legatee, other designee
or estate shall only be entitled to collect the unpaid portion of Employee's
Base Salary to and through the date of Employee's death, and in such event, any
bonus earned under this Agreement shall be pro-rated for the portion of the
Contract Year during which the Employee was alive and employed by Employer. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either
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<PAGE> 10
party shall be effective for any purpose whatsoever unless such waiver is in
writing and signed by such party.
This Agreement shall be construed and governed by the laws of the State of
Georgia.
Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach thereof, shall be settled by
arbitration before the American Arbitration Association, in Atlanta, Georgia,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
If any party to this Agreement shall bring any action, suit, counterclaim,
appeal, arbitration or mediation for any relief against the other, declaratory
or otherwise, to enforce the terms hereof or to declare rights hereunder
(collectively, an "Action"), the losing party shall pay to the prevailing party
a reasonable sum for attorneys' fees and costs (at the prevailing party's
attorneys' then prevailing rates as increased from time to time by the giving of
advance written notice by such counsel to such party) incurred in bringing and
prosecuting such Action and/or enforcing any judgment, order, ruling or award
(collectively, a "Decision") granted therein, all of which shall be deemed to
have accrued on the commencement date of such Action and shall be paid whether
or not such Action is prosecuted to a Decision. Any Decision entered in such
Action shall contain a specific provision providing for the recovery of
attorneys' fees and costs incurred in enforcing such Decision. The court or
arbitrator may fix the amount of reasonable attorneys' fees and costs on the
request of either party. For the purposes of this paragraph, attorneys' fees
shall include, without limitation, fees incurred in the following: (1)
post-judgment motions and collection actions; (2) contempt proceedings; (3)
garnishment, levy and debtor and third party examinations; (4) discovery; and
(5) bankruptcy litigation. "Prevailing party" within the meaning of this
paragraph includes, without limitation, a party who agrees to dismiss an Action
on other party's payment of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
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<PAGE> 11
IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AIM SOLUTIONS, INC.
By :/s/ Paul R. Arena
------------------------------
PAUL R. ARENA, President
/s/ L. Joseph Artime
------------------------------
L. JOSEPH ARTIME, Employee
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<PAGE> 12
EXHIBIT A
Bonus Calculation Chart
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Contract Year If gross revenues equal: Then the bonus shall be:
- - --------------------------------------------------------------------------------
<S> <C> <C>
First-year term $0 $0
- - --------------------------------------------------------------------------------
Between $0 and $6,000,000 $25,000 x (Gross Revenues/$6,000,000)
- - --------------------------------------------------------------------------------
$6,000,000 or greater $25,000
- - --------------------------------------------------------------------------------
</TABLE>
For example only, if gross revenues for the first-year term equal $1,500,000,
then the bonus to be paid to Employee shall be calculated as follows:
$25,000 x $2,250,000 = $9,375 bonus
----------
$6,000,000
<PAGE> 1
Exhibit 10(w)
EMPLOYMENT AGREEMENT
This Agreement to be effective November 15, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation ("AIM Group"), and its
wholly-owned subsidiary AIM Solutions, Inc., a Delaware corporation (the
"Employer"), and William Boynes, Jr., an individual residing at 4282 Sherwood
Oak Drive, Decatur, Georgia 30034 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses, including, but not limited to, internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of Services &
Development of AIM Group; and a Vice President of Services & Development of
Employer. Subject at all times to the direction of the Officers and Board of
Directors of Employer, Employee shall serve in these capacities with respect to
the overall operations of AIM Group and the operations of Employer, including
the performance of such other general services and duties as the Board of
Directors shall determine. Employee shall serve in such other positions and
offices of the Employer and its affiliates, if selected, without any additional
compensation.
Subject to the ultimate control and responsibility of the Board of
Directors of Employer and of AIM Group as its sole stockholder, until the end of
the term hereof, as defined in Section 4 hereof, Employee shall have the right
to participate in the management of the business and affairs of the Employer and
shall participate directly in the formulation of and execution of both short-
and long- term corporate plans, including, without limitation, the hiring,
retention or termination of employees, the setting of compensation and fringe
benefits of employees other than himself, the expansion of the business and the
making of commitments for capital expenditures out of cash flow of the Employer.
AIM shall cooperate with Employee in seeking to maintain and increase the
Employer's profitability.
<PAGE> 2
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote substantially all of his business time, attention, and
energies to the business of the Employer. Employee, during the term of this
Agreement, will not perform any services for any other business entity, whether
such entity conducts a business which is competitive with the business of
Employer or is engaged in any other business activity, provided, however, that
nothing herein contained shall be construed as (a) preventing Employee from
investing his personal assets in any business or businesses which do not compete
directly or indirectly with the Employer, provided such investment or
investments do not require any services on his part on the operation of the
affairs of the entity in which such investment is made and in which his
participation is solely that of an investor, (b) preventing Employee from
purchasing securities in any corporation whose securities are regularly traded,
if such purchases shall not result in his owning beneficially at any time more
than 5% of the equity securities of any corporation engaged in a business which
is competitive, directly or indirectly, to that of Employer, or (c) preventing
Employee from engaging in any activities, if he receives the prior written
approval of the Board of Directors of Employer with respect to his engaging in
such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
(a) Term. Employee's employment hereunder shall be for a period of two
one-year terms (each one year term shall be deemed a Contract Year) to commence
on the date hereof and shall continue until the earlier of (A) the second
anniversary of the date hereof or (B) the occurrence of any of the following
events:
(i) the death or Total Disability of Employee ("Total Disability"
meaning the failure of Employee to perform his normal required services
hereunder at his office for a period of three (3) consecutive months, by
reason of Employee's mental or physical disability as so determined by a
licensed physician selected by the Employer satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto to terminate
Employee's employment hereunder;
(iii) the Employer's termination of Employee's employment hereunder,
upon thirty (30) days' prior written notice to Employee, for "Cause" when
it is reasonable to do
2
<PAGE> 3
so; or
(iv) the Employee's termination of his employment hereunder for
"Good Reason."
(b) Certain Definitions.
(i) For purpose of this Agreement, "Cause" shall mean (A) the
repeated failure or refusal of Employee to follow the lawful directives of
the Employer or its designee (except due to sickness, injury or
disabilities), (B) gross inattention to duty or any other willful,
reckless or grossly negligent act (or omission to act) by Employee, which,
in the good faith judgment of the Board of Directors of the Employer,
materially injures the Employer, including the repeated failure to follow
the policies and procedures of the Employer (it being understood, however,
that neither conduct nor activities pursuant to Employee's exercise of his
good faith business judgment nor unintentional physical damage to any
property of Employer shall be a ground for such a determination by such
Board of Directors, (C) a material breach of this Agreement by Employee or
(D) the conviction of Employee of a felony crime involving moral turpitude
or an act of financial dishonesty against the Employer, after, with
respect to the matters addressed in clauses (A), (B) and (C) of this
subsection, written notice with specificity as to the conduct or
activities complained of and a reasonable opportunity is given to Employee
to cure the same.
(ii) For purposes of this Agreement "Good Reason" shall mean (A) any
assignment to Employee, without his consent, of any duties materially
different from those contemplated by, or any material limitation of the
powers of Employee in any respect not contemplated by, Section 1 hereof,
(B) any removal of Employee from or any failure to re-elect Employee to
any of the positions indicated in Section 1 hereof, except in connection
with termination of Employee's employment for Cause or Total Disability,
(C) a reduction in Employee's Base Salary, or any other material failure
by the Employer to comply with Section 5 hereof, or (D) any material
failure by the Employer to comply with subparagraph (iii) of Section 4(a)
hereof, after, with respect to the matters addressed in clauses (A), (B),
(C) and (D) of this subsection, written notice with specificity as to the
conduct or activities complained of and a reasonable opportunity is given
to Employer to cure the same.
(c) Notice of Termination. Any termination of Employee's employment by the
Employer or by Employee (other than termination for death) shall be communicated
by written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean (i) if
Employee's
3
<PAGE> 4
employment is terminated by his death, the date of his death, (ii) if Employee's
employment is terminated for Total Disability, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (iii) if Employee's employment is terminated for Cause, the date
specified in the Notice of Termination, and (iv) if Employee's employment is
terminated for any other reason, the date on which a Notice of Termination is
given; provided, however, that, in all instances, if within thirty (30) days
after any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
final judgment order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
(e) Exclusive Provisions. Employee may not be terminated by the Employer
and Employee may not terminate his employment hereunder except as provided in
this Section 4.
5. COMPENSATION
(a) As full compensation for the performance of his duties on behalf of
Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary ("Base
Salary") at the rate of One Hundred Twenty-Five Thousand Dollars ($125,000) per
annum, payable semi-monthly; provided, however, that in the event that the
aggregate gross revenues of Employer attributable to the combined businesses of
Client Server Solutions, Inc., and Enterprise Solutions Group, Inc.
(collectively, the "CSS Group") for the first Contract Year equal or exceed Six
Million Dollars ($6,000,000), Employee shall receive a bonus equal to
Twenty-Five Thousand Dollars ($25,000), which bonus shall be paid to Employee
within 45 days of the end of the first Contract Year, and Employer shall pay
Employee a revised Base Salary at the rate of One Hundred Fifty Thousand Dollars
($150,000) per annum for the second Contract Year. If the gross revenues of
Employer attributable to the CSS Group during the first Contract Year are less
than Six Million Dollars ($6,000,000), then Employee shall receive a bonus in an
amount to be calculated as set forth on Exhibit A hereto, which bonus shall be
paid to Employee within 45 days of the end of the second Contract Year and
Employee's Base Salary for the second Contract Year shall remain One Hundred
Twenty-Five Thousand Dollars ($125,000). If the parties agree to renew this
Agreement for a subsequent term or terms, base salary shall be increased from
its then current rate by the greater of; a) a minimum of Five-Percent (5%) per
year (the "Minimum Increase"); or b) as the Board of Directors shall determine
if in excess to the Minimum Increase, payable semi-monthly beginning January 1,
2001. Future salary increases will be subject to mutual agreement in accordance
with job performance. The Base Salary shall be payable in accordance with the
usual and customary payroll payment practices from time to time adopted by
Employer.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance, including the conception of valuable or
unique inventions, processes,
4
<PAGE> 5
discoveries or improvements capable of profitable exploitation.
(ii) Performance Bonus. Upon the proposed establishment of AIM
Group's Performance Profit Sharing Plan (the "Plan"), Employee shall receive a
performance bonus based upon the pre-tax profit generated from the Employer
("additional compensation") as shall be determined by the Board of Directors of
AIM Group. For each year of employment, in the event the Plan has not been
established by the end of that year and the CSS Group shows a "net pre-tax
profit" (as hereinafter defined) for that year, then Employee shall receive a
bonus equal to one month's salary. For purposes hereof, "net pre-tax profit"
shall mean the income of Employer attributable to the CSS Group before (a)
income and deductions not related to primary operations (i.e., gains or losses
on disposal of fixed assets and other miscellaneous unrelated items); (b) taxes
based on income; (c) discontinued operations; (d) cumulative effects of
accounting changes; and (e) extraordinary items, and shall in no event include
any allocation of corporate expenses by and between Client Server Solutions,
Inc. and CSS Financial Software Sales, Inc., and Enterprise Solutions Group,
Inc. and their direct and indirect parents (subject to adjustment), amortization
of goodwill or other intangible assets relating to the merger effected by the
Agreements and Plans of Merger of Client Server Solutions, Inc. and CSS
Financial Software Sales, Inc. with and into AIM Solutions, Inc. and of
Enterprise Solutions Group, Inc. with and into AIM Solutions, Inc. ("Mergers")
or interest expense related to the Mergers, all of which shall be determined in
accordance with generally accepted accounting principles consistently applied.
(e) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
(f) Employer shall maintain term life insurance on the life of the
Employee, to the extent that it is reasonable to do so, in the amount of
$1,000,000.00, with the Employer to receive 75% of any proceeds paid out under
the insurance policy and the Employee to have the right to designate the
recipient(s) of the remaining 25% of such proceeds. Premiums on this policy
shall be paid in the same proportion that the proceeds of the policy are to be
dispersed. Nothing herein shall require the Employer to retain such life
insurance coverage. However, the Employer intends to provide Employee with such
coverage as is afforded to other similarly situated employees of the Employer,
to the extent it is reasonable to do so.
(d) If Employee's employment shall be terminated upon the expiration of
the term of this Agreement as set forth in Section 1 hereof, the Employer shall
pay Employee his full Base Salary through the Date of Termination at the rate in
effect at that time.
(e) If Employee's employment shall be terminated by reason of his death,
the Employer shall pay to such person as Employee shall designate in a notice
filed with the Employer, or, if no such person shall be designated, to his
estate as a lump sum death benefit, his full Base Salary to the date of his
death in addition to any payments Employee's spouse,
5
<PAGE> 6
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan or life insurance policy presently maintained by the
Employer, and such payments shall fully discharge the Employer's obligations
hereunder.
(f) During any period that Employee fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Employee shall
continue to receive his full Base Salary and bonus payments until Employee's
employment is terminated for Total Disability pursuant to Section 4 hereof.
After termination due to Total Disability, Employee shall be paid 100% of his
Base Salary at the rate in effect at the time Notice of Termination is given
less, in each case, any disability payments otherwise payable by or pursuant to
plans provided by the Employer and actually paid to Employee in substantially
equal monthly installments over the remaining term hereof, and the Employer
shall have no further obligations to Employee under this Agreement.
(g) If Employee's employment shall be terminated for Cause, the Employer
shall pay Employee his full Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given and the Employer shall
have no further obligations to Employee under this Agreement.
(h) If (A) in breach of this Agreement, the Employer shall terminate
Employee's employment other than in the manner allowed pursuant to Section 4
hereof (a purported termination pursuant to Section 4 hereof which is disputed
and finally determined not to have been proper shall be a termination by the
Employer in breach of this Agreement) or (B) Employee shall terminate his
employment for Good Reason, then:
(i) the Employer shall pay Employee his full Base Salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and the amount, if any, with respect to any year then
ended which pursuant to the Plan would have accrued to Employee on the
basis of the Employer's performance but which has not yet been paid to
him; and
(ii) in lieu of any further salary payments to Employee for periods
subsequent to the Date of Termination, the Employer shall pay as severance
pay to Employee in substantially equal monthly installments until the
second anniversary of the date hereof an amount equal to the product of
(A) an amount equal to the sum of (i) the annual Base Salary at the
highest rate in effect during the twelve (12) months immediately preceding
the Date of Termination plus (ii) the highest annual bonus payments paid
or accrued pursuant to this Agreement, multiplied by (B) a fraction, the
numerator of which shall be the number of whole months remaining under the
term hereof and the denominator of which shall be twelve (12); and
(iii) all stock options granted to the Employee during the term
hereof (if any) shall become immediately exercisable and shall become
immediately vested.
(i) Employee shall not be required to mitigate the amount of any payment
provided
6
<PAGE> 7
for in this Section 5 by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Section 5 be reduced by any
compensation earned by Employee as the result of employment by another employer
after the Date of Termination.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer, at its sole
expense, shall provide to Employee, hospitalization, major medical and other
fringe benefits on the same terms and conditions as it shall afford other
similarly situated employees. . Nothing herein shall require Employer to
maintain such coverage.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment (including the
first year of employment hereunder); (ii) four (4) weeks per annum up to seven
(7) years of full-time employment; and (iii) five (5) weeks per annum over seven
(7) years of full-time employment.
(c) During the term of this Agreement, Employee shall have the same
right as other similarly situated employees to participate in all
profit-sharing, pension or retirement and incentive compensation or stock option
plans of Employer or its ultimate parent, if any, as are now or may hereafter be
established.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
7
<PAGE> 8
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(e) Employee acknowledges that the services to be rendered by him or her to
Employer are peculiar, special, unique and extraordinary, and that he may during
the term of his employment obtain confidential information of Employer's method
of doing business, secrets, customers, suppliers, formulae, and processes, the
use or revelation of which by Employee during Employee's employment or after the
termination of the employment hereunder, might, would or could injure or cause
injury to Employer's business. Accordingly, Employee agrees to forever keep
secret and inviolate any knowledge or information as to any of Employer's secret
articles, devices, formulae, processes, invention, customers, suppliers, or
discoveries and will not utilize the same for his private benefit or indirectly
for the benefit of others and will never disclose such secret knowledge or
information to anyone else. The foregoing shall not be applicable to any
information which now is or hereafter shall be in the public domain in the
context in which used provided the Employee does not release such information
without Employer's authorization.
(f) In addition, Employee agrees that all information received from principals
and agents of Employer will be held in total confidence for a period of two (2)
years following termination of employment.
10. [Intentionally Blank]
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
8
<PAGE> 9
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. If Employee
should die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Employee's devisee,
legatee, or other designee or, if there be no such designee, to the Employee's
estate. Notwithstanding anything herein to the contrary, if Employee should die
during the term of this Agreement, Employee's devisee, legatee, other designee
or estate shall only be entitled to collect the unpaid portion of Employee's
Base Salary to and through the date of Employee's death, and in such event, any
bonus earned under this Agreement shall be pro-rated for the portion of the
Contract Year during which the Employee was alive and employed by Employer. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either
9
<PAGE> 10
party shall be effective for any purpose whatsoever unless such waiver is in
writing and signed by such party.
This Agreement shall be construed and governed by the laws of the State of
Georgia.
Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach thereof, shall be settled by
arbitration before the American Arbitration Association, in Atlanta, Georgia,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
If any party to this Agreement shall bring any action, suit, counterclaim,
appeal, arbitration or mediation for any relief against the other, declaratory
or otherwise, to enforce the terms hereof or to declare rights hereunder
(collectively, an "Action"), the losing party shall pay to the prevailing party
a reasonable sum for attorneys' fees and costs (at the prevailing party's
attorneys' then prevailing rates as increased from time to time by the giving of
advance written notice by such counsel to such party) incurred in bringing and
prosecuting such Action and/or enforcing any judgment, order, ruling or award
(collectively, a "Decision") granted therein, all of which shall be deemed to
have accrued on the commencement date of such Action and shall be paid whether
or not such Action is prosecuted to a Decision. Any Decision entered in such
Action shall contain a specific provision providing for the recovery of
attorneys' fees and costs incurred in enforcing such Decision. The court or
arbitrator may fix the amount of reasonable attorneys' fees and costs on the
request of either party. For the purposes of this paragraph, attorneys' fees
shall include, without limitation, fees incurred in the following: (1)
post-judgment motions and collection actions; (2) contempt proceedings; (3)
garnishment, levy and debtor and third party examinations; (4) discovery; and
(5) bankruptcy litigation. "Prevailing party" within the meaning of this
paragraph includes, without limitation, a party who agrees to dismiss an Action
on other party's payment of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
10
<PAGE> 11
IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AIM SOLUTIONS, INC.
By: /s/ Paul R. Arena
--------------------------------
PAUL R. ARENA, President
/s/ William Boynes, Jr.
--------------------------------
WILLIAM BOYNES, JR., Employee
11
<PAGE> 12
EXHIBIT A
Bonus Calculation Chart
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Contract Year If gross revenues equal: Then the bonus shall be:
- - --------------------------------------------------------------------------------
<S> <C> <C>
First-year term $0 $0
-----------------------------------------------------------------
Between $0 and $6,000,000 $25,000 x (Gross Revenues/$6,000,000)
-----------------------------------------------------------------
$6,000,000 or greater $25,000
- - --------------------------------------------------------------------------------
</TABLE>
For example only, if gross revenues for the first-year term equal $1,500,000,
then the bonus to be paid to Employee shall be calculated as follows:
$25,000 x $2,250,000 = $9,375 bonus
----------
$6,000,000
<PAGE> 1
Exhibit 10(x)
EMPLOYMENT AGREEMENT
This Agreement to be effective November 15, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation ("AIM Group"), and its
wholly-owned subsidiary AIM Solutions, Inc., a Delaware corporation (the
"Employer"), and Michael Griffith, an individual residing at 220 Willow Bush
Trace, Roswell, Georgia 30075 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses, including, but not limited to, internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of Product Marketing
of AIM Group; and a Vice President of Product Marketing of Employer. Subject at
all times to the direction of the Officers and Board of Directors of Employer,
Employee shall serve in these capacities with respect to the overall operations
of AIM Group and the operations of Employer, including the performance of such
other general services and duties as the Board of Directors shall determine.
Employee shall serve in such other positions and offices of the Employer and its
affiliates, if selected, without any additional compensation.
Subject to the ultimate control and responsibility of the Board of
Directors of Employer and of AIM Group as its sole stockholder, until the end of
the term hereof, as defined in Section 4 hereof, Employee shall have the right
to participate in the management of the business and affairs of the Employer and
shall participate directly in the formulation of and execution of both short-
and long- term corporate plans, including, without limitation, the hiring,
retention or termination of employees, the setting of compensation and fringe
benefits of employees other than himself, the expansion of the business and the
making of commitments for capital expenditures out of cash flow of the Employer.
AIM shall cooperate with Employee in seeking to maintain and increase the
Employer's profitability.
<PAGE> 2
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote substantially all of his business time, attention, and
energies to the business of the Employer. Employee, during the term of this
Agreement, will not perform any services for any other business entity, whether
such entity conducts a business which is competitive with the business of
Employer or is engaged in any other business activity, provided, however, that
nothing herein contained shall be construed as (a) preventing Employee from
investing his personal assets in any business or businesses which do not compete
directly or indirectly with the Employer, provided such investment or
investments do not require any services on his part on the operation of the
affairs of the entity in which such investment is made and in which his
participation is solely that of an investor, (b) preventing Employee from
purchasing securities in any corporation whose securities are regularly traded,
if such purchases shall not result in his owning beneficially at any time more
than 5% of the equity securities of any corporation engaged in a business which
is competitive, directly or indirectly, to that of Employer, or (c) preventing
Employee from engaging in any activities, if he receives the prior written
approval of the Board of Directors of Employer with respect to his engaging in
such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
(a) Term. Employee's employment hereunder shall be for a period of two
one-year terms (each one year term shall be deemed a Contract Year) to commence
on the date hereof and shall continue until the earlier of (A) the second
anniversary of the date hereof or (B) the occurrence of any of the following
events:
(i) the death or Total Disability of Employee ("Total Disability"
meaning the failure of Employee to perform his normal required services
hereunder at his office for a period of three (3) consecutive months, by
reason of Employee's mental or physical disability as so determined by a
licensed physician selected by the Employer satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto to terminate
Employee's employment hereunder;
(iii) the Employer's termination of Employee's employment hereunder,
upon thirty (30) days' prior written notice to Employee, for "Cause" when
it is reasonable to do
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<PAGE> 3
so; or
(iv) the Employee's termination of his employment hereunder for
"Good Reason."
(b) Certain Definitions.
(i) For purpose of this Agreement, "Cause" shall mean (A) the
repeated failure or refusal of Employee to follow the lawful directives of
the Employer or its designee (except due to sickness, injury or
disabilities), (B) gross inattention to duty or any other willful,
reckless or grossly negligent act (or omission to act) by Employee, which,
in the good faith judgment of the Board of Directors of the Employer,
materially injures the Employer, including the repeated failure to follow
the policies and procedures of the Employer (it being understood, however,
that neither conduct nor activities pursuant to Employee's exercise of his
good faith business judgment nor unintentional physical damage to any
property of Employer shall be a ground for such a determination by such
Board of Directors, (C) a material breach of this Agreement by Employee or
(D) the conviction of Employee of a felony crime involving moral turpitude
or an act of financial dishonesty against the Employer, after, with
respect to the matters addressed in clauses (A), (B) and (C) of this
subsection, written notice with specificity as to the conduct or
activities complained of and a reasonable opportunity is given to Employee
to cure the same.
(ii) For purposes of this Agreement "Good Reason" shall mean (A) any
assignment to Employee, without his consent, of any duties materially
different from those contemplated by, or any material limitation of the
powers of Employee in any respect not contemplated by, Section 1 hereof,
(B) any removal of Employee from or any failure to re-elect Employee to
any of the positions indicated in Section 1 hereof, except in connection
with termination of Employee's employment for Cause or Total Disability,
(C) a reduction in Employee's Base Salary, or any other material failure
by the Employer to comply with Section 5 hereof, or (D) any material
failure by the Employer to comply with subparagraph (iii) of Section 4(a)
hereof, after, with respect to the matters addressed in clauses (A), (B),
(C) and (D) of this subsection, written notice with specificity as to the
conduct or activities complained of and a reasonable opportunity is given
to Employer to cure the same.
(c) Notice of Termination. Any termination of Employee's employment by the
Employer or by Employee (other than termination for death) shall be communicated
by written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean (i) if
Employee's
3
<PAGE> 4
employment is terminated by his death, the date of his death, (ii) if Employee's
employment is terminated for Total Disability, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (iii) if Employee's employment is terminated for Cause, the date
specified in the Notice of Termination, and (iv) if Employee's employment is
terminated for any other reason, the date on which a Notice of Termination is
given; provided, however, that, in all instances, if within thirty (30) days
after any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
final judgment order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
(e) Exclusive Provisions. Employee may not be terminated by the Employer
and Employee may not terminate his employment hereunder except as provided in
this Section 4.
5. COMPENSATION
(a) As full compensation for the performance of his duties on behalf of
Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary ("Base
Salary") at the rate of One Hundred Twenty-Five Thousand Dollars ($125,000) per
annum, payable semi-monthly; provided, however, that in the event that the
aggregate gross revenues of Employer attributable to the combined businesses of
Client Server Solutions, Inc., and Enterprise Solutions Group, Inc.
(collectively, the "CSS Group") for the first Contract Year equal or exceed Six
Million Dollars ($6,000,000), Employee shall receive a bonus equal to
Twenty-Five Thousand Dollars ($25,000), which bonus shall be paid to Employee
within 45 days of the end of the first Contract Year, and Employer shall pay
Employee a revised Base Salary at the rate of One Hundred Fifty Thousand Dollars
($150,000) per annum for the second Contract Year. If the gross revenues of
Employer attributable to the CSS Group during the first Contract Year are less
than Six Million Dollars ($6,000,000), then Employee shall receive a bonus in an
amount to be calculated as set forth on Exhibit A hereto, which bonus shall be
paid to Employee within 45 days of the end of the second Contract Year and
Employee's Base Salary for the second Contract Year shall remain One Hundred
Twenty-Five Thousand Dollars ($125,000). If the parties agree to renew this
Agreement for a subsequent term or terms, base salary shall be increased from
its then current rate by the greater of; a) a minimum of Five-Percent (5%) per
year (the "Minimum Increase"); or b) as the Board of Directors shall determine
if in excess to the Minimum Increase, payable semi-monthly beginning January 1,
2001. Future salary increases will be subject to mutual agreement in accordance
with job performance. The Base Salary shall be payable in accordance with the
usual and customary payroll payment practices from time to time adopted by
Employer.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance, including the conception of valuable or
unique inventions, processes,
4
<PAGE> 5
discoveries or improvements capable of profitable exploitation.
(ii) Performance Bonus. Upon the proposed establishment of AIM
Group's Performance Profit Sharing Plan (the "Plan"), Employee shall receive a
performance bonus based upon the pre-tax profit generated from the Employer
("additional compensation") as shall be determined by the Board of Directors of
AIM Group. For each year of employment, in the event the Plan has not been
established by the end of that year and the CSS Group shows a "net pre-tax
profit" (as hereinafter defined) for that year, then Employee shall receive a
bonus equal to one month's salary. For purposes hereof, "net pre-tax profit"
shall mean the income of Employer attributable to the CSS Group before (a)
income and deductions not related to primary operations (i.e., gains or losses
on disposal of fixed assets and other miscellaneous unrelated items); (b) taxes
based on income; (c) discontinued operations; (d) cumulative effects of
accounting changes; and (e) extraordinary items, and shall in no event include
any allocation of corporate expenses by and between Client Server Solutions,
Inc. and CSS Financial Software Sales, Inc., and Enterprise Solutions Group,
Inc. and their direct and indirect parents (subject to adjustment), amortization
of goodwill or other intangible assets relating to the merger effected by the
Agreements and Plans of Merger of Client Server Solutions, Inc. and CSS
Financial Software Sales, Inc. with and into AIM Solutions, Inc. and of
Enterprise Solutions Group, Inc. with and into AIM Solutions, Inc. ("Mergers")
or interest expense related to the Mergers, all of which shall be determined in
accordance with generally accepted accounting principles consistently applied.
(g) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
(h) Employer shall maintain term life insurance on the life of the
Employee, to the extent that it is reasonable to do so, in the amount of
$1,000,000.00, with the Employer to receive 75% of any proceeds paid out under
the insurance policy and the Employee to have the right to designate the
recipient(s) of the remaining 25% of such proceeds. Premiums on this policy
shall be paid in the same proportion that the proceeds of the policy are to be
dispersed. Nothing herein shall require the Employer to retain such life
insurance coverage. However, the Employer intends to provide Employee with such
coverage as is afforded to other similarly situated employees of the Employer,
to the extent it is reasonable to do so.
(d) If Employee's employment shall be terminated upon the expiration of
the term of this Agreement as set forth in Section 1 hereof, the Employer shall
pay Employee his full Base Salary through the Date of Termination at the rate in
effect at that time.
(e) If Employee's employment shall be terminated by reason of his death,
the Employer shall pay to such person as Employee shall designate in a notice
filed with the Employer, or, if no such person shall be designated, to his
estate as a lump sum death benefit, his full Base Salary to the date of his
death in addition to any payments Employee's spouse,
5
<PAGE> 6
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan or life insurance policy presently maintained by the
Employer, and such payments shall fully discharge the Employer's obligations
hereunder.
(f) During any period that Employee fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Employee shall
continue to receive his full Base Salary and bonus payments until Employee's
employment is terminated for Total Disability pursuant to Section 4 hereof.
After termination due to Total Disability, Employee shall be paid 100% of his
Base Salary at the rate in effect at the time Notice of Termination is given
less, in each case, any disability payments otherwise payable by or pursuant to
plans provided by the Employer and actually paid to Employee in substantially
equal monthly installments over the remaining term hereof, and the Employer
shall have no further obligations to Employee under this Agreement.
(g) If Employee's employment shall be terminated for Cause, the Employer
shall pay Employee his full Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given and the Employer shall
have no further obligations to Employee under this Agreement.
(h) If (A) in breach of this Agreement, the Employer shall terminate
Employee's employment other than in the manner allowed pursuant to Section 4
hereof (a purported termination pursuant to Section 4 hereof which is disputed
and finally determined not to have been proper shall be a termination by the
Employer in breach of this Agreement) or (B) Employee shall terminate his
employment for Good Reason, then:
(i) the Employer shall pay Employee his full Base Salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and the amount, if any, with respect to any year then
ended which pursuant to the Plan would have accrued to Employee on the
basis of the Employer's performance but which has not yet been paid to
him; and
(ii) in lieu of any further salary payments to Employee for periods
subsequent to the Date of Termination, the Employer shall pay as severance
pay to Employee in substantially equal monthly installments until the
second anniversary of the date hereof an amount equal to the product of
(A) an amount equal to the sum of (i) the annual Base Salary at the
highest rate in effect during the twelve (12) months immediately preceding
the Date of Termination plus (ii) the highest annual bonus payments paid
or accrued pursuant to this Agreement, multiplied by (B) a fraction, the
numerator of which shall be the number of whole months remaining under the
term hereof and the denominator of which shall be twelve (12); and
(iii) all stock options granted to the Employee during the term
hereof (if any) shall become immediately exercisable and shall become
immediately vested.
(i) Employee shall not be required to mitigate the amount of any payment
provided
6
<PAGE> 7
for in this Section 5 by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Section 5 be reduced by any
compensation earned by Employee as the result of employment by another employer
after the Date of Termination.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer, at its sole
expense, shall provide to Employee, hospitalization, major medical and other
fringe benefits on the same terms and conditions as it shall afford other
similarly situated employees. . Nothing herein shall require Employer to
maintain such coverage.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment (including the
first year of employment hereunder); (ii) four (4) weeks per annum up to seven
(7) years of full-time employment; and (iii) five (5) weeks per annum over seven
(7) years of full-time employment.
(c) During the term of this Agreement, Employee shall have the same
right as other similarly situated employees to participate in all
profit-sharing, pension or retirement and incentive compensation or stock option
plans of Employer or its ultimate parent, if any, as are now or may hereafter be
established.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
7
<PAGE> 8
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(g) Employee acknowledges that the services to be rendered by him or her to
Employer are peculiar, special, unique and extraordinary, and that he may during
the term of his employment obtain confidential information of Employer's method
of doing business, secrets, customers, suppliers, formulae, and processes, the
use or revelation of which by Employee during Employee's employment or after the
termination of the employment hereunder, might, would or could injure or cause
injury to Employer's business. Accordingly, Employee agrees to forever keep
secret and inviolate any knowledge or information as to any of Employer's secret
articles, devices, formulae, processes, invention, customers, suppliers, or
discoveries and will not utilize the same for his private benefit or indirectly
for the benefit of others and will never disclose such secret knowledge or
information to anyone else. The foregoing shall not be applicable to any
information which now is or hereafter shall be in the public domain in the
context in which used provided the Employee does not release such information
without Employer's authorization.
(h) In addition, Employee agrees that all information received from principals
and agents of Employer will be held in total confidence for a period of two (2)
years following termination of employment.
10. [Intentionally Blank]
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
8
<PAGE> 9
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. If Employee
should die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Employee's devisee,
legatee, or other designee or, if there be no such designee, to the Employee's
estate. Notwithstanding anything herein to the contrary, if Employee should die
during the term of this Agreement, Employee's devisee, legatee, other designee
or estate shall only be entitled to collect the unpaid portion of Employee's
Base Salary to and through the date of Employee's death, and in such event, any
bonus earned under this Agreement shall be pro-rated for the portion of the
Contract Year during which the Employee was alive and employed by Employer. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either
9
<PAGE> 10
party shall be effective for any purpose whatsoever unless such waiver is in
writing and signed by such party.
This Agreement shall be construed and governed by the laws of the State of
Georgia.
Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach thereof, shall be settled by
arbitration before the American Arbitration Association, in Atlanta, Georgia,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
If any party to this Agreement shall bring any action, suit, counterclaim,
appeal, arbitration or mediation for any relief against the other, declaratory
or otherwise, to enforce the terms hereof or to declare rights hereunder
(collectively, an "Action"), the losing party shall pay to the prevailing party
a reasonable sum for attorneys' fees and costs (at the prevailing party's
attorneys' then prevailing rates as increased from time to time by the giving of
advance written notice by such counsel to such party) incurred in bringing and
prosecuting such Action and/or enforcing any judgment, order, ruling or award
(collectively, a "Decision") granted therein, all of which shall be deemed to
have accrued on the commencement date of such Action and shall be paid whether
or not such Action is prosecuted to a Decision. Any Decision entered in such
Action shall contain a specific provision providing for the recovery of
attorneys' fees and costs incurred in enforcing such Decision. The court or
arbitrator may fix the amount of reasonable attorneys' fees and costs on the
request of either party. For the purposes of this paragraph, attorneys' fees
shall include, without limitation, fees incurred in the following: (1)
post-judgment motions and collection actions; (2) contempt proceedings; (3)
garnishment, levy and debtor and third party examinations; (4) discovery; and
(5) bankruptcy litigation. "Prevailing party" within the meaning of this
paragraph includes, without limitation, a party who agrees to dismiss an Action
on other party's payment of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
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<PAGE> 11
IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AIM SOLUTIONS, INC.
By: /s/ Paul R. Arena
----------------------------------
PAUL R. ARENA, President
/s/ Michael Griffith
----------------------------------
MICHAEL GRIFFITH, Employee
11
<PAGE> 12
EXHIBIT A
Bonus Calculation Chart
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Contract Year If gross revenues equal: Then the bonus shall be:
- - --------------------------------------------------------------------------------
<S> <C> <C>
First-year term $0 $0
-----------------------------------------------------------------
-----------------------------------------------------------------
Between $0 and $6,000,000 $25,000 x (Gross Revenues/$6,000,000)
-----------------------------------------------------------------
$6,000,000 or greater $25,000
-----------------------------------------------------------------
- - --------------------------------------------------------------------------------
</TABLE>
For example only, if gross revenues for the first-year term equal $1,500,000,
then the bonus to be paid to Employee shall be calculated as follows:
$25,000 x $2,250,000 = $9,375 bonus
----------
$6,000,000
<PAGE> 1
Exhibit 10(y)
EMPLOYMENT AGREEMENT
This Agreement to be effective July 30, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation, and its wholly-owned subsidiary
American Internet Media, Inc., a Delaware corporation (the "Employer"), and
Peyton H. Park, an individual residing at 315 Clifton Road, Atlanta, Georgia
30307 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses including but not limited to internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of Technical
Operations of AIM Group, Inc.; a Vice President of Technical Operations of
Cereus Bandwidth, Limited Liability Company; and a Vice President of Technical
Operations of American Internet Media, Inc. Subject at all times to the
direction of the Officers and Board of Directors of Employer, Employee shall
serve in these capacities with respect to the overall operations of AIM Group,
Inc. and the operations of American Internet Media, Inc. including the
performance of such other general services and duties as the Board of Directors
shall determine. Employee shall serve in such other positions and offices of the
Employer and its affiliates, if selected, without any additional compensation.
Employee shall interrelate with outside sources and stimuli (conference,
journals, consultation, etc.) and remain aware and current of the opportunities,
both business and technical in nature particular to the field of Information
Technologies.
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote substantially all of his business time, attention, and
energies to the business of the Employer.
<PAGE> 2
Employee, during the term of this Agreement, will not perform any services for
any other business entity, whether such entity conducts a business which is
competitive with the business of Employer or is engaged in any other business
activity, provided, however, that nothing herein contained shall be construed as
(a) preventing Employee from investing his personal assets in any business or
businesses which do not compete directly or indirectly with the Employer,
provided such investment or investments do not require any services on his part
on the operation of the affairs of the entity in which such investment is made
and in which his participation is solely that of an investor, (b) preventing
Employee from purchasing securities in any corporation whose securities are
regularly traded, if such purchases shall not result in his owning beneficially
at any time more than 5% of the equity securities of any corporation engaged in
a business which is competitive, directly or indirectly, to that of Employer, or
(c) preventing Employee from engaging in any activities, if he receives the
prior written approval of the Board of Directors of Employer with respect to his
engaging in such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
Employee's employment hereunder shall be for a period of two one-year
terms to commence on the date hereof and end on the second anniversary of the
date hereof, unless terminated earlier for Cause, as defined below. Each one
year term shall be deemed a Contract Year.
For purpose of this paragraph 4, "Cause" shall mean (i) the repeated
failure or refusal of Employee to follow the lawful directives of the Employer
or its designee (except due to sickness, injury or disabilities), (ii) gross
inattention to duty or any other willful, reckless or grossly negligent act (or
omission to act) by Employee, which, in the good faith judgment of the Employer,
materially injures the Employer, including the repeated failure to follow the
policies and procedures of the Employer, (iii) a material breach of this
Agreement by Employee or (iv) the commission by Employee of a felony or other
crime involving moral turpitude or the commission by Employee of an act of
financial dishonesty against the Employer.
5. COMPENSATION
(a) As full compensation ("Base Salary") for the performance of his duties
on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary at the
rate of Forty-Eight Thousand Dollars ($48,000) per annum, payable semi-monthly;
provided, however, that in the event the gross revenues, less discounts ("Gross
Revenues") of the former businesses of the Employee for the first-year term
equal or exceed Two Million Dollars ($2,000,000),
2
<PAGE> 3
Employee shall receive a bonus of Forty-Eight Thousand Dollars ($48,000) upon
the completion of the first-year term and Employer shall pay Employee a revised
base salary at the rate of Ninety-Six Thousand Dollars ($96,000) per annum for
the second-year term. If the Gross Revenues of the former businesses of the
Employee during the first-year term equal less than Two Million Dollars
($2,000,000), Employee shall receive a bonus in an amount to be calculated as
set forth on Exhibit A hereto and Employee's salary for the second-year term
shall be increased by the amount of such bonus, if any. In the event that Gross
Revenues for the second-year term exceed Four Million Dollars ($4,000,000) and
Gross Revenues for the second-year term exceed the actual Gross Revenues for the
first-year term by more than Two Million Dollars ($2,000,000), then in such
event, Sole Stockholder shall receive a bonus in the amount of Forty-Eight
Thousand Dollars ($48,000) upon completion of the second-year term. If this
Agreement is renewed for a subsequent term or terms, base salary shall be
increased pursuant to; a) a minimum of Five-Percent (5%) per year (the "Minimum
Increase"); or b) as the Board of Directors shall determine if in excess to the
Minimum Increase, payable semi-monthly beginning January 1, 2001 subject to the
performance criteria as outlined in Section 1. Future salary increases will be
subject to mutual agreement in accordance with job performance.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance including the conception of valuable or
unique inventions, processes, discoveries or improvements capable of profitable
exploitation.
(ii) Performance Bonus. Upon the proposed establishment of the
Company's Performance Profit Sharing Plan (the"Plan"), Employee shall receive a
performance bonus of the pre-tax profit generated from the Employer ("additional
compensation") as shall be determined by the Board of Directors of AIM Group,
Inc. For each year of employment, in the event the Plan has not been established
by the end of that year and the businesses of the Employee's former Employer,
The Reddy Group, Inc., show a net profit for that year, then Employee shall
receive a bonus equal to one month's salary.
(i) Employer shall reimburse Employee for the expenses incurred by Employee in
connection with his duties hereunder, including travel on businesses, attending
technical and business meetings, professional activities and entertainment, such
reimbursement to be made in accordance with regular Employer policy and upon
presentation by Employee of the details of, and originals of vouchers for, such
expenses.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer shall provide, at
its sole expense to Employee, hospitalization, major medical, life insurance and
other fringe benefits on the same terms and conditions as it shall afford other
similarly situated employees.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment; (ii) four (4)
weeks per annum up to seven (7) years of full-time
3
<PAGE> 4
employment; and (iii) five (5) weeks per annum over seven (7) years of full-time
employment.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(i) Employee acknowledges that the services to be rendered by him or her
to Employer are peculiar, special, unique and extraordinary, and that he may
during the term of his employment obtain confidential information of Employer's
method of doing business, secrets, customers, suppliers, formulae, and
processes, the use or revelation of which by Employee during Employee's
employment or after the termination of the employment hereunder, might, would or
could injure or cause injury to Employer's business. Accordingly, Employee
agrees to forever keep secret and inviolate any knowledge or information as to
any of Employer's secret articles, devices, formulae, processes, invention,
customers, suppliers, or discoveries and will not utilize the same for his
private benefit or indirectly for the benefit of others and will never disclose
such secret knowledge or information to anyone else. The foregoing shall not be
applicable to any information which now is or hereafter shall be in the public
domain in the context in which used
4
<PAGE> 5
provided the Employee does not release such information without Employer's
authorization.
(j) In addition, Employee agrees that all information received from
principals and agents of Employer will be held in total confidence for a period
of two (2) years following termination of employment.
10. [Intentionally Deleted]
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the
5
<PAGE> 6
subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
which are not set forth herein. No modification of this Agreement shall be valid
unless made in writing and signed by the parties hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
This Agreement shall be construed and governed by the laws of the State of
Georgia.
Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach thereof, shall be settled by
arbitration before the American Arbitration Association, in Atlanta, Georgia,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
6
<PAGE> 7
IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AMERICAN INTERNET MEDIA, INC.
By:/s/ Paul R. Arena
-------------------------------
PAUL R. ARENA, Director
/s/ Peyton H. Park
-------------------------------
PEYTON H. PARK, Employee
7
<PAGE> 8
EXHIBIT A
Bonus Calculation Chart
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Contract Year If Gross Revenues equal: Then the bonus shall be:
- - --------------------------------------------------------------------------------
<S> <C> <C>
First-year term $0 $0
-----------------------------------------------------------------
Between $0 and $2,000,000 $48,000 x (Gross Revenues/$2,000,000)
-----------------------------------------------------------------
$2,000,000 or greater $48,000
- - --------------------------------------------------------------------------------
</TABLE>
For example only, if Gross Revenues for the first-year term equal $1,500,000,
then the bonus to be paid to Employee shall be calculated as follows:
$48,000 x $1,500,000 = $36,000 bonus
----------
$2,000,000
Therefore, the Employee would receive a $36,000 bonus for the first-year term,
and the Employee's salary for the second-year term would be increased by $36,000
to $84,000 [$48,000 + $36,000].
<PAGE> 1
Exhibit 10(z)
EMPLOYMENT AGREEMENT
This Agreement to be effective July 30, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation, and its wholly-owned subsidiary
American Internet Media, Inc., a Delaware corporation (the "Employer"), and K.P.
Reddy, an individual residing at 409 Woodton Knoll, Stockbridge, Georgia 30281
(the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses including but not limited to internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of New Media Services
of AIM Group, Inc.; a Vice President of New Media Services of Cereus Bandwidth,
Limited Liability Company; and a Vice President of New Media Services of
American Internet Media, Inc. Subject at all times to the direction of the
Officers and Board of Directors of Employer, Employee shall serve in these
capacities with respect to the overall operations of AIM Group, Inc. and the
operations of American Internet Media, Inc. including the performance of such
other general services and duties as the Board of Directors shall determine.
Employee shall serve in such other positions and offices of the Employer and its
affiliates, if selected, without any additional compensation.
Employee shall interrelate with outside sources and stimuli (conference,
journals, consultation, etc.) and remain aware and current of the opportunities,
both business and technical in nature particular to the field of Information
Technologies.
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote
<PAGE> 2
substantially all of his business time, attention, and energies to the business
of the Employer. Employee, during the term of this Agreement, will not perform
any services for any other business entity, whether such entity conducts a
business which is competitive with the business of Employer or is engaged in any
other business activity, provided, however, that nothing herein contained shall
be construed as (a) preventing Employee from investing his personal assets in
any business or businesses which do not compete directly or indirectly with the
Employer, provided such investment or investments do not require any services on
his part on the operation of the affairs of the entity in which such investment
is made and in which his participation is solely that of an investor, (b)
preventing Employee from purchasing securities in any corporation whose
securities are regularly traded, if such purchases shall not result in his
owning beneficially at any time more than 5% of the equity securities of any
corporation engaged in a business which is competitive, directly or indirectly,
to that of Employer, or (c) preventing Employee from engaging in any activities,
if he receives the prior written approval of the Board of Directors of Employer
with respect to his engaging in such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
Employee's employment hereunder shall be for a period of two one-year
terms to commence on the date hereof and end on the second anniversary of the
date hereof, unless terminated earlier for Cause, as defined below. Each one
year term shall be deemed a Contract Year.
For purpose of this paragraph 4, "Cause" shall mean (i) the repeated
failure or refusal of Employee to follow the lawful directives of the Employer
or its designee (except due to sickness, injury or disabilities), (ii) gross
inattention to duty or any other willful, reckless or grossly negligent act (or
omission to act) by Employee, which, in the good faith judgment of the Employer,
materially injures the Employer, including the repeated failure to follow the
policies and procedures of the Employer, (iii) a material breach of this
Agreement by Employee or (iv) the commission by Employee of a felony or other
crime involving moral turpitude or the commission by Employee of an act of
financial dishonesty against the Employer.
5. COMPENSATION
(a) As full compensation ("Base Salary") for the performance of his duties
on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary at the
rate of Forty-Eight Thousand Dollars ($48,000) per annum, payable semi-monthly;
provided, however, that in the event the gross revenues, less discounts ("Gross
Revenues"), of the former businesses
2
<PAGE> 3
of the Employee for the first-year term equal or exceed Two Million Dollars
($2,000,000), Employee shall receive a bonus of Forty-Eight Thousand Dollars
($48,000) upon the completion of the first-year term and Employer shall pay
Employee a revised base salary at the rate of Ninety-Six Thousand Dollars
($96,000) per annum for the second-year term. If the Gross Revenues of the
former businesses of the Employee during the first-year term equal less than Two
Million Dollars ($2,000,000), Employee shall receive a bonus in an amount to be
calculated as set forth on Exhibit A hereto and Employee's salary for the
second-year term shall be increased by the amount of such bonus, if any. In the
event that Gross Revenues for the second-year term exceed Four Million Dollars
($4,000,000) and Gross Revenues for the second-year term exceed the actual Gross
Revenues for the first-year term by more than Two Million Dollars ($2,000,000),
then in such event, Sole Stockholder shall receive a bonus in the amount of
Forty-Eight Thousand Dollars ($48,000) upon completion of the second-year term.
If this Agreement is renewed for a subsequent term or terms, base salary shall
be increased pursuant to; a) a minimum of Five-Percent (5%) per year (the
"Minimum Increase"); or b) as the Board of Directors shall determine if in
excess to the Minimum Increase, payable semi-monthly beginning January 1, 2001
subject to the performance criteria as outlined in Section 1. Future salary
increases will be subject to mutual agreement in accordance with job
performance.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance including the conception of valuable or
unique inventions, processes, discoveries or improvements capable of profitable
exploitation.
(ii) Performance Bonus. Upon the proposed establishment of the
Company's Performance Profit Sharing Plan (the"Plan"), Employee shall receive a
performance bonus of the pre-tax profit generated from the Employer ("additional
compensation") as shall be determined by the Board of Directors of AIM Group,
Inc. For each year of employment, in the event the Plan has not been established
by the end of that year and the businesses of the Employee's former Employer,
The Reddy Group, Inc., show a net profit for that year, then Employee shall
receive a bonus equal to one month's salary.
(j) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer shall provide, at
its sole expense to Employee, hospitalization, major medical, life insurance and
other fringe benefits on the same terms and conditions as it shall afford other
similarly situated employees.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment; (ii) four (4)
weeks per annum up to seven (7) years of full-time
3
<PAGE> 4
employment; and (iii) five (5) weeks per annum over seven (7) years of
full-time employment.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(k) Employee acknowledges that the services to be rendered by him or her to
Employer are peculiar, special, unique and extraordinary, and that he may during
the term of his employment obtain confidential information of Employer's method
of doing business, secrets, customers, suppliers, formulae, and processes, the
use or revelation of which by Employee during Employee's employment or after the
termination of the employment hereunder, might, would or could injure or cause
injury to Employer's business. Accordingly, Employee agrees to forever keep
secret and inviolate any knowledge or information as to any of Employer's secret
articles, devices, formulae, processes, invention, customers, suppliers, or
discoveries and will not utilize the same for his private benefit or indirectly
for the benefit of others and will never disclose such secret knowledge or
information to anyone else. The foregoing shall not be applicable to any
4
<PAGE> 5
information which now is or hereafter shall be in the public domain in the
context in which used provided the Employee does not release such information
without Employer's authorization.
(l) In addition, Employee agrees that all information received from principals
and agents of Employer will be held in total confidence for a period of two (2)
years following termination of employment.
10. [Intentionally Deleted]
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
5
<PAGE> 6
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
This Agreement shall be construed and governed by the laws of the State of
Georgia.
Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach thereof, shall be settled by
arbitration before the American Arbitration Association, in Atlanta, Georgia,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
6
<PAGE> 7
IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AMERICAN INTERNET MEDIA, INC.
By:/s/ Paul R. Arena
----------------------------------
PAUL R. ARENA, Director
/s/ K. P.Reddy
----------------------------------
K.P. REDDY, Employee
7
<PAGE> 8
EXHIBIT A
Bonus Calculation Chart
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Contract Year If Gross Revenues equal: Then the bonus shall be:
- - --------------------------------------------------------------------------------
<S> <C> <C>
- - ---------------------------------------------------------------------------------
First-year term $0 $0
-----------------------------------------------------------------
Between $0 and $2,000,000 $48,000 x (Gross Revenues/$2,000,000)
-----------------------------------------------------------------
$2,000,000 or greater $48,000
- - --------------------------------------------------------------------------------
</TABLE>
For example only, if Gross Revenues for the first-year term equal $1,500,000,
then the bonus to be paid to Employee shall be calculated as follows:
$48,000 x $1,500,000 = $36,000 bonus
----------
$2,000,000
Therefore, the Employee would receive a $36,000 bonus for the first-year term,
and the Employee's salary for the second-year term would be increased by $36,000
to $84,000 [$48,000 + $36,000].
<PAGE> 1
Exhibit 10(aa)
EMPLOYMENT AGREEMENT
This Agreement to be effective July 30, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation, and its wholly-owned subsidiary
AIM Solutions, Inc., a Delaware corporation (the "Employer"), and Ronald
Roswell, Sr., an individual residing at 7809 St. Andrews Road, Lake Worth,
Florida 33467 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses including but not limited to internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of Business
Development of AIM Group, Inc.; and a Vice President of Business Development of
AIM Solutions, Inc. Subject at all times to the direction of the Officers and
Board of Directors of Employer, Employee shall serve in these capacities with
respect to the overall operations of AIM Group, Inc. and the operations of AIM
Solutions, Inc. including the performance of such other general services and
duties as the Board of Directors shall determine. Employee shall serve in such
other positions and offices of the Employer and its affiliates, if selected,
without any additional compensation.
Employee shall interrelate with outside sources and stimuli (conference,
journals, consultation, etc.) and remain aware and current of the opportunities,
both business and technical in nature particular to the field of Information
Technologies.
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote substantially all of his business time, attention, and
energies to the business of the Employer.
<PAGE> 2
Employee, during the term of this Agreement, will not perform any services for
any other business entity, whether such entity conducts a business which is
competitive with the business of Employer or is engaged in any other business
activity, provided, however, that nothing herein contained shall be construed as
(a) preventing Employee from investing his personal assets in any business or
businesses which do not compete directly or indirectly with the Employer,
provided such investment or investments do not require any services on his part
on the operation of the affairs of the entity in which such investment is made
and in which his participation is solely that of an investor, (b) preventing
Employee from purchasing securities in any corporation whose securities are
regularly traded, if such purchases shall not result in his owning beneficially
at any time more than 5% of the equity securities of any corporation engaged in
a business which is competitive, directly or indirectly, to that of Employer, or
(c) preventing Employee from engaging in any activities, if he receives the
prior written approval of the Board of Directors of Employer with respect to his
engaging in such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
Employee's employment hereunder shall be for a period of one year to
commence on the date hereof and end on the first anniversary of the date hereof,
unless terminated earlier for Cause, as defined below. The one year term shall
be deemed a Contract Year.
For purpose of this paragraph 4, "Cause" shall mean (i) the repeated
failure or refusal of Employee to follow the lawful directives of the Employer
or its designee (except due to sickness, injury or disabilities), (ii) gross
inattention to duty or any other willful, reckless or grossly negligent act (or
omission to act) by Employee, which, in the good faith judgment of the Employer,
materially injures the Employer, including the repeated failure to follow the
policies and procedures of the Employer, (iii) a material breach of this
Agreement by Employee or (iv) the conviction of Employee of a felony crime
involving moral turpitude or an act of financial dishonesty against the
Employer, after, with respect to the matters addressed in Clauses (i), (ii) and
(iii) of this section, written notice with specificity as to the conduct or
activities complained of and a reasonable opportunity is given to Employee to
cure the same.
5. COMPENSATION
(a) As full compensation ("Base Salary") for the performance of his duties
on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary at the
rate of Ninety-Six Thousand Dollars ($96,000) per annum, payable semi-monthly.
If this Agreement is renewed for a subsequent term or terms, base salary shall
be increased pursuant to; a) a
2
<PAGE> 3
minimum of Five-Percent (5%) per year (the "Minimum Increase"); or b) as the
Board of Directors shall determine if in excess to the Minimum Increase, payable
semi-monthly beginning January 1, 2001 subject to the performance criteria as
outlined in Section 1. Future salary increases will be subject to mutual
agreement in accordance with job performance.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance including the conception of valuable or
unique inventions, processes, discoveries or improvements capable of profitable
exploitation.
(ii) Performance Bonus. Upon the proposed establishment of the
Company's Performance Profit Sharing Plan (the"Plan"), Employee shall receive a
performance bonus of the pre-tax profit generated from the Employer ("additional
compensation") as shall be determined by the Board of Directors of AIM Group,
Inc. For each year of employment, in the event the Plan has not been established
by the end of that year and the combined businesses of the Employee's former
Employer, Enterprise Solutions Group, Inc., and of Client Server Solutions, Inc.
and CSS Financial Software Sales, Inc., collectively another acquiree of the
Employer, show a net profit for that year, then Employee shall receive a bonus
equal to one month's salary.
(k) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer shall provide, at
its sole expense, to Employee, hospitalization, major medical, life insurance
and other fringe benefits on the same terms and conditions as it shall afford
other similarly situated employees.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid vacation earned for each twelve month period is: (i) three (3)
weeks per annum up to three (3) years of full-time employment; (ii) four (4)
weeks per annum up to seven (7) years of full-time employment; and (iii) five
(5) weeks per annum over seven (7) years of full-time employment.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's
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employment by Employer, whenever or wherever made, developed or conceived, and
whether or not during business hours, which constitutes an improvement, on those
heretofore, now or at any during Employee's employment, developed, manufactured
or used by Employer in connection with the manufacture, process or marketing of
any product heretofore or now or hereafter developed or distributed by Employer,
or any services to be performed by Employer or of any product which shall or
could reasonable be manufactured or developed or marketed in the reasonable
expansion of Employer's business, shall be and continue to remain Employer's
exclusive property, without any added compensation or any reimbursement for
expenses to Employee, and upon the conception of any and every such invention,
process, discovery or improvement and without waiting to perfect or complete it,
Employee promises and agrees that Employee will immediately disclose it to
Employer and to no one else and thenceforth will treat it as the property and
secret of Employer.
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(m) Employee acknowledges that the services to be rendered by him or her
to Employer are peculiar, special, unique and extraordinary, and that he may
during the term of his employment obtain confidential information of Employer's
method of doing business, secrets, customers, suppliers, formulae, and
processes, the use or revelation of which by Employee during Employee's
employment or after the termination of the employment hereunder, might, would or
could injure or cause injury to Employer's business. Accordingly, Employee
agrees to forever keep secret and inviolate any knowledge or information as to
any of Employer's secret articles, devices, formulae, processes, invention,
customers, suppliers, or discoveries and will not utilize the same for his
private benefit or indirectly for the benefit of others and will never disclose
such secret knowledge or information to anyone else. The foregoing shall not be
applicable to any information which now is or hereafter shall be in the public
domain in the context in which used provided the Employee does not release such
information without Employer's authorization.
(n) In addition, Employee agrees that all information received from
principals and agents of Employer will be held in total confidence for a period
of two (2) years following termination of employment.
10. NON-COMPETITION
In consideration of the Employee's employment with Employer, its
successors, present or future subsidiaries, or assigns during such time as may
be mutually agreeable, of the
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compensation provided herein, of the Employee's Base Salary as an Employee and
for other good and valuable consideration, receipt and adequacy of which are
hereby acknowledged, Employee agrees:
(a) That during the employment by Employer, Employee will not (i)
engage in a business that competes, directly or indirectly, with any of the
products, services or businesses of Employer; (ii) be or become a stockholder,
partner, owner, officer, director, employee or agent of, or consultant to, or
give financial or other assistance to, any person or entity engaged in or
considering engaging in any such business; (iii) seek in competition with the
business of Employer to procure orders from or do business with any customer of
Employer; (iv) solicit, or contact with a view to the engagement or employment
of, any person who is an employee of Employer; or (v) engage in or participate
in any effort or act to induce any of the customers, associates, consultants,
partners, or employees of Employer to take any action which might be
disadvantageous to Employer; provided, however, that nothing herein shall
prohibit Employee from owning, as a passive investor, in the aggregate not more
than 5% of the outstanding publicly traded stock of any corporation so engaged.
(c) That for a period of two years following termination of
Employee's employment, Employer shall, at its option, have the right to require
that the Employee not (i) seek in competition with the business of Employer to
procure orders from or do business with any customer of Employer with which
Employee had contact during the two years prior to termination of Employee's
employment with Employer; (ii) solicit, or contact with a view to the engagement
or employment of, any person who is an employee of Employer; (iii) seek to
contract or engage (in such a way as to adversely affect or interfere with the
business of Employer) any person or entity who has been contracted with or
engaged to manufacture, assemble, supply or deliver products, goods, materials
or services to Employer; or (iv) engage in or participate in any effort or act
to induce any of the customers, associates, consultants, partners, or employees
of Employer to take any action which might be disadvantageous to Employer. The
foregoing restrictions shall apply to conduct and activities in any city, county
or state in the United States or in any foreign country in which any Employer
subsidiary or division in which Employee worked during the two years prior to
termination of Employee's employment with Employer sells products or services or
conducts business. Employer shall, if it exercises its option set forth in this
Section 10 (b), with respect to employment or consulting activities, make the
payments described in Section 10 (d) below to Employee. In the event that the
Employee would violate the provisions of this section following termination of
Employee's employment, Employer may, at its option, extend the foregoing two (2)
year period by the duration of the Employee's violation.
(c) During Employee's employment by Employer and during the course
of the above-mentioned two (2) year period, Employee shall advise Employer in
writing of each and every bona fide offer subject to the restrictions set forth
in this Agreement which Employee receives and wishes to accept. Employees notice
shall be sufficiently detailed regarding the nature and scope of the offer and
the identity and business of the offeror to permit Employer to make an informed
decision whether to exercise its option hereunder, and shall include a copy of
the written offer from the offeror. Employee agrees to supplement the notice
with further information upon request by Employer.
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(d) Employer shall have ten (10) business days following receipt of
Employee's written notification (and any requested supplement) to advise
Employee of its election, in its sole discretion, either; (i) to waive the
non-competition provisions of this Agreement, in which case Employee shall be
free to accept such offer subject to all the other terms and conditions of any
agreements with Employer relating to inventions and confidential information; or
(ii) to insist upon Employers full compliance with the provisions of this
Agreement. If Employer elects option (ii) with respect to an employment or
consulting offer, Employer shall compensate Employee monthly in an amount equal
to Employee's latest monthly base pay as an employee of the Employer in lieu of
salary, benefits and all other remuneration Employee would have received in
connection with the proposed employment or consulting for a period beginning on
the date of Employees notice as provided above and ending twenty-four (24)
months from severance of Employee's employment with Employer. The amount payable
may be reduced as provided herein. Monthly payments shall begin with the end of
the month Employer elects option (ii) above. In the event Employee receives an
offer of temporary or part-time employment or an offer to serve as consultant,
the amount payable pursuant to this Section 10(d) shall be the lesser of (a)
Employee's latest monthly base pay or (b) the amount offered for temporary or
part-time employment or consulting. Payments for temporary employment or
consulting shall only be paid during the period for which Employee receives an
offer of temporary employment or consulting.
(e) The election by Employer of option (i) in Section 10(d) above
with respect to any one offer shall not be deemed a release or a waiver with
respect to any other offers which Employee may receive during the two-year
period of restriction. Payments pursuant to Section 10(d) above will be adjusted
if Employer exercises its option with respect to a subsequent offer of
employment or consulting which results in different payments. Payments ender
Section 10(d) will be based solely upon the most recent offer of employment or
consulting presented to Employer. In no event will compensation ender Section
10(d) exceed Employee's latest monthly base pay as an employee of Employer.
(f) If Employee accepts employment or performs services for any
business acceptable to Employer or not subject to the restriction set forth in
this Agreement during the two-year period of restriction, the amount of any
compensation to which Employee may later become entitled hereunder shall be
reduced by the amount by which compensation received for such employment or
services exceeds the base pay Employee would have received at Employer for a
period of time of the same duration as such employment or services. Employee
shall promptly advise Employer in writing upon seeking payment pursuant to
Section 10(d) of the dates such acceptable or unrestricted employment commenced
and terminated and the compensation received therefor. In such case, Employer
shall reduce future payments to Employee under Section 10(d) as provided herein.
Payments pursuant to Section 10(d) above shall also be reduced by an amount
equal to the amount paid to Employee by Employer under any other agreement, if
any, limiting Employee's right to subsequent employment.
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(g) Notices shall be sent to Employer at most recent corporate
headquarters address, and to Employee at the most recent address Employer has
for Employee, or at such different address as either party shall have given
notice by certified mail, Return Receipt Requested. Refusal by either party to
accept a notice shall be deemed receipt of that notice.
(h) If any provision of this Section 10 should be adjudicated to be
invalid or unenforceable, such provision shall be deemed deleted herefrom with
respect, and only with respect, to the operation of such provision in the
particular jurisdiction in which such adjudication was made; provided, however,
that to the extent any such provision may be made valid and enforceable in such
jurisdiction by limitations on the scope of activities, geographical area or
time period covered, the parties agree that such provision instead shall be
modified and deemed limited to the extent, and only to the extent, necessary to
make such provisions enforceable to the fullest extent permissible under the
laws and public policies applied in such jurisdiction, and in such limited form
shall be fully enforceable. The parties further agree to modify, re-execute and
resubmit this Agreement to an appropriate court if necessary to effect the
purpose of this Agreement. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida.
(i) The Employee acknowledges and agrees that a breach of the
provisions of this Agreement by the Employee will cause serious and irreparable
damage to Employer that may be difficult to quantify and for which monetary
damages alone will not be adequate. Accordingly, the Employee agrees that if
Employer should bring an action to enforce its rights under this Agreement and
if Employer establishes that Employee has breached any of the Employee's
obligations under this Agreement, Employer shall be entitled to (i) temporary
and/or permanent injunctive relief without the need for posting a bond, and (ii)
reasonable attorneys' fees incurred by Employer in bringing and prosecuting any
action for breach. Nothing in this Agreement shall be construed to prohibit
Employer from pursuing any other legal or equitable remedy. Employee agrees that
in no event will Employer be liable to Employee for damages in connection with
Employer's enforcement of this Agreement in excess of the amounts specifically
provided herein. Employee agrees that Employer, or its assignee, may assign this
Agreement upon written notice to Employee.
(j) In consideration for Employees obligations under this Agreement,
Employer shall pay Employee upon termination of Employee's employment with
Employer, as supplemental severance pay in addition to all other normal
severance benefits, but in lieu of similar severance under any other
non-competition agreement, if any, with Employer, one month of Employee's latest
Base Salary as an Employee of Employer.
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining
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Employee from doing or continuing to do or performing any such acts; and
Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by
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such party.
This Agreement shall be construed and governed by the laws of the State of
Florida.
Except as provided in Section 10, any controversy or claim arising under,
out of, or in connection with this Agreement or any breach or claimed breach
thereof, shall be settled by arbitration before the American Arbitration
Association, in _____, _____, before a panel of three arbitrators, in accordance
with its rules, and judgement upon any award rendered may be entered in any
court having jurisdiction thereof.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
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IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AIM SOLUTIONS, INC.
By:/s/ Paul R. Arena
------------------------------
PAUL R. ARENA, Director
/s/ Ronald Roswell, Sr.
------------------------------
RONALD ROSWELL, SR.
Employee
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EXHIBIT 10(bb)
EMPLOYMENT AGREEMENT
This Agreement to be effective July 30, 1999 is entered into by and
between AIM Group, Inc., a Delaware corporation, and its wholly-owned subsidiary
AIM Solutions, Inc., a Delaware corporation (the "Employer"), and Ronald
Roswell, Jr., an individual residing at 7621 St. Andrews Road, Lake Worth,
Florida 33467 (the "Employee").
WITNESSETH:
WHEREAS, Employer intends to engage in the information technology and
related businesses including but not limited to internet services, software
development and sales, world wide web site development and sales, point of sales
technology and media and advertising (the "Information Technologies"); and to
conduct research, experimentation, development, and exploitation of these
related technologies and to engage in other businesses; and
WHEREAS, Employer desires to employ Employee, and Employee desires to be
employed by Employer in such capacities pursuant to the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT: DUTIES AND RESPONSIBILITIES
Employer hereby employs Employee as a Vice President of Product Marketing
of AIM Group, Inc.; and a Vice President of Product Marketing of AIM Solutions,
Inc. Subject at all times to the direction of the Officers and Board of
Directors of Employer, Employee shall serve in these capacities with respect to
the overall operations of AIM Group, Inc. and the operations of AIM Solutions,
Inc. including the performance of such other general services and duties as the
Board of Directors shall determine. Employee shall serve in such other positions
and offices of the Employer and its affiliates, if selected, without any
additional compensation.
Employee shall interrelate with outside sources and stimuli (conference,
journals, consultation, etc.) and remain aware and current of the opportunities,
both business and technical in nature particular to the field of Information
Technologies.
2. FULL TIME EMPLOYMENT
Employee hereby accepts employment by Employer upon the terms and
conditions contained herein and agrees that during the term of this Agreement,
the Employee shall devote
<PAGE> 2
substantially all of his business time, attention, and energies to the business
of the Employer. Employee, during the term of this Agreement, will not perform
any services for any other business entity, whether such entity conducts a
business which is competitive with the business of Employer or is engaged in any
other business activity, provided, however, that nothing herein contained shall
be construed as (a) preventing Employee from investing his personal assets in
any business or businesses which do not compete directly or indirectly with the
Employer, provided such investment or investments do not require any services on
his part on the operation of the affairs of the entity in which such investment
is made and in which his participation is solely that of an investor, (b)
preventing Employee from purchasing securities in any corporation whose
securities are regularly traded, if such purchases shall not result in his
owning beneficially at any time more than 5% of the equity securities of any
corporation engaged in a business which is competitive, directly or indirectly,
to that of Employer, or (c) preventing Employee from engaging in any activities,
if he receives the prior written approval of the Board of Directors of Employer
with respect to his engaging in such activities.
3. RECORDS
In connection with his engagement hereunder, Employee shall accurately
maintain and preserve all notes and records generated by Employer which relate
to Employer and its business and shall make all such reports, written if
required, as Employer may reasonably require.
4. TERM
Employee's employment hereunder shall be for a period of one two-year term
to commence on the date hereof and end on the second anniversary of the date
hereof, unless terminated earlier for Cause, as defined below. Each year shall
be deemed a Contract Year.
For purpose of this paragraph 4, "Cause" shall mean (i) the repeated
failure or refusal of Employee to follow the lawful directives of the Employer
or its designee (except due to sickness, injury or disabilities), (ii) gross
inattention to duty or any other willful, reckless or grossly negligent act (or
omission to act) by Employee, which, in the good faith judgment of the Employer,
materially injures the Employer, including the repeated failure to follow the
policies and procedures of the Employer, (iii) a material breach of this
Agreement by Employee or (iv) the conviction of Employee of a felony crime
involving moral turpitude or an act of financial dishonesty against the
Employer, after, with respect to the matters addressed in Clauses (i), (ii) and
(iii) of this section, written notice with specificity as to the conduct or
activities complained of and a reasonable opportunity is given to Employee to
cure the same.
5. COMPENSATION
(a) As full compensation ("Base Salary") for the performance of his
duties on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer shall pay Employee a base salary at the
rate of One Hundred Twenty-Five Thousand Dollars ($125,000) per annum, payable
semi-monthly;
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provided, however, that in the event the gross revenues of the former businesses
of the Employee and of Client Server Solutions, Inc. and CSS Financial Software
Sales, Inc., collectively another acquiree of Employer, for the first-year term
equal or exceed Six Million Dollars ($6,000,000), Employee shall receive a bonus
of Twenty-Five Thousand Dollars ($25,000) upon the completion of the first-year
term and Employer shall pay Employee a revised base salary at the rate of One
Hundred Fifty Thousand Dollars ($150,000) per annum for the second-year term. If
the combined gross revenues of the former businesses of the Employee and of
Client Server Solutions, Inc. and CSS Financial Software Sales, Inc.,
collectively another acquiree of Employer, during the first-year term equal less
than Six Million Dollars ($6,000,000), Employee shall receive a bonus in an
amount to be calculated as set forth on Exhibit A hereto and Employee's salary
for the second-year term shall remain One Hundred Twenty-Five Thousand Dollars
($125,000). If this Agreement is renewed for a subsequent term or terms, base
salary shall be increased pursuant to; a) a minimum of Five-Percent (5%) per
year (the "Minimum Increase"); or b) as the Board of Directors shall determine
if in excess to the Minimum Increase, payable semi-monthly beginning January 1,
2001 subject to the performance criteria as outlined in Section 1. Future salary
increases will be subject to mutual agreement in accordance with job
performance.
Directors may consider other meritorious adjustments in compensation or a
bonus under appropriate circumstance including the conception of valuable or
unique inventions, processes, discoveries or improvements capable of profitable
exploitation.
(ii) Performance Bonus. Upon the proposed establishment of the
Company's Performance Profit Sharing Plan (the "Plan"), Employee shall receive a
performance bonus of the pre-tax profit generated from the Employer ("additional
compensation") as shall be determined by the Board of Directors of AIM Group,
Inc. For each year of employment, in the event the Plan has not been established
by the end of that year and the combined businesses of the Employee's former
Employer, Enterprise Solutions Group, Inc., and of Client Server Solutions, Inc.
and CSS Financial Software Sales, Inc., collectively another acquiree of the
Employer, show a net profit for that year, then Employee shall receive a bonus
equal to one month's salary.
(l) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder, including travel on
businesses, attending technical and business meetings, professional activities
and entertainment, such reimbursement to be made in accordance with regular
Employer policy and upon presentation by Employee of the details of, and
originals of vouchers for, such expenses.
6. FRINGE BENEFITS
(a) During the term of this Agreement, Employer shall provide, at
its sole expense, to Employee, hospitalization, major medical, life insurance
and other fringe benefits on the same terms and conditions as it shall afford
other similarly situated employees.
(b) During the term of this Agreement, Employer shall provide paid
vacation to Employee which accrues from the date of execution of this Agreement.
The annual paid
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vacation earned for each twelve month period is: (i) three (3) weeks per annum
up to three (3) years of full-time employment; (ii) four (4) weeks per annum up
to seven (7) years of full-time employment; and (iii) five (5) weeks per annum
over seven (7) years of full-time employment.
7. SUBSIDIARIES
For the purposes of this Agreement all references to business products,
services and sales of Employer shall include those of Employer's affiliates.
8. INVENTORIES: SHOP RIGHTS
All systems, inventions, discoveries, apparatus, techniques, methods,
know-how, formulae or improvements made, developed or conceived by Employee
during Employee's employment by Employer, whenever or wherever made, developed
or conceived, and whether or not during business hours, which constitutes an
improvement, on those heretofore, now or at any during Employee's employment,
developed, manufactured or used by Employer in connection with the manufacture,
process or marketing of any product heretofore or now or hereafter developed or
distributed by Employer, or any services to be performed by Employer or of any
product which shall or could reasonable be manufactured or developed or marketed
in the reasonable expansion of Employer's business, shall be and continue to
remain Employer's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and every
such invention, process, discovery or improvement and without waiting to perfect
or complete it, Employee promises and agrees that Employee will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer.
Employee will also execute any instruments requested from time to time by
Employer to vest in it complete title and ownership to such invention, discovery
or improvement and will, at the request of Employer do such acts and execute
such instrument as Employer may require but at Employer's expense to obtain
Letters of Patent, trademarks or copyrights in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in Employer, all without any reimbursement for expenses
(except as provided in Section 5 or otherwise) and without any additional
compensation of any kind of Employee.
9. NON-DISCLOSURE
(o) Employee acknowledges that the services to be rendered by him
or her to Employer are peculiar, special, unique and extraordinary, and that he
may during the term of his employment obtain confidential information of
Employer's method of doing business, secrets, customers, suppliers, formulae,
and processes, the use or revelation of which by Employee during Employee's
employment or after the termination of the employment hereunder, might, would or
could injure or cause injury to Employer's business. Accordingly, Employee
agrees to forever keep secret and inviolate any knowledge or information as to
any of Employer's secret articles, devices, formulae, processes, invention,
customers, suppliers, or discoveries and will not utilize the same for his
private benefit or indirectly for the benefit of others and will never disclose
such
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<PAGE> 5
secret knowledge or information to anyone else. The foregoing shall not be
applicable to any information which now is or hereafter shall be in the public
domain in the context in which used provided the Employee does not release such
information without Employer's authorization.
(p) In addition, Employee agrees that all information received
from principals and agents of Employer will be held in total confidence for a
period of two (2) years following termination of employment.
10. [Intentionally Deleted]
11. INJUNCTION
(a) Should Employee at any time reveal or threaten to reveal any
such secret knowledge or information, or during any restricted period, engage or
threaten to engage in any business in competition with that of Employer, or
perform or threaten to perform any services for anyone engaged in such
competitive business, or in any way violate or threaten to violate any of the
provisions of this Agreement, Employer shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts;
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is brought in equity to enforce
the provisions of this Paragraph, Employee shall not argue as a defense that
there is an adequate remedy at law, nor shall Employer be prevented from seeking
any other remedies which may be available.
(c) The existence of any claim or cause of action by Employer
against Employee, or by Employee against Employer, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of the foregoing restrictive covenants but shall be litigated
separately.
12. PRIOR AGREEMENTS
Employee represents that Employee is not now under any written agreement,
nor has he previously, at any time entered into any written agreement with any
person, firm or corporation, which would or could in any manner preclude or
prevent Employee from giving freely and Employer receiving the exclusive benefit
of his services.
13. MISCELLANEOUS
If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
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<PAGE> 6
dependent upon any covenant or provision so expressed herein.
All prior agreements with respect to the subject matter hereof between the
parties are hereby cancelled. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
The rights, benefits, duties and obligations under this Agreement shall
inure to, and be binding upon, the Employer, its successors and assigns, and
upon the Employee and his legal representatives, heirs and legatees. This
Agreement constitutes a personal service agreement, and the performance of the
Employee's obligations hereunder may not be transferred or assigned by the
Employee.
The failure of either party to insist upon the strict performance of any
of the terms, conditions and provisions of this Agreement shall not be construed
as a waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or conditions of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
This Agreement shall be construed and governed by the laws of the State of
Florida.
Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach thereof, shall be settled by
arbitration before the American Arbitration Association, in ______, _______,
before a panel of three arbitrators, in accordance with its rules, and judgement
upon any award rendered may be entered in any court having jurisdiction thereof.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[ The next page is the signature page. ]
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IN WITNESS WHEREOF the parties have set their hands and seals on the date first
above written.
On Behalf of Employer:
AIM GROUP, INC. and
AIM SOLUTIONS, INC.
By:/s/ Paul R. Arena
-------------------------------
PAUL R. ARENA, Director
/s/ Ronald Roswell, Jr.
---------------------------------
RONALD ROSWELL, JR., Employee
7
<PAGE> 8
EXHIBIT A
BONUS CALCULATION CHART
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------ -------------------------------------------------
CONTRACT YEAR IF GROSS REVENUES EQUAL: THEN THE BONUS SHALL BE:
- - ------------------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
First-year term $0 $0
---------------------------------------- -------------------------------------------------
Between $0 and $6,000,000 $25,000 x (Gross Revenues/$6,000,000)
---------------------------------------- -------------------------------------------------
$6,000,000 or greater $25,000
- - ------------------------------------------------------------------ -------------------------------------------------
</TABLE>
For example only, if gross revenues for the first-year term equal $1,500,000,
then the bonus to be paid to Employee shall be calculated as follows:
$25,000 x $4,500,000 = $18,750 bonus
----------
$6,000,000
<PAGE> 1
EXHIBIT 10(cc)
NOTE PURCHASE AGREEMENT
October __, 1999
Dear Sirs:
The undersigned, AIM Group, Inc., a Delaware corporation (the "Company"), hereby
agrees with you as follows:
Section 1. Authorization of issue. The Company will authorize the issue of
up to $750,000 in aggregate principal amount of its 15% Convertible Subordinated
Notes (the "Convertible Notes"). The Convertible Notes shall, with appropriate
insertions, be substantially in the form attached as Exhibit A hereto, and shall
mature on October __, 2000.
Section 2. Issuance of convertible notes. (a) Acquisition of convertible
notes. The Company agrees to sell to you, and subject to the terms and
conditions herein set forth, you agree to purchase from the Company, Convertible
Notes in the aggregate principal amount of $______. The date on which such
purchase and delivery is to be made is herein called the "Closing Date." on the
Closing Date, the Company will deliver to you the Convertible Notes in
accordance with paragraph (b) of this Section at the offices of McLaughlin &
Stern, 260 Madison Avenue, New York, New York 10016, at 1:00 p.m., New York City
time (or at any other place and time agreed upon by you and Company), against
payment of the purchase price therefor by a check payable to the order of the
Company in New York Clearing House funds. The purchase price shall be an amount
equal to 100 percent of the aggregate principal amount of the Convertible Notes
to be purchased by you on such Closing Date.
(b) Delivery of convertible notes; closing date. On the Closing
Date, the Company shall deliver to you Convertible Notes in the aggregate
principal amount of $____ dated the Closing Date and registered in your name or
to the order of your nominee.
(c) Securities Act. The Company represents and warrants that it has
not, either directly or through any agent, offered any of the Convertible Notes
or substantially similar securities for sale to, or solicited any offers to buy
any thereof from, or otherwise approached or negotiated in respect thereof with,
any person or persons other than you and certin other accredited investors. The
Company agrees that it will not, either directly or through any agent, sell or
offer any of the Convertible Notes or substantially similar securities to, or
solicit any offers to buy any thereof from, or otherwise approach or negotiate
in respect thereof with, such number or character of persons, or in such manner,
as would result in making the issuance or sale of the Convertible Notes a
violation of the provisions of the Securities Act of 1933, as amended (the
"Securities Act").
(d) Purchase for investment. You represent to the Company, and in
issuing the Convertible Notes to you on the Closing Date it is specifically
understood between you and the Company, that you are acquiring the Convertible
Notes for your own account, for the purpose of investment, and not with a view
to the distribution or resale of any thereof.
Section 3. Conditions. Your obligation to purchase and pay for the
Convertible Notes to
<PAGE> 2
be purchased by you on the Closing Date is subject to the accuracy and
correctness of the Company's representations and warranties contained in this
Agreement, and shall be subject to the satisfaction, on or before the
appropriate Closing Date, of the following further conditions:
(a) Opinion of counsel for company. At the Closing Date, you shall
have received the opinion of Messrs. Freedman, Levy, Kroll & Simonds, counsel
for the Company, dated the Closing Date, addressed to you and in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware
and is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which it owns or leases substantial properties or
where the conduct of the business requires qualification, except that
the Company may not be qualified in certain jurisdictions where the
failure to so qualify has no material adverse effect on the financial
condition or operations of the Company and its subsidiaries, as a
whole;
(ii) The Company owns the capital stock of each of its subsidiaries,
and all such shares of stock owned by the Company are validly issued
and outstanding, fully paid nonassessable, and are so owned free and
clear of all liens, encumbrances or other restrictions;
(iii) The Company owns the 1,100 shares of Netsurfer, Inc. Preferred
Stock to serve as security for the Company's obligations to repay the
Convertible Notes purchased hereunder free and clear of all liens
encumbrances or other restrictions excep that they are subject to a
Shareholders' Agreement dated November 30, 1998, as amended through
October __, 1999;
(iv) Each of the subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business as a
foreign corporation in each jurisdiction in which it owns or leases
substantial properties or where the conduct of the business requires
qualification, except that the subsidiaries may not be qualified in
certain jurisdictions where the failure to so qualify has no material
adverse effect on the financial condition or operations of the Company
and its subsidiaries, as a whole;
(v) The Company has authorized capital stock of 1,000,000 shares of
Preferred Stock, $1 par value, of which 150,000 shares were outstanding
on June 30, 1999 and 12,000,000 shares of Common Stock, par value $0.01
per share, of which 3,043,237 shares of Common Stock were outstanding
on October 20,, 1999; all of the Company's outstanding shares of Common
Stock have been duly and validly authorized and issued and are fully
paid and nonassessable;
(vi) The certificates evidencing shares of the Company's Common
Stock are in due and proper form, and the issuance and sale of the
shares of Common Stock initially reserved for issuance upon conversion
of the Convertible Notes pursuant to this Agreement or the exercise of
the Warrants have been duly and validly authorized for issuance, and
are sufficient in number for conversion of all of the Convertible Notes
at the initial conversion price, and the exercise of the Warrants at
the exercise
2
<PAGE> 3
price, and such shares, when so issued upon such conversion in
accordance with the terms and provisions of the Convertible Notes and
this Agreement or upon such exercise in accordance with the terms of
the Warrants will be duly and validly issued, fully paid and
nonassessable;
(vii) This Agreement and the Escrow Agreement has been duly and
validly authorized, executed and delivered by the Company, and
constitutes the Company's valid and binding obligation enforceable in
accordance with its terms, except as enforceability of the
indemnification provisions may be limited under federal securities laws
and except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights;
(viii) The Convertible Notes and Warrants have been duly and validly
authorized and have been duly issued and sold to you, and constitute
the Company's legal, valid and binding obligations enforceable in
accordance with their terms (except as enforcement thereof may be
limited by bankruptcy, insolvency or other laws affecting enforcement
of creditors' rights) and are entitled to the benefits provided by this
Agreement and the Convertible Notes are convertible into the Company's
Common Stock in accordance with the terms of this Agreement;
(vivi) To the best of their knowledge and information, no material
legal or governmental proceedings are pending or threatened against the
Company or any of its subsidiaries;
(x) The issue and sale of the Convertible Notes and Warrants
hereunder and the Company's compliance with all the provisions of the
Convertible Notes, this Agreement and the Escrow Agreement will not
conflict with, result in a breach of any term or provision of,
constitute a default under, or result in the creation or imposition of,
any lien, charge, or encumbrance upon any of the Company's or its
subsidiaries' property or assets pursuant to the terms of, any
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party, by which any of them may be bound,
or to which any of their property or assets is subject, nor will such
action result in any violation of the Company's Articles of
Incorporation, as amended, or Bylaws, or to the best of their
knowledge, of any applicable federal, state, or local statute, order,
rule, or regulation; and
(xi) No authorization, qualification, approval or consent of any
governmental authority or agency is necessary in connection with the
issue and sale of the Convertible Notes or Warrants to you.
(b) Officers' certificate. The representations and warranties
contained in Sections 2(c), 4, and 9 shall (except to the extent of changes
caused by transactions contemplated in or expressly permitted by this Agreement)
be true in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties were originally made on and
as of such date; there shall exist on such Closing Date no condition, event or
act which constitutes an event of default specified in this Agreement and no
condition, event or act which, with notice or lapse of time or both, would
constitute such an event of default; all covenants and agreements to be
performed by the Company hereunder on or before such Closing Date shall
3
<PAGE> 4
have been duly performed; and the Company shall have delivered to you a
certificate, signed by its President or a Vice President and its Secretary or an
Assistant Secretary, dated such Closing Date to each such effect.
(c) Proceedings and documents. All corporate and other proceedings
taken in connection with the transactions contemplated by this Agreement, and
all documents incident thereto, shall be satisfactory in form and substance to
you, and you shall have received copies of all documents and records which you
or your special counsel may reasonably request.
(d) Concurrent purchases of convertible notes. ON the Closing Date
the Company shall have entered into purchase agreements with not more than __
other purchasers substantially identical to this Agreement for the purchase of
the remainder of the up to $750,000 of authorized Convertible Notes.
(e). Concurrent pledge of Netsurfer Preferred Stock. On the Closing
Date, the Company shall have delivered 1,100 shares of Netsurfer Preferred Stock
to the Escrow Agent to serve as collateral for the Convertible Notes to secure
the obligations of the Company under the Convertible Notes. The collateral shall
also include all dividends or other property received in connection with the
Preferred Stock. The Company agrees that it will not vote to change the
Netsurfer Shareholders' Agreement or the terms of the Preferred Stock without
the consent of the Noteholders so long as the Preferred Stock is held as
security for these Convertible Notes.
Section 4. Representations and warranties. The Company hereby represents
and warrants that:
(a) Financial statements. The financial statements of the Company
and its subsidiaries for the fiscal years ended December 31, 1997 and 1998 and
the six months ended June 30, 1999, and which the Company has previously
furnished to you are true and correct and have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
periods involved. The consolidated balance sheets and the related notes fairly
present the financial position of the Company and its consolidated subsidiaries
as of the respective dates thereof, and the consolidated statements of income
and retained earnings and the related notes fairly present the results of the
operations of the Company and such subsidiaries for the respective periods
indicated. There has been no material adverse change in the condition, financial
or otherwise, of the Company and its subsidiaries taken as a whole since
December 31, 1998.
(b) Organization, standing, and qualification of company. The
Company is a corporation duly organized and existing and in good standing under
the laws of the State of Delaware, and has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted. The Company is qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which such
qualification is necessary under applicable provisions of law.
(c) Organization, standing, and qualification of subsidiaries.
Exhibit B annexed hereto correctly sets forth the names of all the subsidiaries
of the Company. Each subsidiary has been duly incorporated and is existing in
good standing under the laws of its jurisdiction of incorporation, has the
corporate power to own its properties and to carry on its business as now
4
<PAGE> 5
being conducted and as proposed to be conducted, and is qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in which
such qualification is necessary under applicable provisions of law. All of the
outstanding shares of the capital stock of each class of each subsidiary have
been validly issued, are fully paid and nonassessable, and are wholly owned by
the Company free and clear of all liens, charges, security interests or
encumbrances with the exception of any directors' qualifying shares required by
law.
(d) Litigation. There are no actions, suits or proceedings pending
or, to the Company's knowledge, threatened against or affecting the Company or
any of its subsidiaries which may result in any material adverse change in their
business, properties or condition.
(e) Title and liens. The real property and all the other property
and assets of the Company as shown on the consolidated balance sheet of the
Company and its subsidiaries as at December 31, 1998 are free from all liens,
charges, security interests, and encumbrances, except for liens, charges,
security interests, and encumbrances described in Schedule II hereto; and,
except as aforesaid, the Company and its subsidiaries, respectively, have good
record and marketable title in fee simple absolute to all the real property, and
good and marketable title to all other property and assets, included in their
most recent consolidated balance sheet furnished to you or subsequently acquired
by the Company or any of its subsidiaries, except property and assets
subsequently sold or otherwise disposed of in the ordinary course of business.
(f) Leases. The Company and its subsidiaries enjoy peaceful and
undisturbed possession under all of the leases to which any of them is a party
or under which any of them is operating. All of such leases are valid and
subsisting and none of them is in default.
(g) Conflicting agreements and charter provisions. Neither the
execution and delivery of this Agreement, the Convertible Notes nor the Warrants
or any other documents to be delivered by the Corporation hereunder, the
consummation of the transactions herein or therein contemplated, the fulfillment
of the terms hereof or thereof, nor compliance with the terms and provisions
hereof or thereof, will conflict with or result in a breach of any of the terms,
conditions, or provisions of any corporate restriction or of any agreement or
instrument to which the Company or any of its subsidiaries is now a party or by
which any of them is bound, or constitute a default thereunder, or results in
the creation or imposition of any lien, charge, security interest, or
encumbrance of any nature whatsoever upon any of the property or assets of the
Company or any of its subsidiaries pursuant to the terms of any such agreement
or instrument.
(h) Income tax returns. The Company and its subsidiaries have filed
all required federal, state, and local tax returns, and have paid or provided
for payment of, all taxes as shown on said returns or pursuant to any assessment
received by the Company, or its subsidiaries, and do not know of any proposed
assessment of additional taxes or any basis therefor. There has been no audit of
the Company's tax returns.
(i) Issuance of convertible notes. Upon receipt by the Company of
payment for the Convertible Notes and Warrants as provided herein, the
Convertible Notes, the Warrants and the shares issuable upon the conversion of
the Convertible Notes and the exercise of the Warrants, will have been duly
authorized, executed, and issued and will constitute the Company's valid and
legally binding obligations enforceable in accordance with their terms and will
be entitled to the
5
<PAGE> 6
benefits provided by this Agreement.
(j) Authorized and outstanding capital stock. The Company's
authorized and outstanding capital stock consists of (i) 1,000,000 shares of
Preferred Stock, $1 par value, of which 150,000 shares were outstanding on June
30, 1999, and (ii) 12,000,000 shares of Common Stock, par value $0.01 per share,
of which 3,043,237 shares of Common Stock were outstanding on October 20, 1999.
All of the Company's outstanding Common Stock has been duly and validly
authorized and issued and is full paid and nonassessable. The shares of Common
Stock initially to be reserved for issuance and to be issued upon conversion of
the Convertible Notes pursuant to this Agreement have been duly and validly
authorized and are sufficient in number for the conversion of all the
Convertible Notes at the initial conversion price.
The Company has granted or issued, or agreed to grant or issue no options
or warrants or similar rights to others to acquire or receive any of its
authorized but unissued shares of either Preferred or Common Stock, or
securities convertible into its Common Stock other than (i) the Convertible
Notes and Warrants to be issued pursuant to this Agreement, (ii) options
pursuant to the Company's Qualified Stock Option Plan to purchase 560,573 shares
of the Company's Common Stock. The Company holds 3,150 shares of its Common
Stock in its Treasury as of June 30, 1999. An additional 108,667 shares are
scheduled to be granted to certain key employees during the current calendar
quarter.
(k) Securities Exchange Act Registration. The Company's Common Stock
has been duly registered with the Securities and Exchange Commission in
accordance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Said Common Stock is the Company's only "equity security" (required to be
registered under the Exchange Act).
(l) The Company is not in default, and there are no circumstances
with the passage of time that will result in a default under any agreements to
which the Company is a party or any Senior Debt of the Company
(m) The Company is current in all filings required of it under the
Securities Exchange Act and such filings do not contain any material
misrepresentation or omissions.
(n) The Company owns the 1,180 shares of Netsurfer, Inc. Preferred
Stock to serve as security for the Company's obligation to repay the Convertible
Notes free and clear of all liens except that they are subject to a
Shareholders' Agreement, dated November 30, 1998, as amended through October __,
1999.
Section 5. Interest payments and redemptions. (a) Interest payments on
convertible notes. The Convertible Notes shall be dated the Closing Date and
shall bear interest at the rate of is percent per annum from the Closing Date.
Interest shall be computed on the basis of a 360-day year, 30-day month. On
April __ 2000, and on October __, 2000, the Company shall pay accrued interest
on the Convertible Notes to such payment dates.
(b) Optional redemption of Convertible Notes. The Convertible Notes
shall be subject to redemption for cash, at the Company's option, at any time,
in whole or in part, prior to maturity with no penalty.
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<PAGE> 7
In the case of each redemption at the Company's option under this Section
5(b), the Company will give written notice thereof to each holder of a
Convertible Note to be redeemed not less than 5 nor more than 10 days prior to
the date fixed for such redemption (the "Redemption Date"), in each case
specifying such date and the aggregate principal amount of the Convertible Notes
to be redeemed on such date, and the principal amount of Convertible Notes held
by such holder to be redeemed on such date.
Section 6. Mandatory Conversion of Convertible Notes. The Convertible
notes will automatically convert in the event that the closing "bid" price of
the Company's Common Stock is above $6.25 for any twenty (20) consecutive
trading days after the closing of this purchase.
Section 7. Optional Conversion of Convertible Notes. (a) Right to convert;
conversion price. Subject to and upon compliance with the provisions hereof, the
holder of any Convertible Note shall have the right, at any time (except that if
the Company has given notice of redemption thereof pursuant to Section 5(b) such
holder shall give written notice of intention to convert the principal amount of
such Convertible Note not less than one day prior to the Redemption Date) until
such Convertible Note has been paid in full, to convert all or any portion of
the unpaid amount of such Convertible Note into Common Stock of the Company at a
price of $3.75 per share, or in case an adjustment of such initial conversion
prices has taken place pursuant to the further provisions of this Section 7,
then at the price as last adjusted and in effect at the date such Convertible
Note or portion thereof is surrendered for conversion (the initial conversion
price or such price as last adjusted, as the case may be, being referred to
herein as the "Conversion Price"); provided, however, that in no event shall the
Conversion Price be reduced below the then applicable par value of the Company's
Common Stock. The number of shares of the Company's Common Stock into which any
Convertible Note is convertible shall be subject to adjustment pursuant to the
further provisions of this Section 7. The number of such shares into which a
portion of any Convertible Note is convertible shall be that proportion of the
total number of such shares, as adjusted, into which such Convertible Note is
then convertible which the principal amount of such portion to be so converted
bears to the then unpaid principal amount of such Convertible Note. In order to
convert any Convertible Note, the holder thereof shall surrender the Note to the
Company at its office in Atlanta (or any other office or agency of the Company
that it designates by notice in writing to the holders of the Convertible
Notes), accompanied by a written statement designating the principal amount of
such Convertible Note, or portion thereof, to be so converted. In the case of
any Convertible Note which is converted in part only, the Company shall, upon
such conversion, execute and deliver to the holder thereof, at the Company's
expense, a new Convertible Note or Convertible Notes of authorized denominations
in principal amount equal to the unconverted portion of such Convertible Note.
(b) Issue of common stock; continuing obligation. Within a
reasonable time, not exceeding five days after the receipt of the written
statement referred to in subsection (a) and surrender of such Convertible Note
as aforesaid, the Company shall issue and deliver to the holder thereof
(hereinafter in this subsection, the term "holder" shall include the nominee of
any such holder), registered in the holder's name, a certificate or certificates
for the number of full shares of Common Stock issuable upon the conversion of
such Convertible Note (or specified portion thereof), bearing the restrictive
legend required by subsection (h). To the extent permitted by law, such
conversion shall be deemed to have been effected and the conversion price and
the number of shares of Common Stock issuable in connection with such conversion
shall be determined as of the close of business on the date on which such
written statement shall have
7
<PAGE> 8
been received by the Company and such Convertible Note shall have been
surrendered as aforesaid, and at such time the rights of the holder of such
Convertible Note (or specified portion thereof) as such holder shall cease, and
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby.
The Company will, at the time of such conversion, in whole or in part, upon
request of the holder of such Convertible Note, acknowledge in writing its
continuing obligation to such holder in respect of any rights (including,
without limitation, any right of registration of the shares of Common Stock
issued upon such conversion) to which such holder shall continue to be entitled
under this Agreement after such conversion; provided, that the failure of such
holder to make any such requests shall not affect the continuing obligation of
the Company to such holder in respect of such rights.
(c) Dividends and interests. No payment or adjustments shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. The Company shall pay all interest on the Convertible Note
surrendered for conversion accrued to the date upon which the above-mentioned
written statement has been received by the Company.
(d) Anti-dilution provisions. A. Adjustment of conversion price. The
Conversion Price shall be subject to adjustment from time to time only as
follows:
(1) If shares of Common Stock are issued as a dividend or other
distribution on any class of stock of the Company, the Conversion Price
which would otherwise be in effect at the opening of business on the day
following the date fixed for determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination. For the purpose of this paragraph
(1), the number of shares at any time outstanding shall include shares
held by the Company if such dividend or distribution is paid or made in
respect thereof.
(2) If the Common Stock is subdivided into a greater or combined
into a lesser number of shares of Common Stock, the Conversion Price in
effect immediately prior thereto, or immediately prior to the record date
for such subdivision or combination if a record date is fixed, shall be
proportionately adjusted so that it will bear the same relation to the
Conversion Price in effect immediately prior to such subdivision or
combination, or such record date, as the total number of shares of Common
Stock outstanding immediately prior to such subdivision or combination, or
such record date shall bear to the total number of shares of Common Stock
outstanding immediately after such subdivision or combination or such
record date. For purposes of this paragraph (2), the number of shares at
any time outstanding shall include shares held by the Company if such
subdivision or combination affects such shares.
(3) In case of any capital reorganization of the Company, or of any
8
<PAGE> 9
reclassification of the Common Stock, or in case of the consolidation of
the Company with, or the merger of the Company into, any other corporation
or of the sale of all or substantially all of the Company's properties and
assets to any other corporation, each Convertible Note shall after such
capital reorganization, reclassification, consolidation, merger, or sale
entitle the holder to receive upon conversion the number of shares of
stock or other securities or property of the Company, or of the
corporation resulting from such consolidation or surviving such merger or
to which such sale shall be made, as the case may be, to which the holder
of securities deliverable (at the time of such capital reorganization,
reclassification, consolidation, merger, or sale) upon conversion of such
Convertible Note would have been entitled upon such capital
reorganization, reclassification, consolidation, merger or sale; and in
any such case the provisions of this Section 7(d) with respect to the
rights and interests thereafter of the holders of Convertible Notes shall
be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or any property
thereafter deliverable on the conversion of the Convertible Notes. Any
such adjustment which shall be approved by the Company's Board of
Directors shall for all purposes of this paragraph conclusively be deemed
to be an appropriate adjustment. The subdivision or combination of shares
of Common Stock deliverable upon conversion of the Convertible Notes at
any time outstanding into a greater or lesser number of shares of Common
Stock (whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock for the purposes of this paragraph.
(4) If the Company issues Common Stock or rights or warrants or
securities convertible into shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock without consideration or
at a price per share less than the Current Market Value per share (as
determined pursuant to Section 7(d)(G)) on the record date for the
issuance of such shares, rights or warrants, then the Conversion Price in
effect on the date immediately prior to such record date shall immediately
be adjusted to a price (computed to the nearest cent) equal to the
quotient obtained by dividing
(a) an amount equal to the sum of (i) the number of shares of
Common Stock issued and outstanding on such record date multiplied
by the Conversion Price in effect on such record date, and (ii) the
aggregate consideration to be received by the Company if all such
rights or warrants were exercised, by
(b) an amount equal to the sum of (i) the number of shares of Common
Stock issued and outstanding on such record date and (ii) the number of shares
issuable upon exercise of such rights or warrants (in each case increased or
decreased to the extent that the number of such shares shall have been increased
by a dividend or distribution of the type contemplated by paragraph (1) of this
Section 7(d)(A) or shall have been increased or decreased by each subdivision or
combination thereof);
provided, however, that such adjustment shall be made only if the
aforesaid quotient shall be less than the Conversion Price in effect
immediately prior to the issue of such rights or warrants. Such
adjustment shall become effective retroactively immediately after
the record date for the determination of stockholders entitled to
receive such rights or warrants.
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<PAGE> 10
(5) For the purposes of any adjustment of the Conversion Price
pursuant to this Section 7(d), the following provisions shall be
applicable:
(a) in case of the issuance of Common Stock for a
consideration part or all of which shall be cash (including such
issuance upon exercise of rights, warrants or options, granted
without consideration, to subscribe for or purchase such shares),
the amount of the cash consideration shall be the amount of such
cash received by the Company, provided that no deduction shall be
made for any commissions, discounts or expenses incurred by the
Company for any underwriting of the issue or otherwise in connection
therewith; and
(b) in case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the lower of the fair value
thereof as determined by the Board of Directors of the Company or
the value of the shares issued based on the Current Market Value of
the Common Stock (determined as provided in Section 7(d)(G)).
(6) For the purpose of this Section 7(d)(A), shares of Common Stock
or other securities held in the treasury of the Company shall not be
deemed to be outstanding, except as specifically provided herein, and the
sale or other disposition of any shares of Common Stock or other
securities held in the treasury of the Company shall be deemed an issuance
thereof.
(7) Anything in this Section 7(d) to the contrary notwithstanding,
no adjustment of the Conversion Price shall be required in any case in
which the amount of the adjustment would be less than 5 cents but in such
case any adjustment that would otherwise be required then to be made will
be carried forward and made at the time and together with the next
subsequent adjustment which, together with any and all such adjustments so
carried forward, shall amount to 5 cents or more per share of Common
Stock. Regardless of any subdivision or combination of shares of Common
Stock, said amount of 5 cents shall not be proportionately decreased or
increased.
(8) The certificate of the Company's independent public accountants
shall be conclusive evidence of the correctness of any computation made
under this Section 7(d)(A).
B. In any case in which this Section 7(d) requires that an adjustment
shall become effective immediately after a record date for an event, the Company
may defer until the occurrence of such event (i) issuing to the holder of a
Convertible Note converted after such record date and before the occurrence of
such event the additional shares issuable upon such conversion by reason of the
adjustment required by such event over and above the shares issuable upon such
conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of a fractional share pursuant to Section
7(d)(F); provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holders' right to receive
such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.
C. Whenever the Conversion Price is adjusted as herein provided the
Company shall also
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adjust the Conversion Prices to be in effect for subsequent Conversion Periods,
and shall compute the adjusted Conversion Prices in accordance with Section
7(d)(A) and shall prepare a certificate signed by the Chairman of the Board, the
President or a Vice President and by a Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth the
adjusted Conversion Prices and showing in reasonable detail the facts (and
computations) upon which such adjustments are based, and such certificate, as
well as any accountants' certificate provided for in Section 7(d)(A)(8) on which
the Company has relied in making such adjustments, shall forthwith be mailed (by
first class mail postage prepaid) to each registered holder of a Convertible
Note at such holder's last address as shown on the register of the Company.
D. If at any time after the date hereof and prior to October __, 2000 and
so long as any amounts remain unpaid under the Convertible Notes:
(1) The Company authorizes the granting to the holders of its
Common Stock of rights to subscribe for or purchase any shares of stock of
any class or of any other rights; or
(2) There is any reclassification of the Company's Common Stock
(other than a subdivision or combination of its outstanding common stock); or
(3) There is any capital reorganization by the Company; or
(4) There is any consolidation or merger involving the Company or
sale, transfer or other disposition of all or substantially all of its
property, assets, or business (except a merger or other reorganization in
which the Company is the surviving corporation and except a consolidation,
merger or sale, transfer or other disposition involving a wholly owned
subsidiary); or
(5) There is a voluntary or involuntary dissolution, liquidation, or
winding up of the Company or any partial liquidation by the Company or
distribution to holders of Common Stock (other than the Company's customary
cash and stock dividend);
then in any one or more of said cases, the Company shall cause to be mailed
(by first class mail postage prepaid) to each registered holder of a
Convertible Note at such holder's last address as shown on the register of
the Company, at the earliest practicable time (and, in any event, not less
than 20 days before any record date or other date set for definitive action),
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution, or subscription rights or
such reorganization, reclassification, sale, consolidation, merger,
dissolution, liquidation, or winding up shall take place, as the case may be.
Such notice shall also set forth such facts as shall indicate the effect of
such action (to the extent such effect may be known at the date of such
notice) on the Conversion Price and the kind and amount of the shares of
stock and other securities and property deliverable upon conversion of the
Convertible Notes. Such notice shall also specify the date as of which the
holders of the shares of record shall participate in said dividend,
distribution, or subscription rights or shall be entitled to exchange their
shares for securities or other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation, or
winding up, as the case may be.
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E. The form of Convertible Note Certificate need not be changed because of
any change in the Conversion Prices and Convertible Note Certificates issued
before or after such change, and may state the same Conversion Prices as stated
in the Convertible Note Certificates theretofore issued pursuant to this
Agreement. How-ever, the Company may at any time in its sole discretion (which
shall be conclusive) make any change in the form of Convertible Note Certificate
that it may deem appropriate and that does not affect the substance thereof; and
any Convertible Note Certificates thereafter issued may be in the form as so
changed.
F. Anything contained herein to the contrary notwithstanding, the Company
shall not be required to issue any fraction of a share in connection with the
conversion of Convertible Notes, but in any case where any holder of a
Convertible Note Certificate would, except for the provisions of this paragraph
F, be entitled under the terms of this Agreement to receive a fraction of a
share upon the conversion of Convertible Notes, the Company shall pay a sum in
cash equal to such fraction multiplied by the Current Market Value of the shares
(determined as provided in Section 7(d)(G) except that the Current Market Value
shall be deemed to be the market price for the business day next preceding the
day of conversion), unless the Board of Directors of the Company shall determine
to adjust fractional shares by the issue of scrip of the Company in respect of
such fraction or in some other manner.
G. For the purposes of any computation under this Section 7(d), the
Current Market Value of Common Stock per share or of any other security (herein
collectively referred to as a "security") at the date therein specified shall be
deemed to be the average of the daily market prices for the 20 consecutive
business days commencing 30 business days before such date. The market price for
each such business day shall be the last reported bid price on such day, as
reported by a reputable quotation source designated by the Company.
(e) Shares issuable upon conversion. The Company covenants and agrees that
all shares of Common Stock which are issued upon the conversion of all
outstanding Convertible Notes or upon exercise of the Warrants, will, upon
issuance, be duly and validly issued and fully paid and nonassessable and free
from all taxes, liens, and charges with respect to the issue thereof. The
Company further covenants and agrees that it will at all times have authorized,
and reserved and kept available solely for the purpose of issue upon the
conversion of Convertible Notes or the exercise of the Warrants as herein
provided, a sufficient number of shares of its Common Stock as are then issuable
upon the conversion of all outstanding Convertible Notes and exercise of all
outstanding Warrants.
(f) Registration, approval or listing of common stock. If any shares of
Common Stock required to be reserved for purposes of conversion of Convertible
Notes hereunder require registration with or approval of any governmental
authority under any federal (other than the Securities Act or similar federal
statute than in force) or state law, or listing on any national securities
exchange, before such shares may be issued upon conversion, the Company will, at
its expense, as expeditiously as possible exercise its best efforts to cause
such shares to be duly registered or approved or listed on the relevant national
securities exchange, as the case may be. Shares of Common Stock issued upon
conversion of the Convertible Notes shall be registered by the Company under the
Securities Act if required by subsection (h) below and subject to the conditions
stated therein.
(g) Issuance tax and expenses. The Company shall pay all expenses,
issuance taxes and
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other charges payable in connection with the preparation, execution and delivery
of certificates for Common Stock issuable upon each conversion of the
Convertible Notes, except that, if any such certificate is registered in a name
or names other than the name of the holder of such Convertible Note, funds
sufficient to pay all stock transfer taxes which are payable upon the execution
and delivery of such certificate shall be paid by such holder to the Company
when such Convertible Note is surrendered for conversion.
(h) A. Legend; restrictions on conversion and transfer. Each Convertible
Note issued pursuant to this Agreement shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"This Note, and any shares or other securities acquired upon the
conversion of this Note, have not been registered under the Securities Act of
1933 and may be offered and sold or transferred only if registered pursuant
to the provisions of that Act or if an exemption, supported by an opinion of
counsel, from registration is available."
Each stock certificate issued upon the conversion of any Convertible Note
(except as permitted by this Section 7) or upon exercise of any Warrant shall be
stamped or imprinted with a legend in substantially the following form:
" These securities have not been registered under the Securities Act of
1933 and may be offered and sold or transferred only if registered pursuant
to the provisions of that Act or if an exemption, supported by an opinion of
counsel, from registration is available."
The outstanding stock of the Company evidenced by a certificate or
certificates bearing such legend is herein sometimes called "Legend Stock." Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution under a registration statement of the securities represented
thereby) shall also bear such legend unless in the opinion of such holder's
counsel specified in Clause B below (addressed to such holder), the securities
represented thereby need no longer be subject to the restrictions contained in
this Section 7. The provisions of this Section 6 shall be binding upon all
subsequent holders of Legend Stock, and shall also be applicable to and inure to
the benefit of all subsequent holders of the Convertible Notes.
B. Notice of intention to convert or transfer; opinions of counsel;
registration required by holders of convertible notes. The Convertible Notes and
the Legend Stock to be issued upon such conversion thereof shall not be
transferable except upon the conditions specified in this subsection (h). Each
holder of any Convertible Note or Legend Stock, by acceptance thereof, agrees,
prior to any transfer of such Convertible Note or Legend Stock or concurrently
with any conversion of such Convertible Note, to give written notice to the
Company expressing such holder's intention to effect such transfer or conversion
and describing briefly the manner of the proposed transfer or, in the case of
such conversion, such holder's intention as to the disposition (and the intended
method thereof) or retention to be made of Common Stock issuable upon the
proposed conversion, together, if registration of such Convertible Note or
Legend Stock or Common Stock is deemed unnecessary, with a copy of the opinion
of counsel selected by such holder and reasonably satisfactory to the Company
(addressed to such holder) as to the nonnecessity for registration under the
Securities Act of such Convertible Note or Legend Stock or Common Stock in
connection with such proposed transfer or disposition or retention upon
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<PAGE> 14
such proposed conversion. The following provisions shall apply:
(1) If in the opinion of such counsel, the proposed transfer of such
Convertible Note or Legend Stock, or the proposed disposition or retention of
Common Stock to be issued upon such conversion, may be effected without such
registration of such Convertible Note or of such Legend Stock or of such
Common Stock under the Securities Act, such holder shall be entitled to
transfer such Convertible Note or Legend Stock or to dispose of or retain
such Common Stock to be issued upon conversion, all in accordance with the
terms of the notice delivered by such holder to the Company. Unless in the
opinion of such counsel subsequent disposition by such holder or by others of
the Common Stock to be issued upon conversion or of the Legend Stock to be so
transferred may require such registration, the Company will promptly upon
such conversion or transfer deliver certificates for Common Stock not bearing
a legend of the character set forth in the first sentence of this subsection
(h), all as contemplated by such form of legend.
(2) If the proposed transfer of such Convertible Note or Legend Stock, or
the proposed disposition (including retention) of the Common Stock to be
issued upon such conversion, may not be effected without such registration of
such Convertible Note, Legend Stock, or such Common Stock, (i) the holder
thereof shall not be entitled to transfer such Convertible Note or such
Legend Stock until such registration is in effect, and (ii) the Company shall
promptly give written notice to all holders of outstanding Convertible Notes
and or Legend Stock of a possible registration of Legend Stock under the
Securities Act.
C. "Piggyback" registrations. If the Company at any time proposes to
register any of its securities under the Securities Act on any form upon which
may be registered securities similar to the Legend Stock, it will at each such
time give written notice to all holders of outstanding Convertible Notes and/or
Legend Stock, including shares issued upon exercise of the Warrants, of its
intention so to do. Upon the written request to the Company by any holder or
holders of outstanding Convertible Notes and/or Legend Stock, given within 30
days after receipt of any such notice, the Company will use its best efforts to
cause the Legend Stock which the Company has been requested to register by the
holders to be registered under the Securities Act, all to the extent requisite
to permit the sale or other disposition by such holders of the Legend Stock,
including shares issued upon exercise of the Warrants, so registered; provided,
however, that, if the registration is in connection with an underwritten public
offering and the managing underwriter determines that inclusion of the Legend
Stock in the registration will materially impair the marketability of the stock
being registered, the Company shall not be obligated to include such shares. If
the underwriter consents to include any shares owned by shareholders of the
Company, the holder of Legend Stock will be able to participate ratably with any
other shareholders eligible to participate.
D. Payment of registration expenses. With respect to any registration
statement filed pursuant to clause C of this Section 7(h), the Company shall
bear all the costs and expenses incidental thereto, with the exception of the
filing fees of the National Association of Security Dealers, Inc., the
registration fee payable to the Securities and Exchange Commission, the blue sky
fees and expenses, and transfer taxes attributable to the Legend Stock being
included, which fees and expenses shall be borne by the holders of such Legend
Stock.
E. Information to be furnished. Notices and requests delivered pursuant to
this Section (h)
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<PAGE> 15
shall contain such information regarding the Legend Stock and the intended
method of disposition thereof as shall reasonably be required in connection with
the action to be taken.
F. Exchange of stock certificates. As expeditiously as possible after the
effectiveness of any registration pursuant to this Section 7(h), the Company
will deliver in exchange for any certificates representing shares of Legend
Stock so registered, new common stock certificates not bearing the legend set
forth above.
G. Indemnification. (1) In the event of any registration pursuant to this
Section 7(h), the Company will indemnify each holder of Legend Stock so
registered and each other person, if any, who controls such holder within the
meaning of the Securities Act and each other person (including underwriters) who
participates in the offering of such Legend Stock against any losses, claims,
damages, or liabilities, joint or several, to which such holder or controlling
person or participating person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under which such Legend
Stock was registered under the Securities Act, in any preliminary prospectus or
final prospectus contained therein, or in any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder and each such
controlling person or participating person for any legal or any other expenses
reasonably incurred by such holder or such controlling person or participating
person in connection with investigating or defending any such loss, claim,
damage, liability, or proceeding; provided, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, said
preliminary or final prospectus or said amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by an
instrument with respect to such holder or person duly executed by such holder or
person specifically for use in the preparation thereof.
(2) Each holder of Legend Stock included in the Registration
Statement shall agree to indemnify and hold harmless the Company and each
person, if any (including underwriters), who participate in the offering to the
same extent as the foregoing indemnity from the Company but only with respect to
any information furnished in writing by or on behalf of and with respect to such
holder expressly for use in any Preliminary Prospectus, the Registration
Statement or any amendment or supplement thereof. In case any action shall be
brought against the Company or any underwriter or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereof or any application, and in
respect of which indemnity may be sought against the holder of Legend Stock,
such holder shall have the rights and duties given to the Company by the
provisions in the preceding paragraph.
H. Survival of obligations. The obligations of the Company contained in
this Section 7(h) shall survive payment in full of the Convertible Notes.
I. The Company will keep any registration statement filed pursuant to this
Section 7(h) current so long as the holder has Legend Stock.
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Section 8. Subordination. Anything in this Agreement or the Convertible
Notes to the contrary notwithstanding, the indebtedness evidenced by the
Convertible Notes, principal and interest, shall be subordinate and junior to
the extent set forth in the following subparagraphs of this Section 8 to all
principal and interest of all indebtedness of the Company for borrowed money
(except such indebtedness of the Company other than the Convertible Notes which
is subordinate or junior in any respect to other indebtedness of the Company),
whether outstanding at the date of this Agreement or created or incurred after
the date of this Agreement but prior to the maturity of the Convertible Notes by
lapse of time, acceleration or otherwise. Notwithstanding the foregoing, money
borrowed from affiliates shall not be senior to the Convertible Notes. Such
indebtedness of the Company to which the Convertible Notes are subordinate and
junior is sometimes hereinafter referred to as "Senior Debt."
(a) Maturity of senior debt. Upon maturity of any Senior Debt by
lapse of time, acceleration or otherwise, then all principal of, premium, if
any, and interest on, all such matured Senior Debt shall first be paid in full
before any payment on account of principal or interest is made upon the
Convertible Notes.
(b) Liquidation, etc. In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company or its creditors or
its property, and in. the event of any proceedings for voluntary liquidation,
dissolution, or other winding up of the Company, whether or not involving
insolvency or bankruptcy proceedings, then all principal, premium, if any, and
interest due on Senior Debt shall first be paid in full, or such payment shall
have been provided for, before any payment on account of principal or interest
is made upon the Convertible Notes. Any payment or distribution of any kind or
character, whether in cash, property, stock, or obligations, which may be
payable or deliverable in respect of the Convertible Notes in any of the
proceedings referred to in the first sentence of this Section 8(b) shall be paid
or delivered directly to the holders of Senior Debt (or to a banking institution
selected by the court or person making the payment or delivery or designated by
any holder of Senior Debt) for application in payment thereof, unless and until
all principal and interest on all Senior Debt shall have been paid in full, or
such payment shall have been provided for; provided however, that:
(i) In the event that payment or delivery of such cash,
property, stock or obligations to the holders of the Convertible Notes
is authorized by an order or decree giving effect, and stating in such
order or decree that effect is given, to the subordination of the
Convertible Notes to Senior Debt, and made by a court of competent
jurisdiction in a reorganization proceeding under any applicable
bankruptcy or reorganization law, no payment or delivery of such cash,
property, stock or obligations payable or deliverable with respect to
the Convertible Notes shall be made to the holders of Senior Debt; and
(ii) No such delivery shall be made to holders of Senior Debt
of stock or obligations which are issued pursuant to reorganization
proceedings or dissolution or liquidation proceedings, or upon any
merger, consolidation, sale, lease, transfer or other disposal not
prohibited by the provisions of this Agreement, by the Company, as
reorganized, or by the corporation succeeding to the Company or
acquiring its property and assets, if such stock or obligations are
subordinate and junior at least to the extent provided in this Section
8 to the payment of all Senior Debt then outstanding and to the payment
of any stock or obligations which are issued in exchange or
substitution for any
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Senior Debt then outstanding.
(c) Senior debt default. The Company shall not make any payment of
principal or interest on, or purchase or acquire for value, any of the
Convertible Notes during the continuance of any default in the payment of
principal of or premium or interest on any Senior Debt.
(d) Company's obligations unimpaired. The provisions of this Section 8 are
for the purpose of defining the relative rights of the holders of Senior Debt,
on the one hand, and the holders of the Convertible Notes on the other hand, and
as between the Company and the holders of the Convertible Notes nothing herein
shall impair the obligation of the Company, which is unconditional and absolute,
to pay the holders thereof the principal thereof and interest thereon in
accordance with their terms and the terms of the related agreements, nor shall
anything herein prevent the holder of any Convertible Note from exercising all
remedies otherwise permitted by applicable law upon default thereunder, subject
to the rights, under this Section 8, of holders of Senior Debt in respect of
cash, property, stock or other securities received upon the exercise of such
remedies.
(e) Subrogation. Subject to the payment in full of all Senior Debt, the
holders of the Convertible Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of assets of the
Company payable or distributable to the holders of Senior Debt until all the
Convertible Notes shall be paid in full and, as between the Company, its
creditors other than the holders of Senior Debt, and the holders of the
Convertible Notes, no payments or distributions otherwise payable or deliverable
in respect of the Convertible Notes but, by virtue of the provisions thereof,
paid or delivered to the holders of Senior Debt shall be deemed to be a payment
by the Company on account of Senior Debt and no payments or distributions paid
to the holders of the Convertible Notes, by virtue of the subrogation herein
provided for, shall be deemed to be a payment by the Company on account of the
Convertible Notes.
(f) Subordination unimpaired. No right of any present or future holder of
Senior Debt to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act in good faith by any such holder, or by
any noncompliance by the Company with the terms, provisions, and covenants of
any agreement relating to Senior Debt, regardless of any knowledge thereof any
such holder may have or be otherwise charged with.
Section 9. Security. The Company will pledge 1,100 shares of Netsurfer,
Inc. Preferred Stock as security for the repayment of the aggregate principal of
the Convertible Notes sold. Such security will be placed in escrow with
Freedman, Levy, Kroll & Simonds pursuant to an Hypothecation and Escrow
Agreement to be entered into by the Company and the holders of the Convertible
Notes.
Section 10. Affirmative covenants of company. The Company covenants and
agrees that, so long as any of the Convertible Notes shall be outstanding:
(a) Provide financial and other material information
concerning operations of company. The Company shall furnish to each registered
holder of a Convertible Note:
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(1) As soon as practicable after they have been sent to stockholders
of the Company or filed with the Commission, a copy of each annual and
interim financial and other report or communication sent by the Company to
its stockholders or filed with the Securities and Exchange Commission;
(2) As soon as practicable a copy of every press release and every
material news item and article in respect of the corporate affairs of the
Company which is released for publication by the Company; and
(3) Such additional nonconfidential and readily available documents
and information with respect to the Company and its business affairs and
the business affairs of any Subsidiaries as you may from time to time
request in writing.
(b) Insurance. The Company will maintain or cause to be
maintained with well rated and reputable insurers, insurance with respect to its
properties and business and the properties and businesses of its subsidiaries
against such risks (including, without limitation, risks of business
interruption), casualties and contingencies and of such types and in such
amounts as is customary in the case of corporations engaged in the same or
similar business or having similar properties.
(c) Notice of event of default. If any officer of the
Company obtains knowledge of the occurrence of any event of default specified in
this Agreement which has not been cured, or if the holder of any of the
Convertible Notes demands payment of such Convertible Notes or takes any other
action permitted upon the occurrence and continuance of such an event of
default, the Company will at once give notice to every other holder of the
Convertible Notes, specifying the nature of such demand or of such event of
default or of such action, as the case may be.
(d) Notices of certain events. The Company agrees to give
notice to the holders of the Convertible Notes within ten days after it has
filed with the Securities and Exchange Commission an application to register any
of the securities of the Company pursuant to the Exchange Act, or any comparable
federal statute. The Company agrees to review its stock ledgers, stock transfer
books and other corporate records periodically (and not less often than once in
each calendar quarter) in order to determine whether you are or shall have
become, directly or indirectly, the beneficial owner of more than such
percentage of any class of its equity securities (as defined in the Exchange
Act) as shall cause you to be required to make any filings or declarations to
the Company, the Securities and Exchange Commission pursuant to any provision of
the Exchange Act or any comparable federal statute, and the Company will give
prompt notice to you whenever it shall have determined, upon the basis of the
information disclosed by any such review, that you are or have become such a
holder, which notice shall also specify the information upon which the Company
bases such determinations.
(e) Payment of taxes, etc. The Company will pay, and will
cause each of its subsidiaries to pay, before they become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed
upon it or its property, and
(ii) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords
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and other like persons which, if unpaid, might result in the creation of a
lien upon its property.
Neither the Company nor any of its subsidiaries shall be required to pay any
such tax, assessment, charge, levy, claim or demand if the amount, applicability
or validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or such subsidiary, as the case may be, shall
have set aside on its books reserves m accordance with generally accepted
accounting principles deemed by its independent public accountants to be
adequate with respect thereto.
(f) Books and records. The Company will at all times keep, and will
cause each of its subsidiaries to keep, in accordance with generally accepted
accounting principles, true and complete books and records in connection with
its assets and operations.
(g) Preservation of properties. The Company will at all times keep
its properties, and will cause each of its subsidiaries to keep their respective
properties, whether owned in fee or otherwise, or leased, in good operating
condition, and from time to time will make, and will cause each of its
subsidiaries to make, all proper repairs, renewals, replacements, additions and
improvements thereto needed to maintain such properties in good operating
condition, will at all times comply with, and will cause each of its
subsidiaries to comply with, the provisions of all material leases to which it
or any subsidiary of it is a party or under which it or any subsidiary of it
occupies property so as to prevent any loss or forfeiture thereof or thereunder,
and at all times will comply with, and will cause each of its subsidiaries to
comply with, all laws, rules, regulations, and orders applicable to the
properties or business or any part thereof of it or any subsidiary.
(h) The Company will, so long as the holder of any warrants or
shares issuable upon the conversion of the Notes or exercise of the warrants,
remain current in all Exchange Act filings and retain its Bulletin Board listing
(or such listing of greater distribution such as NASDAQ).
Section 11. Use of proceeds. The Company represents and warrants that the
net proceeds of the sale of the Convertible Notes will be added to the general
funds of the Company and be used for working capital or to complete pending
acquisitions.
Section 12. Exchange, transfer, or replacement of convertible notes. At
the request of a holder of Convertible Notes, the Company at its own expense
will issue, upon transfer and surrender, or in exchange or replacement, of
Convertible Notes or mutilated portions thereof, new Convertible Notes of the
same tenor (except, in the case of a transfer, for the payee thereof) as, and in
an aggregate principal amount not exceeding the sum of, the outstanding
Convertible Notes held by such holder and so transferred and surrendered or
exchanged or replaced; notwithstanding the foregoing the Company may condition
such transfer on the payment to it by such holder of a sum sufficient to cover
any stamp tax or other governmental charge imposed in respect of any such
transfer and may condition the replacement of any of the Convertible Notes
reported as lost, stolen, or destroyed by a holder upon the receipt from such
holder of indemnity or security reasonably satisfactory to the Company;
provided, however, that if you or your designee shall be such holder, your
agreement of indemnity shall be sufficient for all purposes of this Section.
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Section 13. Amendments and waivers. This Agreement may be amended or any
of its restrictions or provisions may be waived with the written consent of the
holders of 66 2/3 percent of the principal amount of the Convertible Notes at
the time outstanding, except that without the written consent of the holders of
all Convertible Notes at the time outstanding no amendment to this Agreement
shall extend the maturity of any of the Convertible Notes, or reduce the rate of
interest or any premium payable with respect to any Convertible Note, or affect
the amount or allocation of any interest payments required under Section 5(a),
or affect the conversion rights of the Convertible Notes or reduce the
proportion of the principal amount of the Convertible Notes required with
respect to any consent or amendment.
Section 14. Events of default and remedies. The following events shall
constitute "events of default" under this agreement:
(a) The Company defaults (i) in the payment of principal or premium
on any Convertible Note when and as it becomes due and payable, whether at
maturity, on a date fixed for an interest payment under Section 5(a) or for a
redemption or otherwise, or (ii) in the payment of interest on any Convertible
Note when and as it becomes due and payable in accordance with the provisions
hereof and of the Convertible Notes,
(b) The Company defaults with respect to any material
misrepresentation in the representations or warranties made in Sections 2(c), 4,
or 11 hereof or in any certificate provided for herein which confirms any such
representation or warranty;
(c) The Company defaults in the performance or observance of any
other covenant, condition, or agreement made by it, or its successors or
assigns, either in this Agreement or in any Convertible Note, and such default
continues for a period of 30 days;
(d) A court of competent jurisdiction enters a decree or order
adjudging the Company or any material subsidiary a bankrupt or insolvent, or
approves as properly filed a petition seeking reorganization, readjustment,
arrangement, composition, or similar relief for the Company or any subsidiary
under the federal bankruptcy laws, or any other similar applicable federal or
state law, and such decree or order continues undischarged and unstayed for a
period of 60 days; a court of competent jurisdiction enters a decree or order
for the appointment of a receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of the Company or any subsidiary or a substantial part
of the Company's or subsidiary's property, or for the winding up or liquidation
of its affairs, and such decree or order remains in force undischarged and
unstayed for a period of 60 days; or any property of the Company or a subsidiary
is sequestered or attached and is not returned to the Company's or subsidiary's
possession or released from such attachment within 60 days thereafter;
(e) The Company or any material subsidiary: institutes proceedings
to be adjudicated a voluntary bankrupt; consents to the filing of a bankruptcy
proceeding against it; files a petition, answer, or consent seeking
reorganization, readjustment, arrangement, composition, or similar relief under
the federal bankruptcy laws, or any other similar applicable federal or state
law; consents to the filing of any such petition; consents to the appointment of
a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it
or a substantial part of its business; makes an assignment for the benefit of
creditors; admits in writing its in-ability to pay its debts generally as they
become due; or the Company or any subsidiary takes corporate
20
<PAGE> 21
action in furtherance of any of the above purposes;
(f) The Company or any material subsidiary defaults in any payment
of principal or premium or interest on, or any other payment of money due under,
any other obligation for borrowed money (including any obligation secured by
purchase money mortgages) beyond any period of grace provided with respect
thereto, and such default is not cured, or in the performance of any other
agreement, term, or condition contained in any agreement under which any such
obligation is created if the effect of such default is to cause, or permit the
holder or holders of such obligation (or a trustee on behalf of the holder or
holders) to cause, such obligation to become due prior to its stated maturity,
unless such default has been cured or effectively waived before the obligation
becomes due and the Convertible Notes are declared due under this Section 12; or
(g) A court or other governmental body renders final judgment
against the Company or any of its material subsidiaries for the payment of
money, which together with other outstanding judgments against the Company or
its subsidiaries, exceeds a total of $100,000, and the Company or such
subsidiary does not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay thereof, within 60 days from the
date of entry thereof and within such 60-day period, or within any longer period
during which execution of such judgment has been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.
If any one or more of the above events of default occurs, any holder of
the Convertible Notes then outstanding may declare the entire principal of all
the Convertible Notes held by such holder, and all accrued unpaid interest
thereon, and (to the extent permitted by law) the applicable premium thereon set
forth in Section 5(b) hereof to be due and payable immediately. Upon any such
declaration the principal of such Convertible Notes and said accrued unpaid
interest and said premium shall be immediately due and payable, anything in such
Convertible Notes or in this Agreement contained to the contrary
notwithstanding, and the holder of any of such Convertible Notes may thereupon
proceed to protect and enforce its rights either by suit in equity, or by action
at law, or by other appropriate proceedings whether for the specific performance
(to the extent permitted by law) of any covenant or agreement contained in this
Agreement or such Convertible Notes or in aid of the exercise of any power
granted in this Agreement, and proceed to enforce the payment of any of such
Convertible Notes held by it, and to enforce any other legal or equitable right
of such holder.
Section 15. Method of payment of principal, premium and interest.
Notwithstanding any contrary provision in the Convertible Notes or in this
Agreement, the Company will promptly and punctually pay to you at the address
set forth on the signature page hereof or to you or to your nominee at any other
address you designate to the Company in writing, all amounts payable in respect
of the principal of or premium or interest on any of the Convertible Notes, so
long as it is held by you or by such nominee, without any presentment thereof.
You or your nominee may, but need not, make any notation on any of the
Convertible Notes as to any such payment, except that prior to any sale or other
disposition of any of the Convertible Notes by you or your nominee, you or such
nominee, as the case may be, will give written notice of such sale or other
disposition of any of the Convertible Notes by you or your nominee, you or such
nominee, as the case may be, will give written notice of such sale or other
21
<PAGE> 22
disposition to the Company specifying the name and address of the transferee (if
known to you or such nominee).
Section 16. Payment by company of fees and expenses. Regardless of whether
the purchases of the Convertible Notes by you as contemplated by this Agreement
are consummated, the Company will, on demand, pay, indemnify, and hold you and
each other holder of any of the Convertible Notes harmless from and against any
and all liability and loss with respect to or resulting from all claims for or
on account of brokers' or finders' fees or commissions with respect to your
purchases of the Convertible Notes hereunder.
The obligations of the Company under this Section 16 shall survive the
payment of the Convertible Notes.
Section 17. Survival of covenants, agreements, representations and
warranties; successors and assigns. All covenants, agreements, representations,
and warranties made herein and in certificates delivered pursuant hereto shall
survive the execution and delivery of the Convertible Notes, and shall continue
in full force and effect as long as any of the Convertible Notes are outstanding
and unpaid and thereafter as provided in Section 7(h) and Section 16.
Section 18. Entire agreement; no oral change. This Agreement embodies the
entire agreement and understanding between the Company and you relating to the
subject matter hereof, and supersedes all prior agreements and understandings
relating to such subject matter. This Agreement may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, or discharge is sought.
Section 19. Notices, etc. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be delivered, or mailed
by registered mail, postage prepaid, addressed: (a) if to you, to your address
to which this Agreement is addressed, or to any other address you have furnished
to the Company in writing, or (b) if to any other holder of the Convertible
Notes to such address or such holder as may appear on, or in the registration
of, such Convertible Notes, or to any other address such holder has furnished to
the Company in writing, or (c) if to the Company, to its address set forth below
or to any other address the Company has furnished to you in writing. Notices
shall be deemed delivered when received by the party being notified.
Section 20. Law governing. This Agreement and the Convertible Notes shall
be construed in accordance with and governed by the laws of the State of New
York and all parties hereby consent to subject themselves to the jurisdiction of
the State of New York.
Section 21. Legal expenses. The Company will pay the legal expenses of the
Noteholders incurred in connection with the purchase of the Convertible Notes
and the Warrants, up to an aggregate of $5,000, such expenses to be deducted
from the purchase price.
Upon your signing the form of acceptance on the enclosed counterpart of this
Agreement and returning such counterpart to the Company, this Agreement shall
become a binding agreement between you and the Company.
Very truly yours,
22
<PAGE> 23
AIM Group, Inc.
By:
---------------------------
Name:
President
1000 Abernathy Road
Suite 1000
Atlanta, GA 30328
The foregoing is hereby accepted
as of the date first above written.
[NAME]
By :
------------------------
-------------------------
23
<PAGE> 24
EXHIBIT A
15% CONVERTIBLE SUBORDINATED NOTE
Atlanta, Georgia
October __, 1999
$
------------
FOR VALUE RECEIVED, the undersigned AIM Group, Inc. (the "Company"), a
corporation organized and existing under the laws of the State of Delaware,
hereby promises to pay to the order of ___________ the principal amount of
$_________ as hereinafter provided, together with interest (computed on the
basis of a 360-day year of twelve 30-day months) on the unpaid principal amount
hereof at the rate of fifteen percent (15%) per annum from the date hereof to
maturity, whether by acceleration or otherwise, payable semiannually on April
15th and October 15th in each year commencing on April 15, 2000, and unless
prohibited by applicable law, to pay interest (computed as aforesaid) on any
overdue principal and overdue interest at the rate of eighteen percent (18%) per
annum (or, in each case at the highest rate permitted by applicable law,
whichever is less).
The principal of this Note shall be due and payable on October __, 2000.
All payments of principal and interest are to be made in lawful money of the
United States of America at _____________________.
This Note is one of the Company's 15% Convertible Subordinated Notes,
limited in aggregate original principal amount of $750,000 issued pursuant to a
Purchase Agreement dated October __, 1999 (the "Agreement"), entered into by the
Company with _____________, and others . This Note is subject to redemption at
the Company's option, at any time, in whole or in part, prior to maturity with
no penalty. This Note may be, at the option of the Company, prepaid at any time
prior to maturity, without penalty.
The maturity of this Note may be accelerated by the holder hereof
following an event of default. The following events shall constitute an "event
of default":
(a) The Company defaults (i) in the payment of principal or premium
on any Convertible Note when and as it becomes due and payable, whether at
maturity, on a date fixed for an interest payment under Section 5(a) or for a
redemption or otherwise, or (ii) in the payment of interest on any Convertible
Note when and as it becomes due and payable in accordance with the provisions
hereof and of the Convertible Notes,
(b) The Company defaults with respect to any material
misrepresentation in the representations or warranties made in Sections 2(c), 4,
or 11 of the Agreement or in any certificate provided for herein which confirms
any such representation or warranty;
(c) The Company defaults in the performance or observance of any
other covenant, condition, or agreement made by it, or its successors or
assigns, either in this Agreement or in any Convertible Note, and such default
continues for a period of 30 days;
(d) A court of competent jurisdiction enters a decree or order
adjudging the
<PAGE> 25
Company or any material subsidiary a bankrupt or insolvent, or approves as
properly filed a petition seeking reorganization, readjustment, arrangement,
composition, or similar relief for the Company or any subsidiary under the
federal bankruptcy laws, or any other similar applicable federal or state law,
and such decree or order continues undischarged and unstayed for a period of 60
days; a court of competent jurisdiction enters a decree or order for the
appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or
insolvency of the Company or any subsidiary or a substantial part of the
Company's or subsidiary's property, or for the winding up or liquidation of its
affairs, and such decree or order remains in force undischarged and unstayed for
a period of 60 days; or any property of the Company or a subsidiary is
sequestered or attached and is not returned to the Company's or subsidiary's
possession or released from such attachment within 60 days thereafter;
(e) The Company or any material subsidiary: institutes proceedings
to be adjudicated a voluntary bankrupt; consents to the filing of a bankruptcy
proceeding against it; files a petition, answer, or consent seeking
reorganization, readjustment, arrangement, composition, or similar relief under
the federal bankruptcy laws, or any other similar applicable federal or state
law; consents to the filing of any such petition; consents to the appointment of
a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of it
or a substantial part of its business; makes an assignment for the benefit of
creditors; admits in writing its in-ability to pay its debts generally as they
become due; or the Company or any subsidiary takes corporate action in
furtherance of any of the above purposes;
(f) The Company or any material subsidiary defaults in any payment
of principal or premium or interest on, or any other payment of money due under,
any other obligation for borrowed money (including any obligation secured by
purchase money mortgages) beyond any period of grace provided with respect
thereto, and such default is not cured, or in the performance of any other
agreement, term, or condition contained in any agreement under which any such
obligation is created if the effect of such default is to cause, or permit the
holder or holders of such obligation (or a trustee on behalf of the holder or
holders) to cause, such obligation to become due prior to its stated maturity,
unless such default has been cured or effectively waived before the obligation
becomes due and the Convertible Notes are declared due: or
(g) A court or other governmental body renders final judgment
against the Company or any of its material subsidiaries for the payment of
money, which together with other outstanding judgments against the Company or
its subsidiaries, exceeds a total of $100,000, and the Company or such
subsidiary does not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay thereof, within 60 days from the
date of entry thereof and within such 60-day period, or within any longer period
during which execution of such judgment has been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.
This Note is subordinated to certain other indebtedness of the Company, as
follows:
(a) Maturity of senior debt. Upon maturity of any Senior Debt by
lapse of time, acceleration or otherwise, then all principal of, premium, if
any, and interest on, all such matured Senior Debt shall first be paid in full
before any payment on account of principal or interest is
2
<PAGE> 26
made upon the Convertible Notes. "Senior Debt" means all principal and interest
of all indebtedness of the Company for borrowed money (except such indebtedness
of the Company other than the Convertible Notes, which is subordinate or junior
in any respect to other indebtedness of the Company), whether outstanding at the
date hereof or created or incurred after the date hereof but prior to the
maturity of this Note by lapse of time, acceleration or otherwise.
Notwithstanding the foregoing, money borrowed from affiliates shall not be
senior to this Note.
(b) Liquidation, etc. In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company or its creditors or
its property, and in. the event of any proceedings for voluntary liquidation,
dissolution, or other winding up of the Company, whether or not involving
insolvency or bankruptcy proceedings, then all principal, premium, if any, and
interest due on Senior Debt shall first be paid in full, or such payment shall
have been provided for, before any payment on account of principal or interest
is made upon the Convertible Notes. Any payment or distribution of any kind or
character, whether in cash, property, stock, or obligations, which may be
payable or deliverable in respect of the Convertible Notes in any of the
proceedings referred to in the first sentence of this Section (b) shall be paid
or delivered directly to the holders of Senior Debt (or to a banking institution
selected by the court or person making the payment or delivery or designated by
any holder of Senior Debt) for application in payment thereof, unless and until
all principal and interest on all Senior Debt shall have been paid in full, or
such payment shall have been provided for; provided however, that:
(i) In the event that payment or delivery of such cash,
property, stock or obligations to the holders of the Convertible Notes is
authorized by an order or decree giving effect, and stating in such order
or decree that effect is given, to the subordination of the Convertible
Notes to Senior Debt, and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy or
reorganization law, no payment or delivery of such cash, property, stock
or obligations payable or deliverable with respect to the Convertible
Notes shall be made to the holders of Senior Debt; and
(ii) No such delivery shall be made to holders of Senior Debt
of stock or obligations which are issued pursuant to reorganization
proceedings or dissolution or liquidation proceedings, or upon any merger,
consolidation, sale, lease, transfer or other disposal not prohibited by
the provisions of this Agreement, by the Company, as reorganized, or by
the corporation succeeding to the Company or acquiring its property and
assets, if such stock or obligations are subordinate and junior at least
to the extent provided in this Section to the payment of all Senior Debt
then outstanding and to the payment of any stock or obligations which are
issued in exchange or substitution for any Senior Debt then outstanding.
(c) Senior debt default. The Company shall not make any payment of
principal or interest on, or purchase or acquire for value, any of the
Convertible Notes during the continuance of any default in the payment of
principal of or premium or interest on any Senior Debt.
(d) Company's obligations unimpaired. The provisions of this Section
are for the purpose of defining the relative rights of the holders of Senior
Debt, on the one hand, and the holders of the Convertible Notes on the other
hand, and as between the Company and the holders of the Convertible Notes
nothing herein shall impair the obligation of the Company, which is
3
<PAGE> 27
unconditional and absolute, to pay the holders thereof the principal thereof and
interest thereon in accordance with their terms and the terms of the related
agreements, nor shall anything herein prevent the holder of any Convertible Note
from exercising all remedies otherwise permitted by applicable law upon default
thereunder, subject to the rights, under this Section, of holders of Senior Debt
in respect of cash, property, stock or other securities received upon the
exercise of such remedies.
(e) Subrogation. Subject to the payment in full of all Senior Debt,
the holders of the Convertible Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of assets of the
Company payable or distributable to the holders of Senior Debt until all the
Convertible Notes shall be paid in full and, as between the Company, its
creditors other than the holders of Senior Debt, and the holders of the
Convertible Notes, no payments or distributions otherwise payable or deliverable
in respect of the Convertible Notes but, by virtue of the provisions thereof,
paid or delivered to the holders of Senior Debt shall be deemed to be a payment
by the Company on account of Senior Debt and no payments or distributions paid
to the holders of the Convertible Notes, by virtue of the subrogation herein
provided for, shall be deemed to be a payment by the Company on account of the
Convertible Notes.
(f) Subordination unimpaired. No right of any present or future
holder of Senior Debt to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act in good faith by any such
holder, or by any noncompliance by the Company with the terms, provisions, and
covenants of any agreement relating to Senior Debt, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
This Note is convertible into common stock of the Company in the manner,
and upon the terms and conditions, provided in the Agreement.
4
<PAGE> 28
If the indebtedness represented by this Note or any part thereof is placed
in the hands of attorneys for collection after an event of default, as defined
in the Agreement, the Company agrees to pay the principal, premium if any, and
interest due and payable hereon, and all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
This Note shall be governed by the laws of New York and any dispute shall
be subject to the jurisdiction of New York.
The parties hereto waive presentment, notice of dishonor, notice of
protest, presentment and demand in connection with the delivery, acceptance,
performance or default of this Note.
AIM Group, Inc.
By:
---------------------------
Name:
[Corporate Seal] President
By:
---------------------------
Name:
Secretary
-------------------------
(Address)
5
<PAGE> 29
AIM GROUP, INC.
Warrant
THIS AGREEMENT is made as of October __, 1999, by and between AIM GROUP,
INC., a Delaware corporation (the "Company"), and ___________ (the "Warrant
Holder").
W I T N E S S E T H:
WHEREAS, the Company desires to issue to the Warrant Holder a warrant to
purchase shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), in partial consideration for the Warrant Holder's purchase of
the Company's 15% Convertible Subordinated Notes.
NOW, THEREFORE, the parties hereto, intending to be legally bound, do
agree as follows:
1. Issuance of Warrant. Subject to the terms and conditions of this
Agreement, the Company hereby issues to Warrant Holder the right to purchase
from the Company that number of shares of Common Stock as determined in
accordance with the following formula:
a) 0.5 times the number of shares into which the Warrant Holder's
Notes are convertible, if the Notes are repaid or converted within
30 days of the issuance of the Notes and Warrants;
b) 1.0 times the number of shares into which the Warrant Holders Notes
are convertible, if the Notes are repaid or converted up to 90 days
of the issuance of the Notes and warrants; or
c) 1.5 times the number of shares into which the Warrant Holders Notes
are convertible, if the Notes are repaid or converted after 90 days
of issuance of the Notes and Warrants.
2. Warrant Price and Time of Exercise. The per-share purchase price at
which the shares subject to this Warrant may be purchased by Warrant Holder
pursuant to his exercise of this warrant shall be $4.00. The Warrant may be
exercised for a three (3) year period commencing at the earlier of (i) the
repayment or the conversion of the Convertible Notes or (ii) ninety (90) days
after the closing of the purchase of the Convertible Notes ("Exercise Period").
3. Method of Exercise and Payment for Shares. This warrant shall be
exercised by written notice delivered to the Company at its principal office,
specifying the number of shares to be acquired upon such exercise, and
accompanied by cash payment of the exercise price.
4. Non-transferability. This warrant is not transferable by Warrant Holder
except as
<PAGE> 30
otherwise provided in Paragraph 10 below.
5. Exercise After Death. In the event Warrant Holder dies before the
expiration of this warrant, Warrant Holder's estate, or the person or persons to
whom his rights under this warrant shall pass by will or the laws of descent and
distribution, may exercise this warrant, to the extent exercisable at the date
of death, at any time within six months following Warrant Holder's death (but in
any event before the expiration of the Exercise Period).
6. Adjustments.
(a) Adjustments by Stock Split, Stock Dividend, Etc. If the Company
shall at any time increase or decrease the number of its outstanding shares of
Common Stock, or change in any way the rights and privileges of such shares, by
means of the payment of a Common Stock dividend or the making of any other
distribution upon such shares payable in Common Stock, or through a Common Stock
split or subdivision of shares, or a consolidation or combination of shares, or
through a reclassification or recapitalization involving the Common Stock, or
the conversion price of the Company's 15% Convertible Subordinated Notes is
adjusted, or any Common Stock of the Company is issued for a price below that of
the exercise price of this Warrant, then the numbers, rights and privileges of
the shares of Common Stock underlying the warrant granted hereunder shall be
increased, decreased or changed in like manner as if they had been issued and
outstanding, fully paid and non-assessable at the time of such occurrence.
(b) Dividend Payable in Stock of Another Corporation, Etc. If the
Company shall at any time pay or make any dividend or other distribution upon
the Common Stock payable in securities or other property (except money or Common
Stock), a proportionate part of such securities or other property shall be set
aside and delivered to the Warrant Holder upon exercise hereof.
(c) Apportionment of Price. Upon any occurrence described in the
preceding subsections (a) and (b) of this Section 6, the total warrant price
hereunder shall remain unchanged but shall be apportioned ratably over the
increased or decreased number or changed kinds of securities or other property
subject to this warrant.
(d) Rights to Subscribe. If the Company shall at any time grant to the
holders of its Common Stock rights to subscribe pro rata for additional shares
thereof or for any other securities of the Company or of any other corporation,
there shall be added to the number of shares underlying this warrant, the Common
Stock or other securities which the Warrant Holder would have been entitled to
subscribe for if immediately prior to such grant the Warrant Holder had
exercised his entire warrant, and the warrant price shall be increased by the
amount which would have been payable by the Warrant Holder for such Common Stock
or other securities.
(e) Determination by the Company. Adjustments under this Section 6
shall be made by the Company, whose determinations with regard thereto shall be
final and binding. No fractional shares of Common Stock shall be issued on
account of any such adjustment.
2
<PAGE> 31
7. Merger, Consolidation, Etc.
(a) Effect of Transaction. Upon the occurrence of any of the
following events, if the notice required by Section 7(b) hereof shall have first
been given, the warrant granted hereunder shall automatically terminate and be
of no further force and effect whatsoever, without the necessity for any
additional notice or other action by the Company: (i) the merger, consolidation
or liquidation of the Company or the acquisition of its assets or stock pursuant
to a nontaxable reorganization, unless the surviving or acquiring corporation,
as the case may be, shall assume all outstanding warrants of the Company or
substitute new warrants for them; (ii) the dissolution or liquidation of the
Company; (iii) the appointment of a receiver for all or substantially all of the
Company's assets or business; (iv) the appointment of a trustee for the Company
after a petition has been filed for the Company's reorganization under
applicable statutes; or (v) the sale, lease or exchange of all or substantially
all of the Company's assets and business.
(b) Notice of Such Occurrences. At least 30 days' prior written
notice of any event described in Section 7(a) hereof, except the transactions
described in subsections 7(a)(iii) and (iv) as to which no notice shall be
required, shall be given by the Company to the Warrant Holder. If the Warrant
Holder is so notified, he may exercise all or a portion of the entire
unexercised portion of this warrant at any time before the occurrence of the
event requiring the giving of notice. Such notice shall be deemed to have been
given when delivered personally to the Warrant Holder or when mailed to the
Warrant Holder by registered or certified mail, postage prepaid, at the Warrant
Holder's last address known to the Company.
8. Binding Effect, Entire Agreement. Subject to the limitations stated
above, this Agreement shall be binding upon and inure to the benefit of the
personal representatives of Warrant Holder and the successors of the Company.
This Agreement constitutes the entire agreement between the parties and cannot
be altered, modified, or changed in any way unless made in writing and signed by
the party against whom such alteration, modification, or change is asserted.
9. Registration. This warrant is subject to the registration rights set
forth in a Note Purchase Agreement of this same date and such provisions are
incorporated herein by reference.
10. Assignability. This warrant may be assigned by the Warrant Holder
so long as such assignee agrees to be bound by the terms of this Warrant and the
Note Purchase Agreement.
11. Governing Law. This Warrant shall be governed by the laws of New
York and the parties agree that any dispute hereunder shall be subject to the
jurisdiction of New York.
------------------------
3
<PAGE> 32
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its President and the Warrant Holder has signed this Agreement.
AIM GROUP, INC.
By:
-----------------------------------
Paul R. Arena
President
WARRANT HOLDER:
-----------------------------------
Name:
4
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF CEREUS TECHNOLOGY PARTNERS, INC.
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY STATE OF INCORPORATION
- - ------------------ ----------------------
<S> <C>
AIM Solutions, Inc. Delaware
American Internet Media, Inc. Delaware
United Mineral Corporation-Arkansas Arkansas
United Mineral Corporation-Arizona Arizona
HeatShield Technologies, Inc. Florida
</TABLE>
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form 10-SB of Cereus Technology Partners, Inc. (formerly AIM Group,
Inc.; the "Company") of our report dated February 19, 1999, relating to the
financial statements appearing in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1998.
MOORE STEPHENS FROST, PLC
December 13, 1999
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form 10-SB of Cereus Technology Partners, Inc. (formerly AIM Group,
Inc.; the "Company") of our report dated April 15, 1999, relating to the
financial statements of Enterprise Solutions Group, Inc. appearing in Amendment
No. 1 to the Company's Current Report on Form 8-K dated July 30, 1999.
MELAMED HANDY & KARP, LLP
December 21, 1999
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form 10-SB of Cereus Technology Partners, Inc. (formerly AIM Group,
Inc.; the "Company") of our report dated April 30, 1999, relating to the
financial statements of The Reddy Group, Inc. and subsidiary appearing in
Amendment No. 1 to the Company's Current Report on Form 8-K dated July 30, 1999.
MOORE STEPHENS TILLER, LLC
December 16, 1999
