AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1998
REGISTRATION NO.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMAZON HERB COMPANY
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
FLORIDA 2833 65-0199738
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of Incorporation or Organization) Classification Code Number)
</TABLE>
725 NORTH A1A, SUITE C-115
JUPITER, FLORIDA 33447
(561) 575-7663
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
MR. JOHN H. EASTERLING
725 NORTH A1A, SUITE C-115
JUPITER, FLORIDA 33447
(561) 575-7663
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
ROBERT C. HACKNEY, ESQ.
HACKNEY, MILLER & ROBBINS, P.A.
4400 PGA BLVD., SUITE 505
PALM BEACH GARDENS, FLORIDA 33410
(561) 627-0677
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================
TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM PROPOSED REGISTRATION
OF SECURITIES TO REGISTERED OFFERING PRICE AGGREGATE FEE
BE REGISTERED- -- PER SHARE OFFERING
<S> <C> <C> <C> <C>
Common Stock.................380,000 $5.50 $2,090,000 $721
======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of Regulation C promulgated under the Securities Act of
1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OF
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
AMAZON HERB COMPANY
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION PROSPECTUS HEADING
----------------------- ------------------
<S> <C>
1. Front of Registration Statement and Forepart of Registration Statement and
Outside Front Cover of Prospectus...... Prospectus Cover Page
2. Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover Pages
of Prospectus.......................... of Prospectus
3. Summary Information and Risk Factors..... Prospectus Summary and Risk Factors
4. Use of Proceeds.......................... Use of Proceeds
5. Determination of Offering Price.......... Risk Factors and Plan of Distribution
6. Dilution................................. Dilution
7. Selling Security Holders................. Not Applicable
8. Plan of Distribution..................... Plan of Distribution
9. Legal Proceedings........................ Not Applicable
10. Directors, Executive Officers, Promoters
and Control Persons...................... Management and Principal Stockholders
11. Security Ownership of Certain Beneficial
Owners and Management.................... Management and Principal Stockholders
12. Description of Securities
to be Registered......................... Description of Securities
13. Interest of Named Experts and Counsel.... Legal Matters
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
15. Organization Within Last Five Years...... Not Applicable
16. Description of Business.................. Business
17. Management's Discussion and Analysis or
Plan of Operation........................ Plan of Operation
18. Description of Property.................. Business of the Company
19. Certain Relationships and Related
Transactions............................. Not Applicable
20. Market for Common Equity and Related
Stockholder Matters...................... Not Applicable
21. Executive Compensation................... Management
22. Financial Statements..................... Financial Statements
23. Changes In and Disagreements With
Accountants on Accounting and Financial
Disclosure............................... Not Applicable
</TABLE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
DATED JUNE 15, 1998
<PAGE>
UP TO 380,000 SHARES OF COMMON STOCK
AMAZON HERB COMPANY
Rainforest Bio-Energetics /registered mark/
------------------------
The Company is offering up to 380,000 shares of Common Stock of Amazon Herb
Company (the "Common Stock"). See "Description of Securities."
The minimum offering by the Company will be 275,000 shares of Common Stock
($1,512,500) and the maximum offering will be 380,000 shares of Common Stock
($2,090,000). The Common Stock is offered on a "best efforts, all or none" basis
with respect to the minimum number of shares of Common Stock offered hereby, and
on a "best efforts" basis with respect to sales of shares of Common Stock
thereafter up to the maximum number of shares of Common Stock being offered.
Pending the payment for not less than 275,000 shares of Common Stock, all
proceeds of this offering will be deposited in an interest bearing escrow
account at Bank, (the "Escrow Agent").
The Company reserves the right to use selling agents. No underwriting discounts,
commissions or expenses are payable or applicable in connection with the sale of
the Shares. Persons who wish to purchase Shares in this offering must submit a
Share Purchase Agreement, attached hereto as Appendix A, together with the
required payment, to the Company. The minimum subscription is 25 Shares. See
Plan of Distribution. THE COMPANY IS OFFERING INCENTIVES FOR (i) PURCHASE OF AT
LEAST 500 SHARES AND (ii) VOLUME DISCOUNTS FOR PURCHASE OF CERTAIN QUANTITIES OF
SHARES. SEE "PLAN OF DISTRIBUTION."
An electronic format of this Prospectus is available on the Company's Internet
World Wide Web Site at http:/www.amazonherb.com and shares may be purchased
electronically at that site.
There has been no public market for any securities of the Company prior to this
offering, and there can be no assurance that a public market will develop by
reason of this offering. If such a market should develop, there is no assurance
that it will be sustained, or that it will develop into a market greater than a
limited market. See "Risk Factors."
The initial public offering price for the Common Stock has been determined
solely by the Company, and does not necessarily bear any direct relationship to
the Company's assets, operations, book or other established criteria of value.
See "Risk Factors" and "Dilution."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION FROM THE OFFERING PRICE. SEE "RISK FACTORS" AND "DILUTION."
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS COMPANY(3)
- - ------------------------------------------------------------------------------
Per Share............ $5.50 $-0- $5.50
- - ------------------------------------------------------------------------------
Total Minimum........ $1,512,500 $-0- $1,512,500
- - ------------------------------------------------------------------------------
Total Maximum........ $2,090,000 $-0- $2,090,000
================================================================================
Footnotes on Next Page
<PAGE>
The offering of the Common Stock hereunder will terminate not later than ,
1998 (the "Termination Date"), provided that, in the sole discretion of the
Company, the offering period may be extended for an additional period not to
exceed 90 days. The Company has entered into an escrow agreement with Bank, to
hold any proceeds from this offering in an interest bearing escrow account
subject to certain terms and conditions. If subscriptions for all of the Common
Stock offered hereby have not been received and accepted by the Company by the
Termination Date, no Common Stock will be sold, and all funds held in escrow
will be returned promptly to investors along with any interest accrued thereon.
See "Plan of Distribution."
THE DATE OF THIS PROSPECTUS IS ________, 1998
Footnotes to Cover Page
(1) Common Stock is being offered for sale at $5.50 per share. Payment in full
for the shares is due upon subscription. Common Stock purchase funds will
initially be held in an interest bearing escrow account at
_____________________Bank,___________________ . This offering will terminate on
or before a date 90 days from the date of this Prospectus unless the maximum
amount of shares of Common Stock offered hereby is sold prior to such date, or
unless this offering is otherwise extended in the discretion of the Company for
a period not to exceed 90 days. When subscriptions for the minimum amount of
shares of Common Stock offered hereby have been received and accepted by the
Company, such funds will be released from escrow to the Company, and investors
whose subscriptions for shares of Common Stock have been accepted by the Company
will be issued Common Stock evidencing the number of shares of Common Stock
acquired, and the initial escrow will close. See "Common Stock Purchase
Information" and "Plan of Distribution."
(2) Proceeds to the Company are calculated before the deduction of expenses in
connection with this offering and payable by the Company, which are estimated to
be $120,000 if the minimum number of shares of Common Stock offered hereby are
sold, and $140,000 if the maximum number of shares of Common Stock offered
hereby are sold, and include filing, legal, accounting, printing and other
miscellaneous fees.
Rainforest Bio-Energetics/registered mark/ is a trademark of the Company.
<PAGE>
(INSIDE FRONT COVER)
(Appearing on the inside front cover of the Prospectus will be color pictures of
the products manufactured and distributed by the Company, each as it appeared on
May 15, 1998.)
<PAGE>
PROSPECTUS SUMMARY
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors
including those set forth under "Risk Factors" and elsewhere in this Prospectus.
The following information is selective and qualified in its entirety by the
detailed information (including financial information and notes thereto)
appearing elsewhere in this Prospectus. This summary of certain provisions of
the Prospectus is intended only for convenient reference and does not purport to
be complete. The entire Prospectus should be read and carefully considered by
prospective investors before making a decision to purchase Common Stock. Except
as set forth in the Company's financial statements or as otherwise indicated
herein, all information in this Prospectus has been adjusted to reflect the
1-for-2.5 reverse stock split of the Company's Common Stock effected on May 1,
1998.
COMMON STOCK PURCHASE INFORMATION
Subscribers purchasing shares of Common Stock should make checks payable to "
Bank, as Escrow Agent for Amazon Herb Company". Subscribers must complete a
Subscription Agreement in the form attached as Appendix A to this Prospectus.
For convenience, an actual Subscription Agreement has been included with this
Prospectus. Additional copies of the Subscription Agreement may be obtained by
writing or calling or faxing the Company at its executive office; 725 North A1A,
Suite C-115, Jupiter, Florida, 33447, Attn: Shareholder Relations Coordinator,
telephone (561) 575-7663 and facsimile (561) 575-7935. All checks and
Subscription Agreements should be forwarded to the Company at its Jupiter,
Florida office.
THE COMPANY
Amazon Herb Company, a Florida corporation, was incorporated on June 6,
1990. The Company is authorized to issue two classes of capital stock, which are
Common Stock and Preferred Stock. The total authorized Common Stock of the
Company is 8,000,000 shares, $.01 par value. The total authorized Preferred
Stock of the Company is 2,000,000 shares, $1.00 par value. The Company's
principal executive offices are located at 725 North A1A, Suite C-115, Jupiter,
Florida 33447; and its telephone number is (561) 575-7663.
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. There can be no assurance that the Company will have substantial
product sales or revenues or that it will be able to sell its products at a
profit. Other risk factors include the Company's reliance on third-party
producers and the Company's reliance on independent distributors and wholesalers
for product sales. See "Risk Factors."
THE OFFERING
Securities Offered by the
Company...............................
Minimum: 275,000 shares of Common Stock
Maximum: 380,000 shares of Common Stock
Price per share: ......................$5.50
Common Stock Outstanding
before Offering.......................2,733,200 Shares
<PAGE>
Common Stock Outstanding
after Minimum Offering................ 3,008,200 Shares
Common Stock Outstanding
after Maximum Offering................ 3,113,200 Shares
Use of Proceeds........................ Marketing, new product introductions,
and for working capital and general corporate purposes.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The information set forth below has been selected from the Financial Statements
of Amazon Herb Company. This information should be read in conjunction with, and
is qualified in its entirety by reference to the financial statements, including
the notes thereto, included elsewhere in this memorandum. The per share data has
been adjusted to reflect the 1 for 2.5 share reverse split of the common stock
that became effective on May 1, 1998.
<TABLE>
<CAPTION>
(000)
YEAR ENDED JUNE 30, NINE MONTHS ENDED MARCH 31,
------------------- ---------------------------
1996 1997 1997 1998
---- ---- ---- ----
STATEMENT OF INCOME DATA:
<S> <C> <C> <C> <C>
NET SALES $ 2,119 $ 2,378 $1,855 $1,799
Gross Profit 1,358 1,346 1,265 1,241
Income from operations 113 132 164 170
Net income 83 92 136 140
Net income per Share .025 .025 .049 .051
Weighted average number of
Shares outstanding 2,733,200 2,733,200 2,733,200 2,733,200
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997 MARCH 31, 1998
ACTUAL ACTUAL AS ADJUSTED
------ ------ -----------
BALANCE SHEET DATA:
<S> <C> <C> <C>
Total assets 814 881 2,273,500
Long-term debt 2 0 -0-
Shareholders' equity 647 787 2,179,500
</TABLE>
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of risk
and is not an appropriate investment for persons who cannot afford the loss of
their entire investment. Prospective investors should carefully consider the
following risk factors, in addition to the other information contained in this
Prospectus, before purchasing any of the Common Stock.
THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
WHICH REPRESENT THE COMPANY'S OBJECTIVES, EXPECTATIONS OR BELIEFS, INCLUDING,
BUT NOT LIMITED TO, STATEMENTS CONCERNING INDUSTRY PERFORMANCE, THE COMPANY'S
OPERATIONS, ECONOMIC PERFORMANCE, FINANCIAL CONDITION, GROWTH STRATEGIES AND
MARGINS AND GROWTH IN SALES OF THE COMPANY'S PRODUCTS. FOR THIS PURPOSE, ANY
STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE NOT STATEMENTS OF HISTORICAL
FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE
FOREGOING, WORDS SUCH AS "MAY," "WILL," "EXPECT," "BELIEVE," "ANTICIPATE,"
"INTEND," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF
OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES,
CERTAIN OF WHICH ARE BEYOND THE COMPANY'S CONTROL, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY DEPENDING ON A VARIETY OF IMPORTANT FACTORS, INCLUDING THOSE
DESCRIBED BELOW UNDER THIS "RISK FACTORS" SECTION AND ELSEWHERE IN THIS
PROSPECTUS.
DEPENDENCE UPON KEY PERSONNEL. The Company's success is heavily dependent upon
the continued active participation of its current executive officers, key
employees and consultants, particularly John H. Easterling. Loss of the services
of one of these executives, employees or consultants could have a material
adverse effect upon the development of the Company's business. The Company has
no employment agreement with but maintains $3 million "key man" life insurance
on Mr. Easterling's life. It does not have employment contracts with or life
insurance on any other officers or employees. There can be no assurance that the
Company will be able to recruit or retain other qualified personnel should it be
necessary to do so. See "Management."
NETWORK MARKETING RISKS. The Company's network marketing system is subject to a
number of federal and state regulations administered by the Federal Trade
Commission and various state agencies. The Company is subject to the risk that
in one or more of its markets, its marketing system could be found not to be in
compliance with applicable regulations. Failure by the Company to comply with
these regulations could have a material adverse effect on the Company and a
particular market or the Company's markets in general.
COMPETITION. The market for the sale of dietary supplements is highly
competitive. There are numerous companies in the industry selling products to
retailers, including mass merchandisers, drug store chains, independent drug
stores, supermarkets and health food stores. Most of these companies are
privately held and the Company is unable to precisely assess the size of its
competitors or where it ranks in comparison to such privately held competitors
with respect to sales to retailers. No company is believed to control more than
10% of this market. Although Amazon Herb competes with other health and
nutritional food companies, the Company believes
<PAGE>
its primary competition stems from other direct sales companies. The Company
competes in the recruitment of independent sales people with other direct sales
organizations whose product lines may or may not compete with the Company's
products.
Certain of the Company's competitors are substantially larger than the Company
and have greater financial resources than the Company. The principal competitive
factors affecting the market for the Company's products include product quality,
packaging, brand recognition, price and distribution capabilities. There can be
no assurance that the Company will be able to compete successfully against
current and future competitors based on these and other factors. The Company
competes with a variety of domestic and international suppliers of dietary
supplement products, many of whom have substantially greater financial,
distribution and marketing resources and have achieved a higher level of brand
recognition than the Company. Increased competition could result in price
reductions, reduced profit margins and loss of market share, all of which would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business of the Company -- Competition."
RELIANCE ON THIRD PARTIES FOR MANUFACTURING. The Company currently relies upon
third parties to manufacture and package substantially all of its products at
facilities in Woodbine, Iowa and Titusville, Florida. The Company's business,
results of operations and financial condition would be materially adversely
affected if any one of the manufacturers were unable, for any reason, to meet
the Company's delivery commitments or if a manufacturer were unable to continue
to produce a product being marketed and distributed by the Company. The Company
maintains business interruption insurance. There can be no assurance, however,
that such insurance will continue to be available at a reasonable cost or, if
available, will be adequate to cover any losses that may be incurred from an
interruption in the Company's manufacturing and distribution operations. See
"Business of the Company-- Manufacturing and Processing."
FOREIGN SUPPLY. Currently, all of the raw materials used by the Company are
grown outside of the United States, in the Amazon Rainforest, primarily in Peru
and to a lesser extent in other South American countries. The foreign supply of
botanicals is subject to a number of risks, including transportation delays and
interruptions, political and economic disruptions, the imposition of tariffs and
import and export controls and changes in governmental policies. Because the raw
materials used by the Company are extracted from the rainforest and because
Management believes that there is growing international pressure to restrict
harvesting of plants and materials in the rainforest for a variety of reasons,
it is possible that the governments controlling the rainforest may significantly
impede or impose restrictions on the harvesting of raw materials in the future.
Because the raw materials used by the Company are extracted from countries which
have or are experiencing political instability and/or insurrection, it is
possible that guerrilla activity or counter-insurgency activity by these
governments may significantly impede the harvesting of raw materials. Any such
impediment could have a material adverse impact on the Company. While the
Company has not to date experienced any material adverse effects due to such
risks, there can be no assurance that such events will not occur in the future
with the result of possible increases in costs and delays of, or interferences
with, product deliveries resulting in losses of revenues and goodwill. See
"Business of the Company- Purchasing of Raw Materials."
FOREIGN CURRENCY AND FOREIGN EXCHANGE REGULATION. As part of the Company's
ordinary business operations, the Company will be required to purchase raw
materials from the suppliers. The Company may be required to accomplish such
purchases through the use of foreign currencies. As a result, fluctuations in
exchange rates of the United States dollar against foreign
<PAGE>
currencies could adversely affect the Company's results of operations. The
Company may attempt to limit its exposure to the risk of currency fluctuations
by purchasing forward exchange contracts which could expose the Company to
substantial risk of loss. In such a transaction, the Company would purchase a
predetermined amount of foreign currency to ensure that the Company in the
future will own a known amount of such currency to pay for goods at a
predetermined cost. The Company believes that the use of such transactions will
successfully allow the Company to better determine costs involved in its
operations, and thus better manage currency fluctuations. There can be no
assurance that the Company will in the future successfully manage its exposure
to currency fluctuations or that such fluctuations will not have a material
adverse effect on the Company.
DEVELOPMENT OF NEW PRODUCTS; NEED TO MANAGE PRODUCT INTRODUCTIONS. The dietary
supplement industry is highly competitive and characterized by changing consumer
preferences and continuous introduction of new products. The Company's goal is
to expand its portfolio of dietary supplement products through the development
of new products serving niche segments of the industry, and introduce such new
products on a timely and regular basis to maintain distributor and consumer
interest and appeal to varying consumer preferences. The Company believes that
its future growth will depend, in part, on its ability to anticipate changes in
consumer preferences and acquire, manage, develop and introduce, in a timely
manner, new products that adequately address such changes. There can be no
assurance that the Company will be successful in acquiring, developing,
introducing and marketing new products on a timely and regular basis. If the
Company is unable to develop and introduce new products or if the Company's new
products are not successful, the Company's sales may be adversely affected as
customers seek competitive products. In addition, the introduction or
announcement of new products by the Company could result in reduction of sales
of the Company's existing products, requiring the Company to manage carefully
product introductions in order to minimize disruption in sales of existing
products. There can be no assurance that the introduction of new product
offerings by the Company will not cause distributors and consumers to reduce
purchases or consumption of existing Company products. Such reduction of
purchases or consumption could have a material adverse effect on the Company's
business, operating results and financial condition.
ARBITRARY DETERMINATION OF OFFERING PRICE. The offering price of the Common
Stock was arbitrarily determined by the Company. Among the factors considered by
the Company in establishing the offering price of the Common Stock was the
proceeds to be raised by the Company, the percentage of ownership to be held by
investors in this offering, the experience of the Company's management and the
current market conditions in the over-the-counter securities market.
Accordingly, there is no relationship whatsoever between the offering price and
the assets, earnings or book value of the Company, or any other recognized
criteria of value.
NO DIVIDENDS ON COMMON STOCK ANTICIPATED. The Company has not paid any dividends
upon its Common Stock since its inception and, by reason of its present
financial status and its contemplated financial requirements, does not
contemplate or anticipate paying any dividends upon its Common Stock in the
foreseeable future. Therefore, any potential purchaser of the Common Stock whose
decision to invest in the Common Stock is based upon an expectation of dividend
payments should refrain from purchasing the shares of Common Stock. See
"Dividend Policy."
SHARES AVAILABLE FOR RESALE. Sales of substantial numbers of shares of Common
Stock in the public market following this offering could adversely affect the
market price of the Common Stock prevailing from time to time. Upon completion
of this offering, and assuming that the maximum number of shares offered hereby
have been sold, the Company will have 3,113,200
<PAGE>
shares of Common Stock outstanding. All shares of Common Stock outstanding
(including the 380,000 Shares sold in this offering) will be freely transferable
without restriction of further registration under the Securities Act, unless
they are held by "affiliates" of the Company within the meaning of Rule 144
promulgated under the Securities Act as currently in effect. The Company is
unable to estimate when or the number of foregoing shares that may be sold by
existing stockholders because such sales will depend upon the market price for
the Common Stock, the personal circumstances of the seller and other factors.
The future sales of Common Stock or the availability of such shares of Common
Stock for sale may have an adverse effect on the market price of the Common
Stock prevailing from time to time. If such future sales did adversely affect
the market price of the Common Stock, the Company's ability to raise additional
funds through an equity offering at such time could be adversely affected. See
"Principal Stockholders" and "Shares Eligible for Future Sale."
DEPENDENCE ON TRADEMARKS AND PROPRIETARY RIGHTS; NO ASSURANCE OF ENFORCEABILITY.
The Company's success will depend in part on its ability to obtain and preserve
its trademarks and to operate without infringing the proprietary rights of third
parties. There can be no assurance that any applications related to the
Company's trademarks will provide the Company with a competitive advantage or
will afford protection against competitors with products similar to those
offered by the Company, or that competitors of the Company will not circumvent,
or challenge the validity of, the Company's trademarks. In addition, in the
event that another party infringes the Company's trademarks, the enforcement of
such rights is at the option of the Company and can be a lengthy and costly
process, with no guarantee of success. Finally, although to date no claims have
been brought against the Company alleging that its trademarks infringe
intellectual property rights of others, there can be no assurance that such
claims will not be brought against the Company in the future, or that any such
claims will not be successful. If such a claim were successful, the Company's
business could be materially adversely affected. In addition to any potential
monetary liability for damages, the Company could be required to obtain a
license in order to continue to provide products under its trademarks or could
be enjoined from utilizing its trademarks if such a license were not made
available on acceptable terms. If the Company becomes involved in such
litigation, it may require significant Company resources, which may materially
adversely affect the Company. See "Business of the Company --Trademarks."
DILUTION. Present stockholders of the Company acquired their shares of Common
Stock at an average cost of approximately $0.29 per share, an amount
substantially less than the $5.50 per share to be paid by public investors. The
Company's net tangible book value as of March 31, 1998, without giving effect to
any outstanding warrants or options of the Company, was $787,067 or $0.29 per
share and will increase to approximately $2,179,384, or $0.73 per share if the
minimum number of shares of Common Stock offered hereby is sold, and $2,454,384,
or $0.82 per share, if the maximum number of shares of Common Stock offered
hereby is sold. The result will be an immediate and substantial dilution of the
net tangible book value of the shares of Common Stock acquired by the public
investor of $4.77 (87%) per share if the minimum number of shares of Common
Stock offered hereby is sold, and $4.68 (85%) per share if the maximum number of
shares of Common Stock offered hereby is sold. Public investors therefore will
bear most of the risk of loss, while control of the Company will remain in the
hands of the present management and stockholders. See "Dilution."
ESCROW OF INVESTORS' FUNDS PENDING SALE OF MINIMUM NUMBER OF SHARES OFFERED.
Under the terms of this offering, the Company is offering the shares on a
"275,000 shares or none, best efforts" basis. If the minimum number of shares is
sold, the remaining 105,000 shares will be offered on a "best efforts" basis
until all of the shares are sold or the offering period ends, whichever occurs
first, unless the offering is terminated earlier by the Company. Therefore, no
<PAGE>
commitment exists by anyone to purchase all or any part of the shares offered
hereby. Consequently, there is no assurance that all of the shares offered
hereby will be sold, and subscribers' funds may be escrowed for so long as 90
days (or a period of 180 days if the offering period is extended by the Company)
and then returned promptly with interest thereon, in the event all of the shares
offered hereby are not sold within the 90 day offering period. Investors,
therefore will not have the use of any funds paid for the purchase of the shares
during the offering period. In the event the Company is unable to sell all of
the shares offered hereby within the offering period, the offering will be
withdrawn. See "Plan of Distribution."
DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Company's Articles of
Incorporation and Bylaws require the Company to indemnify and hold harmless its
directors and officers from and against and in respect of certain losses,
damages, deficiencies, expenses or costs which may be incurred or suffered by
such directors and officers as a result of their serving in such capacities with
the Company. See "Certain Provisions of Florida Law and of the Company's
Articles of Incorporation and Bylaws."
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF PRICE OF COMMON STOCK. Prior to
this offering, there has been no public market for any of the shares of the
Company's Common Stock, and there can be no assurance that a trading market will
develop, or if developed, that it will be developed into something greater than
a limited market. The trading price of the shares of Common Stock could be
subject to wide fluctuations in response to such factors as, among others,
variations in the Company's anticipated or actual results of operations and
market conditions in the industries in which the Company operates.
DISCRETION OF MANAGEMENT AND THE BOARD OF DIRECTORS IN USE OF PROCEEDS. Although
the Company intends to apply the net proceeds of this offering in the manner
described under "Use of Proceeds," the Company's management and the Board of
Directors have broad discretion within such proposed uses as to the precise
allocation of the net proceeds, the timing of expenditures and all other aspects
of the use thereof. The Company reserves the right to reallocate the net
proceeds of this offering among the various categories set forth under "Use of
Proceeds" as it, in its sole discretion, deems necessary or advisable based upon
prevailing business conditions and circumstances. See "Use of Proceeds."
LACK OF A MAJORITY OF INDEPENDENT DIRECTORS. Upon completion of the offering of
the shares, the Company's board of directors will have only two independent
directors. As such, upon completion of the offering of the shares, the majority
of the Company's directors will be either officers of the Company, persons
related to the officers of the Company, or persons who provide consulting or
advisory services to the Company in exchange for remuneration. See "Management."
GOVERNMENT REGULATION. The manufacturing, processing, formulation, packaging,
labeling and advertising of the Company's products are subject to regulation by
one or more federal agencies, including the United States Food and Drug
Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer
Product Safety Commission, the United States Department of Agriculture, the
United States Postal Service, the United States Environmental Protection Agency
and the Occupational Safety and Health Administration. These activities are also
regulated by various agencies of the states and localities in which the
Company's products are sold. In particular, the FDA regulates the safety,
labeling and distribution of dietary supplements, including vitamins, minerals
and herbs, food additives, food supplements, OTC and prescription drugs and
cosmetics. The regulations that are promulgated by the FDA relating to the
manufacturing process are known as Current Good Manufacturing Practices
("CGMPs"), and are
<PAGE>
different for drug and food products. In addition, the FTC has overlapping
jurisdiction with the FDA to regulate the labeling, promotion and advertising of
vitamins, OTC drugs, cosmetics and foods.
The Dietary Supplement Health and Education Act of 1994 ("DSHEA") was enacted on
October 25, 1994. DSHEA amends the Federal Food, Drug and Cosmetic Act by
defining dietary supplements which include vitamins, minerals, nutritional
supplements and herbs, as a new category of food separate from conventional
food. DSHEA provides a regulatory framework to ensure safe, quality dietary
supplements and the dissemination of accurate information about such products.
Under DSHEA, the FDA is generally prohibited from regulating the active
ingredients in dietary supplements as drugs unless product claims, such as
claims that a product may heal, mitigate, cure or prevent an illness, disease or
malady, trigger drug status.
DSHEA provides for specific nutritional labeling requirements for dietary
supplements effective January 1, 1997, although final regulations have not been
published and implementation will be delayed. DSHEA permits substantiated,
truthful and non-misleading statements of nutritional support to be made in
labeling, such as statements describing general well-being resulting from
consumption of a dietary ingredient or the role of a nutrient or dietary
ingredient in affecting or maintaining a structure or function of the body. The
Company anticipates that the FDA will finalize CGMPs which are specific to
dietary supplements and require at least some of the quality control provisions
contained in the CGMPs for drugs. The Company currently manufactures its
vitamins and nutritional supplement products in compliance with the applicable
food CGMPs.
The FDA has proposed but not finalized regulations to implement DSHEA, including
those relating to nutritional labeling requirements. The Company cannot
determine what effect such regulations, when promulgated, will have on its
business in the future. Such regulations are likely to require expanded or
different labeling for the Company's vitamin and nutritional products and could,
among other things, require the recall, reformulation or discontinuance of
certain products, additional record keeping, warnings, notification procedures
and expanded documentation of the properties of certain products and scientific
substantiation regarding ingredients, product claims, safety or efficacy.
Failure to comply with applicable FDA requirements can result in sanctions being
imposed on the Company or the manufacturers of its products, including,
depending on the product category, warning letters, fines, product recalls and
seizures.
Governmental regulations in foreign countries where the Company plans to
commence or expand sales may prevent or delay entry into a market or prevent or
delay the introduction, or require the reformulation, of certain of the
Company's products.
Amazon Herb is subject to regulation under various international, state and
local laws which include provisions regulating, among other things, the
operation of direct sales programs. In addition, many countries currently have
laws that would restrict or prohibit direct sales companies, such as Amazon
Herb, from conducting business therein.
In addition, the Company cannot predict whether new domestic or foreign
legislation regulating its activities will be enacted. Such new legislation
could have a material adverse effect on the Company. See "Business of the
Company--Government Regulations."
MANAGING GROWTH. The Company is currently experiencing a period of rapid growth
and expansion which has placed, and could continue to place, a significant
strain on the Company's management, customer service and support operations,
sales and administrative personnel and other resources. In order to serve the
needs of its existing and future customers, the Company has
<PAGE>
substantially increased and will continue to increase its workforce, which
requires the Company to attract, train, motivate and manage qualified employees.
The Company's ability to manage its planned growth requires the Company to
continue to expand its operating, management, information and financial systems,
all of which may significantly increase its operating expenses. If the Company
fails to achieve its growth as planned or is unsuccessful in managing its
anticipated growth, there could be a material adverse effect on the Company. In
addition, the loss of a significant customer or a number of customers, or a
significant reduction in purchase volume by or financial difficulty of such
customers, for any reason, could have a material adverse effect on the Company.
POTENTIAL EFFECT OF ADVERSE PUBLICITY. The Company's products consist of herbs
and other ingredients that the Company regards as safe when taken as suggested
by the Company and that various scientific studies have suggested may involve
health benefits. While the Company conducts extensive quality control testing on
its products, the Company generally does not conduct or sponsor clinical studies
relating to the benefits of its products. The Company is highly dependent upon
consumers' perception of the overall integrity of its business, as well as the
safety and quality of its products and similar products distributed by other
companies which may not adhere to the same quality standards as the Company. The
Company could be adversely affected if any of the Company's products or any
similar products distributed by other companies should prove or be asserted to
be harmful to consumers or should scientific studies provide unfavorable
findings regarding the effectiveness of the Company's products. Amazon Herb's
ability to attract and retain independent distributors could be adversely
affected by negative publicity relating to it or to other direct sales
organizations.
RELIANCE ON INDEPENDENT DISTRIBUTORS. Amazon Herb's sales are directly dependent
upon the efforts of its independent associates (distributors), and any growth in
sales volume will require an increase in the productivity or the number of such
distributors. As is typical in the direct sales industry, there is turnover in
distributors from year to year, which requires the sponsoring and training of
new associates by existing associates in order to maintain the size of the
associate network. The Company experiences seasonal decreases in associate
sponsoring and product sales due to summer and winter holiday periods. Other
factors such as general economic conditions and negative publicity relating to
Amazon Herb or other direct sales organizations could also adversely affect the
ability of Amazon Herb to maintain or expand its distributor network. The loss
of a key associate or group of associates could adversely affect sales of Amazon
Herb products and impair Amazon Herb's ability to attract new distributors.
RISKS ASSOCIATED WITH INTERNATIONAL MARKETS. An element of the Company's future
growth strategy is to increase the distribution and sale of the Company's
products into international markets. The Company's existing and planned
international operations are subject to political and economic uncertainties,
including, among other things, inflation, risk of modification of existing
arrangements with governmental authorities, transportation, tariffs, export
controls, government regulation, currency exchange rate fluctuations, foreign
exchange restrictions which limit the repatriation of investments and earnings
therefrom, changes in taxation, hostilities or confiscation of property. Changes
related to these matters could have a material adverse effect on the Company.
YEAR 2000 COMPLIANCE RISK. The Company uses computer software programs and
operating systems in its internal operations, including applications used in
financial business systems and various administration functions, including
calculation of commissions due to Associates. Computer programs have
traditionally been written using two digits rather than four to define the
applicable year. As a consequence, unless modified, computer systems will not be
able to
<PAGE>
differentiate between the year 2000 and 1900. Failure to address this problem
could result in system failures and the generation of erroneous data. The
Company is reviewing its computer programs and systems to ensure that the
programs and systems will function properly and be in compliance for the year
2000. To the extent that these software applications contain code that is unable
to appropriately interpret upcoming calendar year 2000, some level of
modification of such source code or applications will be necessary. The Company
is currently in the process of evaluating its computer software programs and
operating systems to ensure such programs and systems will be able to process
transactions in the year 2000. The Company does not believe that the costs to
modify its programs or systems will be material to its financial condition or
results of operations However, while the estimated cost of these efforts are not
expected to be material to the Company's financial position or any year's
results of operations, there can be no assurance to this effect. In addition,
the Company cannot predict the effect of the year 2000 problem on entities with
which the Company transacts business, and there can be no assurance that the
effect of the year 2000 problem on such entities will not have a material
adverse effect on the Company's business, financial condition or results of
operations.
PRODUCT LIABILITY CLAIMS. As a marketer of vitamin and nutritional supplements
and other products that are ingested by consumers or applied to their bodies,
the Company may be subjected to various product liability claims, including,
among others, that its products contain contaminants or include inadequate
instructions as to use or inadequate warnings concerning side effects and
interactions with other substances. While such claims to date have not been
material to the Company and the Company maintains product liability insurance,
there can be no assurance that product liability claims and the resultant
adverse publicity will not have a material adverse effect on the Company.
CONCENTRATION OF OWNERSHIP; CERTAIN ANTI-TAKEOVER CONSIDERATIONS. The Company's
directors and executive officers and certain of their affiliates beneficially
own approximately 83.5% of the outstanding Common Stock. Accordingly, these
shareholders will continue to have the ability to elect all of the directors of
the Company and to thereby direct or substantially influence the management,
policies and business operations of the Company and will have the power to
control the outcome of any matters submitted to a vote of the Company's
shareholders. The Company's Board of Directors has the authority to approve the
issuance of 2,000,000 shares of preferred stock and to fix the rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the Company's shareholders. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of holders of any preferred stock that may be issued in
the future. Certain provisions of Florida law, as well as the issuance of
preferred stock, could delay or inhibit the removal of incumbent directors and
could delay, defer, make more difficult or prevent a merger, tender offer or
proxy contest, or any change in control involving the Company, as well as the
removal of management, even if such events would be beneficial to the interests
of the Company's shareholders, and may limit the price certain investors may be
willing to pay in the future for shares of Common Stock.
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of Common Stock (after deducting
offering expenses) are estimated to be approximately $1,392,500 if the minimum
number of 275,000 shares of Common Stock is sold and $1,950,000 if the maximum
number of 380,000 shares of Common Stock is sold. The following table sets forth
the estimated application by the Company of the net proceeds to be derived from
the sale of Common Stock offered hereby.
MINIMUM OFFERING MAXIMUM OFFERING
Total Proceeds to Company $1,512,500 $2,090,000
Less Offering Expenses:
Legal and Accounting 60,000 60,000
Printing and Advertising 50,000 70,000
Filing Fees 5,721 5,721
Miscellaneous 4,279 4,279
Net Proceeds to Company $1,392,500 $1,950,000
Intended Use of Proceeds:
Marketing and
New Product Introduction (1) $800,000 $1,100,000
General Working Capital (2) $592,500 $ 850,000
(1) Represents funds required to implement the Company's sales and marketing
programs. This will include the creation of new marketing tools for the
Company's independent distributors, incentive programs and events for
distributors, attendance at trade shows, research, development and introduction
of new products. See "Business of the Company-- Product Distribution/ Direct
Sales Through Independent Distributors."
(2) Represents funds which will support the basic operations of the Company,
including but not limited to funds for office rent, utilities, salaries and
miscellaneous expenses.
Pending the expenditure of the proceeds of this offering, the Company may make
temporary investments in insured certificates of deposit, insured short-term
interest-bearing deposits, United States Government obligations or insured money
market certificates.
DIVIDEND POLICY
The Company has never paid or declared any cash dividends on its Common Stock
and does not intend to pay dividends on its Common Stock in the foreseeable
future. The Company presently expects to retain its earnings to finance the
development and expansion of its business. The payment by the Company of
dividends, if any, on its Common Stock in the future is subject to the
discretion of the Board of Directors and will depend on the Company's earnings,
financial condition, capital requirements and other relevant factors. See
"Description of Securities."
DILUTION
As of March 31, 1998, there were 2,733,200 shares of Common Stock outstanding
(as adjusted for the 1 for 2.5 reverse split effective May 1, 1998) having a net
tangible book value of $787,067 or approximately $0.29 per share. Net tangible
book value per share is the net tangible assets of
<PAGE>
the Company (total assets less total liabilities and intangible assets) divided
by the number of shares of Common Stock outstanding. Upon completion of this
offering, there will be 3,008,200 shares of the Company's Common Stock
outstanding having a net tangible book value of approximately $2,179,567 or
approximately $0.72 per share if the minimum number of Shares is sold; and
3,113,200 shares of the Company's Common Stock outstanding having a net tangible
book value of approximately $2,737,067 or approximately $0.88 per share if the
maximum number of Shares is sold. The net tangible book value of each share will
have increased by approximately $0.48 per share to present stockholders, and
decreased by approximately $4.78 per share (a dilution of 87%) to public
investors if the minimum number of shares is sold, and the net tangible book
value of each share will have increased by approximately $0.64 per share to the
present stockholders and decreased by approximately $4.62 per share (a dilution
of 84%) to public investors if the maximum number of shares is sold.
The following tables set forth the percentage of equity to be purchased by
public investors in this offering compared to the percentage of equity to be
owned by the present stockholders, and the comparative amounts paid for the
shares of Common Stock by public investors as compared to the total cash
consideration paid by the present stockholders of the Company.
ASSUMING THE MINIMUM NUMBER OF SHARES OF COMMON STOCK SOLD
<TABLE>
<CAPTION>
TOTAL SHARES OF PURCHASED CONSIDERATION
----------- ----------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PAID PER SHARE(1)
------ ------- ------ ------- -----------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders..... 2,733,200 91% $787,067 24% $0.29
New Investors........................ 275,000 9% $1,512,500 76% $5.50
--------- --- ---------- ---
TOTAL...................... 3,008,200 100% $1,980,404 100%
========= === ========== ===
</TABLE>
- - ---------------
(1) Based on the average value per share paid by existing stockholders to the
Company and a public offering price of $5.50 per share of Common Stock paid by
new investors.
ASSUMING THE MAXIMUM NUMBER OF SHARES SOLD
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------- ------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PAID PER SHARE(1)
------ ------- ------ ------- -----------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.. 2,733,200 90% $787,067 18% $0.29
New Investors................. 380,000 10% $2,090,000 82% $5.50
--------- --- ---------- ---
TOTAL............. 3,113,200 100% $2,557,904 100%
========= === ========== ===
</TABLE>
- - ---------------
(1) Based on the average value per share paid by existing stockholders to the
Company and a public offering price of $5.50 per share of Common Stock paid by
new investors.
The Company has reserved an aggregate of 1,000,000 shares of its Common Stock
for its officers, directors, employees and consultants to purchase pursuant to
its Stock Option Plan. As of the date of this Prospectus, the Company has not
issued any options pursuant to the terms of its Stock
<PAGE>
Option Plan. The above paragraph does not give effect to the possible issuance
of up to 1,000,000 additional shares of the Company's Common Stock upon exercise
of any options which have been, or may yet be, granted under the Stock Option
Plan. The issuance of shares of the Company's Common Stock upon the exercise of
options which may be granted under the Stock Option Plans would result in
further dilution in the interests of stockholders if at the time of exercise,
the Company's net tangible book value per share is greater than the exercise
price of any such options. See "Stock Option Plan."
CAPITALIZATION
The following tables set forth at March 31, 1998 (i) the actual capitalization
of the Company and (ii) the capitalization as adjusted to reflect the sale of
the minimum and the maximum number of Shares of Common Stock offered hereby
(based upon an initial public offering price of $5.50 per Share and the
application of the net proceeds therefrom). The table should be read in
conjunction with the Financial Statements and Notes thereto included elsewhere
in this Prospectus.
ASSUMES MINIMUM NUMBER OF SHARES SOLD
MARCH 31, 1998
------------------
<TABLE>
<CAPTION>
ACTUAL (1) AS ADJUSTED (2)
---------- ---------------
(UNAUDITED)
<S> <C> <C>
Stockholders' equity:
Common Stock, $.01 par value, 8,000,000 shares authorized;
2,733,200 shares outstanding (3,008,200)........... 27,332 30,082
Additional paid-in-capital.................................... 497,768 1,887,518
Preferred Stock, $1.00 par value, 2,000,000 shares
authorized; no shares outstanding........... -0- -0-
Offering Expenses....................................... (19,540) (19,540)
Retained Earnings....................................... 281,507 281,507
-------- ----------
Total stockholders' equity................................. 787,067 2,179,567
Total capitalization.................................. 787,067 2,179,567
======== ==========
</TABLE>
- - ---------------
(1) Derived from the Financial Statements of the Company included elsewhere in
this Prospectus.
(2) As adjusted to reflect the sale of the minimum number of Shares offered
hereby and the application of the net proceeds set forth in "Use of Proceeds."
<PAGE>
ASSUMES MAXIMUM NUMBER OF SHARES SOLD
MARCH 31, 1998
------------------
<TABLE>
<CAPTION>
ACTUAL(1) AS ADJUSTED(2)
--------- --------------
(UNAUDITED)
- - ---------------
<S> <C> <C>
Stockholders' equity:
Common Stock, $.01 par value, 8,000,000 shares authorized;
2,733,200 shares outstanding (3,113,200).......... 27,332 31,132
Additional paid-in-capital.................................... 497,768 1,887,518
Preferred Stock, $1.00 par value, 2,000,000 shares
authorized; no shares outstanding........... -0- -0-
Offering Expenses....................................... (19,540) (19,540)
Retained Earnings....................................... 281,507 281,507
------- ---------
Total stockholders' equity................................. 787,067 2,737,067
Total capitalization.................................. 787,067 2,737,067
======= =========
</TABLE>
(1) Derived from the Financial Statements of the Company included elsewhere in
this Prospectus.
(2) As adjusted to reflect the sale of the maximum number of Shares offered
hereby and the application of the net proceeds set forth in "Use of Proceeds."
SELECTED FINANCIAL DATA
The statement of operations and balance sheet information set forth below as of
June 30, 1997 and for the year ended June 30, 1997, are derived from, and are
qualified by reference to, the financial statements of the Company which have
been audited by Bernard J. Donth, independent certified public accountants. The
financial statements as of June 30, 1997, and the report thereon, are included
elsewhere in this Prospectus. The selected data for the six months ended
December 31, 1997 are derived from the unaudited financial statements of the
Company, and in the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of such data have been
included. The information below should be read in conjunction with the
consolidated Financial Statements and Notes thereto included in this Prospectus.
The Company's historical operating results are not necessarily indicative of the
results of any future period. The per share data has been adjusted to reflect
the 1 for 2.5 reverse split of the common stock that was effective on May 1,
1998.
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, NINE MONTHS ENDED
(000) MARCH 31,
----------------------------------- ---------------------
1996 1997 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income Statement Data:
Net Sales................. $2,119 $2,378 $1,855 $1,799
Gross Profit ............. 1,358 1,346 1,265 1,214
Operating income.......... 113 132
Other income (expenses),
net................. 8 0
Income before taxes....... 121 132 164 170
Net income................ 83 92 136 140
Net income per share (1) .01 .01 .049 .051
Weighted average shares
outstanding (1)..... 2,733,200 2,733,200 2,733,200 2,733,200
</TABLE>
<TABLE>
<CAPTION>
June 30, March 31,
(000)
----------------------------------
1996 1997 1998
--------------- ------------- -------------
<S> <C> <C> <C>
Balance Sheet Data:
Total assets........... 925 814 881
Long-term debt, less 9 2 0
current portion
Stockholders' equity 499 647 787
</TABLE>
(1) Net income per share is computed assuming 2,733,200 shares issued and
outstanding on May 1, 1998, were outstanding for all periods presented.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements of Amazon Herb Company and the financial information appearing
elsewhere herein.
Amazon Herb Company's historic operations have consisted of sourcing and
marketing food and dietary supplements produced from products grown in the
Amazon Rainforest of Peru, Brazil, Paraguay and Uruguay. The primary costs of
operating the Company's herb business are those related to the network marketing
of its products.
NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE MONTHS ENDED MARCH 31, 1997
REVENUES AND GROSS PROFITS. Revenues decreased by 3.0% to $1,799,770 for the
period ending March 31, 1998 compared to $1,855,860 for the period ending March
31, 1997. Even though actual sales decreased, booked orders were running at a
higher rate than the previous period. Gross profits decreased by 2% to
$1,240,893 for the period ending March 31, 1998 compared to $1,265,479 for the
period ending March 31, 1997.
<PAGE>
OPERATING EXPENSES. Operating expenses totaled $1,070,837 for the period ending
March 31, 1998, a decrease of 3% from $1,101,073 for the period ending March 31,
1997. The decrease in operating expenses was attributable to the reduction of
selling expenses and raw material costs.
INCOME FROM OPERATIONS. Income from operations increased to $170,056 for the
period ending March 31, 1998 as compared to $164,406 for the period ending March
31, 1997. The increase of 3% reflects the better margins due to lower operating
costs..
LIQUIDITY AND CAPITAL RESOURCES At March 31, 1998, the Company had cash balances
totaling $20,104 and a working capital balance of $779,717. This compares to a
cash balance of $35,497 and working capital of $664,104 as of March 31, 1997.
The Company's primary liquidity needs are to upgrade distributors' sales tools,
for new product introductions, to fund inventory purchases, and for marketing
purposes. Historically, the Company has funded its operations through operating
profit, shareholder loans, bank borrowings, and the sale of stock.
The Company's accounts receivable decreased 17.1% to $192,725 from the period
ending March 31, 1998 compared to $232,420 from the period ending March 31,
1997. The decrease in accounts receivable was attributable to more efficient
collections and stronger credit policy.
At March 31, 1998, the Company's material capital commitments relate to the
direct public offering of its stock, otherwise, the Company has no plans to
expend capital resources outside of ordinary operating expenses. The Company
intends to use funds available for additional marketing and tools for the
distributors.
At March 31, 1998, the Company's capital resources consisted of bank credit
lines, capital leases and cash on hand.
With the cash on hand the Company believes that it has sufficient capital to
satisfy its anticipated working capital requirements for at least the next
twelve months.
YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996
REVENUES AND GROSS PROFITS. Revenues increased by 12.2% to $2,378 for the year
ended September 30, 1997 compared to $2,119 for the year ended September 30,
1996. The increase in sales was attributable to the addition of approximately
4,000 sales representatives during the year. Gross profits increased by .9% to
$1,358,000 for the year ended September 30, 1997 from $1,346,000 for the year
ended September 30, 1996. The increase in gross profits was attributable to an
increase in sales during the period which was partially offset by higher raw
material costs.
OPERATING EXPENSES. Operating expenses totaled $1,214,000 for the year ended
June 30, 1997 a decrease of 2.6% from $1,245,000 for the year ended June 30,
1996. The decrease in operating expenses during the current year was primarily
attributable to a decrease in general and administrative and depreciation
expenses.
INCOME FROM OPERATIONS. Income from operations increased to $92,000 for the year
ended June 30, 1997 a 10.8% increase from the $83,000 for the corresponding
period of the prior year. This increase was a result of lower operating
expenses.
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
<PAGE>
REVENUES AND GROSS PROFITS. Revenues increased by 64.1% to $2,119,000 for the
year ended June 30, 1996 compared to $1,291,000 for the year ended June 30,
1995. The increase in sales was attributable to an increase in the consumer and
distributor base. Gross profits increased by 34.5% to $1,358,000 for the year
ended June 30, l996 from $1,010,000 for the year ended June 30, 1995. The
increase in gross profits was attributable to an increase in sales during the
period which were partially offset by a reduction in gross margins. The
reduction in gross margins was attributable to higher raw material costs.
OPERATING EXPENSES. Operating expenses totaled $1,245,000 for the year ended
June 30, 1996 an increase of 24.1% from $1,003,000 for the year ended June 30,
1995. The increase in operating expenses during the current year was primarily
attributable to an increase in selling expenses.
INCOME FROM OPERATIONS. Income from operations increased to $113,000 for the
year ended June 30, 1996 from $7,000 for the year ended June 30, 1995. Net
income experienced a 12.6% decrease from $95,000 for the year ended June 30,
1995 to $83,000 for 1996. This increase was a result of $38,000 of income taxes
being charged against income for the year ended June 30, 1995 while no taxes
were charged to income for the year ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES. At September 30, 1997, the Company had cash
balances totaling $102,861 and a working capital balance of $694,994. This
compares to a cash balance of $1,029 and working capital of $710,230 as of
September 30, 1996.
The Company's primary liquidity needs are to upgrade Associates' sales tools,
new product introductions and fund inventory purchases. Historically, the
Company has funded its operations through shareholder loans, bank borrowings,
and the sale of stock.
The Company's accounts receivable decreased to $164,875 at September 30, 1997
compared to $169,394 or 7.12% of fiscal year 1997 sales, at June 30, 1997 and
$114,352, or 3.84% of fiscal 1996 sales at June 30, 1996. The decrease in
accounts receivable during the first three months of fiscal 1997 was
attributable to more efficient collections. The increase in accounts receivable
in aggregate and as a percentage of sales from fiscal 1996 to fiscal 1997 was
attributable to an increase in the sales of raw materials.
At September 30, 1997, the Company had no material capital commitments and has
no material commitments to expend capital resources outside of ordinary
operating expenses. However, the Company intends to use funds as available for
additional marketing tools and expanding its network sales force.
At September 30, 1997, the Company's capital resources consisted of various bank
credit facilities, capital leases and cash on hand. The Company's bank credit
facilities consist of three installment loans, two of which will be paid in full
during the current fiscal year and the third during the year ending June 30,
1999. The Company does not presently have a line of credit with any lending
institution.
At September 30, 1997, the Company had three lease commitments for its
facilities. At September 30, 1997 the lease obligations totaled $61,206 of which
$30,618 is attributable to current lease obligations. The obligations under
these leases require total monthly payments of $3,402.
<PAGE>
With the cash on hand the Company believes that it has sufficient
capital to satisfy its anticipated working capital requirements for at least the
next twelve months.
SEASONALITY
The Company's business varies very little from season to season, although the
summer months produce slightly more sales than the months during the balance of
the year.
INFLATION
Inflation, historically has not had a material effect on the Company's
operations. When the price of raw materials has increased, the costs have been
built into the pricing structure. Furthermore, the Company does not have either
long-term supply contracts or long-term contracts with customers. Prices are
quoted based on the prevailing prices for herbal products. Accordingly, the
Company does not believe inflation will have a material effect on its future
operations.
BUSINESS OF THE COMPANY
MISSION STATEMENT AND COMPANY PHILOSOPHY
Amazon Herb Company's mission is to supply consumers with herbs and herbal
extracts from the Rainforest of the Amazon Basin while simultaneously promoting
and supporting the preservation of the flora and fauna of the Rainforest. Amazon
Herb Company works directly with a number of indigenous communities to
ecologically harvest sustainable resources. In addition, as an environmentally
responsible company, Amazon Herb Company commits 10% of its net profits to be
returned to the Rainforest to help protect and preserve the Rainforest and the
indigenous people of the Amazon River Basin.
HISTORY AND DEVELOPMENT OF THE COMPANY
The Company was incorporated in Florida on June 6, 1990 under the name Marco
Polo Trading Co., Inc. On April 1, 1991, the Company registered the name Amazon
Herb Company as a fictitious name. On January 8, 1993, the Company filed
Articles of Amendment changing its name to Amazon Herb Company. The Company also
does business under the name of Rainforest Bio-Energetics.
INDUSTRY OVERVIEW
As reported by industry sources, the annual domestic retail market for dietary
supplements was $6.5 billion in 1996. In the last several years, public
awareness of the positive effects of dietary supplements on health has been
heightened by widely publicized reports of scientific findings. Recent studies
have indicated a correlation between the regular consumption of selected
supplements and reduced incidences of conditions such as heart disease, cancer,
stroke, arthritis, osteoporosis, mental fatigue and depression and neural tube
birth defects. The rise of alternative medicine and the holistic health movement
has also contributed to increased sales of dietary supplements.
The Company expects that the aging of the United States population, together
with a corresponding increased focus on preventative health measures, will
result in increased demand for dietary supplement products. According to the
United States Census Bureau, through 2010,
<PAGE>
the 35-and-older age group of consumers, which represents a substantial majority
of regular users of dietary supplements, is expected to grow significantly
faster than the general United States population. Based on a national survey
indicating that approximately 35% of Americans consumed supplements on a regular
basis in 1996, the Company believes that there is a large untapped domestic
market for dietary supplements. Industry sources also report that vitamin
consumers are taking more vitamins and nutritional supplements per day than in
the past.
The primary channels of distribution in the dietary supplement industry are: (i)
mass market retailers which include drug stores, supermarkets, mass
merchandisers and discount stores; (ii) health food stores; (iii) direct sales
organizations; and (iv) mail order. Within the mass market retailer channel,
there are three primary vitamin product categories: national brands, broadline
and other brands and private label brands.
While the retail channel of distribution for dietary supplements has been
consolidating, there has not yet been any significant consolidation among the
companies that manufacture and sell these products. The dietary supplement
industry remains fragmented, and the Company believes that no company controls
more than 10% of the market.
BUSINESS
The Company is engaged in the importing, manufacturing and distribution of herb
products produced from the Amazon rainforests of Peru, Brazil, Paraguay and
Uruguay. The Company conducts its operations from Jupiter, Florida and maintains
warehouse facilities in Bremen, Georgia and Woodbine, Iowa.
The Company has experienced substantial growth in sales and net income in recent
years. From 1992 to 1997, the Company's sales grew from $234,000 to $2,378,000,
while the Company's net income grew from a loss of $98,000 to a profit of
$91,000 during the same period.
PRODUCT DISTRIBUTION/ DIRECT SALES THROUGH INDEPENDENT DISTRIBUTORS
The Company's products are marketed exclusively through a network marketing
system exclusively through a sales force of independent associates who are not
employees of the Company. This system was developed by the Company in 1993. As
with most network marketing systems, the Company's Associates purchase products
for retail sale and personal consumption. The Company believes network marketing
is an effective vehicle to distribute the Company's products for the following
reasons: (i) the benefits of the Company's products are more readily explained
on an individual, educational basis, which emphasizes the manner in which its
products work, and is more direct than the use of television and print
advertisements; (ii) direct sales allow for consumers to try the products; (iii)
the impact of Associate and consumer testimonials is enhanced; and (iv) as
compared to other distribution methods, Associates can provide higher levels of
customer service and attention by, among other things, following up on sales to
ensure proper product usage and customer satisfaction, and encouraging repeat
purchases. The network marketing system enables the Company's independent
associates to earn profits by selling Amazon Herb products on a retail basis to
consumers. Associates may also develop their own associate organizations by
sponsoring other "associates" or distributors to do business in any market where
the Company operates, entitling the sponsors to receive commissions and bonuses
on product sales within their downline organizations. The Company also believes
that its network marketing system will continue to build a base of potential
consumers for additional products.
<PAGE>
The Company's products are packaged only for the network marketing distribution
channel and are not available through retailers. Amazon Herb's independent
associates are not required to pay any sign-up fees or to buy any kits. The
Company encourages Associates to enroll new Associates with whom the Associates
may have an ongoing relationship as a family member, friend, business associate,
neighbor or otherwise.
To become an Amazon Herb associate, a person or entity must enter into a
standard associate agreement with Amazon Herb which obligates that person to
abide by Amazon Herb's policies and procedures. A $50.00 order qualifies an
associate to receive commissions. With the first order, information is sent
which includes all of the materials necessary for an associate to commence
operating his or its distributorship including information about the Company,
product information, support functions, training materials, the profit program,
policies and procedures, order forms, application forms and sales aids. To
remain active a $10.00 annual renewal is required of all associates. The number
of active Amazon Herb associates as of May 1, 1998 was approximately 8,000. An
"active" Amazon Herb distributor is defined to mean any distributor who is
eligible to participate in the Amazon Herb business, including all new
associates as well as those existing associates who have renewed their
distributorship during the last twelve months.
Amazon Herb processes, fills and ships orders from the Company's distribution
center, usually within a 24 hour period after the order is placed by the
distributor. Amazon Herb allows its customers to return any product, for any
reason, for one year from the date of purchase for a total refund or
replacement. In the event of termination of the relationship between Amazon Herb
and a distributor, Amazon Herb will repurchase from such distributor all
resaleable inventory purchased by such distributor within 12 months of such
termination for 90% of the original net cost to the distributor. The Company
provides for a reserve for such returns, however, to date, such returns have not
been material.
Amazon Herb's success is dependent upon continued sales of its products to
consumers by its distributors and the ongoing recruitment and maintenance of a
motivated, experienced network of distributors. Amazon Herb sponsors and
conducts regional and national conventions in order to educate and recruit
distributors, and employs various technologies and innovations which allow for
fast and efficient communication and service between Amazon Herb, its
distributors and their customers. These include such tools as the monthly
automatic shipping program, which allows products to be regularly shipped each
month directly from Amazon Herb to the end-user. The Company also maintains a
dedicated department to provide information and assistance to distributors. The
Company publishes and distributes a newsletter to inform its distributors of
recent developments and other relevant information and to recognize the
accomplishments of certain distributors.
The Company believes that high quality sales aids play an important role in the
success of Associate efforts. The Company is committed to fully utilizing
current and future technologies to continue to enhance the effectiveness of
direct selling.
Amazon Herb Company is building a website as marketing support for its
distributors, at www.amazonherb.com and www.rainforestbioenergetic.com. Amazon
Herb is investigating the possibility of using a communications system which
will allow Amazon Herb or its distributors to send phone messages to large
numbers of distributors at once or communicate to specific distributors. The
Company intends to also offer participation in a stock option plan and stock
purchase plan to distributors who reach certain sales targets.
<PAGE>
Management believes that Amazon Herb's network marketing system is ideally
suited to its products which emphasize a healthy lifestyle because sales of such
products are strengthened by ongoing personal contact between retail consumers
and distributors, many of whom use the Company's products themselves. The
Company's network marketing system appeals to a broad cross-section of people
throughout the United States, particularly those seeking to supplement the
family income.
ASSOCIATE PROFIT PLAN
All Associate profits are paid monthly, directly by the Company and are based on
sales of the Company's products. The Company's profit plan integrates a single
downline, or "unilateral" element, with an infinity bonus which, adds additional
compensation based upon attainment of certain Associate leadership levels. The
result of this structure is to compensate both Associates in the early stages of
building their business and Associates with more established organizations, by
rewarding Associates for helping the Associates in their organization to be
successful.
The Company believes that its profit plan is among the most associate friendly
and financially rewarding plans offered in the industry. Commissions can reach
60% of finished product sales if Associates reach the highest levels in the
plan. The Company currently expends approximately 40% of finished product
revenues on commissions or approximately 20% of the total revenue.
The ages of the Company's customers varies widely, but approximately 70% of its
customers are between the ages of 30 and 60. The Company markets its products
throughout the United States with Florida, New York, California and Texas being
the Company's largest single markets. To date, the Company has done little
advertising, but hopes to increase its advertising expenditures substantially.
The Company plans to substantially update all Associates' information and
marketing tools.
The retail price of the Company's products range from $15.00 per 100 capsule
bottle of Sumaca or Una de Gato to $40.00 for the 8 oz. bottle of Illumination.
The Company also markets a quick start kit consisting of one of each of the
Company's products for $300.00.
PURCHASING OF RAW MATERIALS
The raw materials necessary for the manufacture and production of the Company's
products are gathered by various villages of indigenous people who reside in the
Amazon Rain Forest. The majority of the Company's raw materials originate in
Peru. These materials may only be harvested by those holding an extraction
permit issued by the various governments. These raw materials are gathered,
sorted, classified and inspected at a compound in the country of collection.
Although the Company does not own the compound in Peru, the construction of two
buildings on this property were funded from profits derived from sales of
botanicals to the Company, and Management believes that the continued use of the
compound is dependent upon the Company's activities. The Peruvian compound
currently employs 12 people although none of these persons are employees of the
Company.
Once the botanicals have been sorted, cleaned, cut, bundled and validated as to
their authenticity, a sanitary permit must be issued by the appropriate
government before they are shipped. The raw material is then transported by
truck to a sea port where it is shipped to Miami, Florida, and inspected by U.S.
Customs, FDA and U.S. Department of Agriculture. Approximately 60% of the
imported raw materials are used in the production of the Company's finished
goods and 40% are sold in bulk to third parties for their manufacturing of
private label products to be sold in
<PAGE>
health stores and other retail outlets. The goods to be produced by the Company
are inspected and tested in Jupiter, Florida. If acceptable, the raw materials
are then sent to contract processing plants in either Titusville, Florida or
Woodbine, Iowa.
MANUFACTURING AND PROCESSING
The Company has no manufacturing facility of its own. Rather, all of its
manufacturing is performed on a contract basis by third party manufacturers.
After the botanicals have been inspected and tested in Jupiter, Florida,
approximately 40% of the raw materials are shipped and sold to third parties for
their own manufacturing and processing. The remaining 60% is sent to one of two
manufacturing facilities for processing. The majority of the contract
manufacturing for the Company is performed at a facility in Woodbine, Iowa and a
lesser amount in Titusville, Florida. At these facilities, the raw material is
cut and ground into powder. Some of the raw material is ground into a course mix
which is then sent to a California facility for packaging into tea bags. The
powder is sent to the Company's warehouse in Georgia where it is stored until
needed. It is ultimately finished by encapsulators in Florida and California who
compress the powder into tablets or capsules, and package the finished products.
The liquefied products are manufactured at the Iowa facility. Here the raw
materials are treated for approximately two weeks and then pressed. The liquid
extract is then bottled and packaged. To a lesser extent, this facility also
performs a dry extraction process. All finished products are warehoused in
Jupiter, Florida.
DESCRIPTION OF KEY PRODUCTS
Una de Gato (Cat's Claw)
Gathered in the Peruvian Amazon, the bark of this vine is considered by many to
be the most important botanical of our time and has become one of the most
popular botanicals in the market place.
Sumaca
This formula includes four Rainforest herbs: Suma, Maca, Muira Puama, and
Stevia. It naturally delivers a broad range of nutrients, amino acids and
electrolytes. Sumaca is popular among body builders and physical fitness
experts.
Stevia
This botanical is growing in popularity and is being researched for its many
attributes.
Arcozon
Arcozon contains the Rainforest's most notable support herbs including Una de
Gato, Pau d'Arco, Suma and Jatoba to aid the body's natural defense ability.
Calmazon
Passion Flower, Mulungu, and Lemon Balm are blended in this supplement to assist
the body's natural process and support its nutritional needs which may arise as
a result of a stressful environment.
Digestazon
This formula includes Boldo and Peppermint to aid the body's natural process of
digestion and nutritional absorption.
<PAGE>
Envirozon
This formula includes the following Rainforest botanicals: Jerubeba, Quebra
Pedra, and Una de Gato to facilitate the body's natural ability to cleanse and
restore balance.
Lunazon
The formula includes Abuta, Suma, and Mulungu and is designed as a female tonic.
Metabazon
This formula includes Pedra Hume Caa and Pata de Vaca to assist the body's
natural ability to maintain metabolic harmony.
Shipibo Treasure Tea
Shipibo Treasure Tea is a blend of the Rainforest's favorite botanicals. Each
tea bag contains 3 grams of herbal blend.
Sumacazon
This formula includes four Rainforest herbs: Suma, Maca, Muira Puama, and
Stevia.
Warrior
This formula is used as a multi sport athletic supplement. This formula includes
Amazonia Catuaba, Sarsaparilla, and the famous Brazillian shrub, Muira Puama.
Recovazon
This formula traditionally used after workouts contains Rainforest Iporuru,
Tayuya, and Samambaia.
Illumination
Illumination is an herbal tonic combination of over 30 of the Rainforest's best
known botanicals.
CUSTOMERS
The Company's customers consist principally of individuals located throughout
the United States, many of whom also sell and distribute the Company's products.
No single customer accounts for five percent (5%) or more of the Company's
sales. The largest concentration of the Company's customers are in New York,
California and Florida. The Company has no plans to market its products outside
the United States in the foreseeable future.
GOVERNMENT REGULATION
The manufacturing, processing, formulating, packaging, labeling and advertising
of the Company's products are subject to regulation by one or more federal
agencies, including the FDA, the Federal Trade Commission (the "FTC"), the
Consumer Products Safety Commission, the United States Department of
Agriculture, the United States Postal Service, the United States Environmental
Protection Agency and the Occupational Safety and Health Administration. These
activities are also regulated by various agencies of the states and localities,
as well as foreign countries, in which the Company's products are sold. In
particular, the FDA regulates the safety, labeling and distribution of dietary
supplements, including vitamins, minerals and herbs, food additives, food
supplements, OTC and prescription drugs and cosmetics. The regulations that are
promulgated by the FDA relating to the manufacturing process are known as CGMPs,
and are
<PAGE>
different for drug and food products. In addition, the FTC has overlapping
jurisdiction with the FDA to regulate the labeling, promotion and advertising of
vitamins, OTC drugs, cosmetics and foods.
The Dietary Supplement Health and Education Act of 1994 ("DSHEA") was enacted on
October 25, 1994. DSHEA amends the Federal Food, Drug and Cosmetic Act by
defining dietary supplements, which include vitamins, minerals, nutritional
supplements and herbs as a new category of food separate from conventional food.
DSHEA provides a regulatory framework to ensure safe, quality dietary
supplements and the dissemination of accurate information about such products.
Under DSHEA, the FDA is generally prohibited from regulating the active
ingredients in dietary supplements as food additives or as drugs unless product
claims, such as claims that a product may heal, mitigate, cure or prevent an
illness, disease or malady, trigger drug status.
DSHEA provides for specific nutritional labeling requirements for dietary
supplements and final regulations have been published with an October 23, 1997
effective date for the notification to FDA of Statements of Nutritional Support
and new dietary ingredients, and a March 23, 1999 effective date for the
labeling provisions. DSHEA permits substantiated, truthful and non-misleading
statements of nutritional support to be made in labeling, such as statements
describing general well-being resulting from consumption of a dietary ingredient
or the role of a nutrient or dietary ingredient in affecting or maintaining a
structure or function of the body. Any statement of nutritional support beyond
traditional claims must be accompanied by disclosure that the FDA has not
evaluated such statement and that the product is not intended to cure or prevent
any disease. The Company anticipates that the FDA will finalize CGMPs which are
specific to dietary supplements and require at least some of the quality control
provisions contained in the CGMPs for drugs, which are more rigorous than CGMPs
for foods. The Company currently manufactures its vitamins and nutritional
supplement products in compliance with the applicable food CGMPs.
The Company cannot determine what effect such regulations implementing DSHEA,
which were adopted on September 23, 1997, will have on its business in the
future. Such regulations require expanded and different labeling for the
Company's vitamins and nutritional supplement products and, among other things,
require additional recordkeeping, warnings, notification procedures and expanded
documentation of the properties of certain products and scientific
substantiation regarding ingredients, product claims, safety or efficacy. The
Company believes that it is in material compliance with all applicable laws.
DSHEA created two new governmental bodies, the Office of Dietary Supplements
("ODS") established within the National Institutes of Health, and the
Presidential Commission on Dietary Supplements ("Commission"). The Commission
which was established for two years to provide recommendations to the President
and Congress for the regulation of supplement labeling and health claims,
including procedures for making disease-related claims, issued its final report
on November 24, 1997. Such report includes findings which are similar, and
different in material respects from the FDA regulations on DSHEA. Such report
further recommends that ODS, which is charged with coordinating research results
and advising the Secretary of Health and Human Services on supplement
regulation, safety and health claims, be funded as authorized by DSHEA. The
Company cannot determine what effect such report will have on its business in
the future, and such report could lead to legislative or regulatory changes to
the final rules promulgated by the FDA under DSHEA.
Although the vitamin and nutritional supplement industry is subject to
regulation by the FDA and local authorities, dietary supplements, including
vitamins, minerals, herbs and nutritional supplements, have now been statutorily
affirmed as a food and not as a drug or food additive.
<PAGE>
Therefore, the regulation of dietary supplements is less restrictive than that
imposed upon manufacturers and distributors of drugs or food additives. Unlike
food additives and new drugs, which require regulatory approval of formulation,
safety and labeling, and for drugs, efficacy prior to marketing, dietary
supplement companies are authorized to make substantiated statements of
nutritional support and to market manufacturer-substantiated-as-safe dietary
supplement products without such FDA preclearances. Failure to comply with
applicable FDA requirements can result in sanctions being imposed on the Company
or the manufacturers of its products, including warning letters, product recalls
and seizures, injunctions and criminal prosecutions.
The Company is subject to regulation under various international, state and
local laws which include provisions regulating, among other things, the
operations of direct sales programs.
COMPETITION
The Company is subject to significant competition for the recruitment of sales
personnel and distributors from other network marketing organizations, including
those that market weight management products, food and dietary supplements and
personal care products, as well as other types of network marketed products.
Some of the Company's competitors are substantially larger and have available
considerably greater financial resources than the Company. The Company's ability
to remain competitive depends, in significant part, on the Company's success in
recruiting and retaining distributors through an attractive compensation plan
and other incentives. The Company believes that its compensation plan, and other
incentive programs provide its distributors with significant earning potential.
However, there can be no assurance that the Company's programs for recruitment
and retention of distributors will be successful.
The business of marketing food and dietary supplement products is highly
competitive. This market segment includes numerous manufacturers, distributors,
marketers, retailers and physicians that actively compete for the business of
consumers both in the United States and abroad. In addition, the market is
highly sensitive to the introduction of new products (including various
prescription drugs) that may rapidly capture a significant share of the market.
As a result, the Company's ability to remain competitive depends in part upon
its successful introduction of new products.
TRADEMARKS AND SERVICE MARKS
The Company's products are packaged under the Company's "private label." The
Company has registered the mark Rainforest Bio-Energetics(R) with the United
States Patent and Trademark Office. The Company also intends to apply for
trademark or service mark registration for various product names.
EMPLOYEES
As of June 30, 1997, the Company had eight full-time employees. These numbers do
not include the Company's distributors, who are considered independent
contractors rather than employees of the Company. The Company considers its
employees relationships to be satisfactory. None of the Company's employees is a
member of any labor union, and the Company has never experienced any business
interruption as a result of any labor disputes.
<PAGE>
FACILITIES
In May, 1998 the Company executed a lease for a term of two years beginning July
15th, 1998 for an office warehouse facility comprising of 5,194 square feet in
Jupiter, Florida. The monthly lease payment of this facility is $4,358. For the
previous five years the Company has operated from a 3,000 square foot leased
facility in an office warehouse in Jupiter, Florida, having a monthly rental of
$3,402. A 5,000 square foot storage facility in Bremen, Georgia is leased on a
month to month basis at a rate of $300 per month and a 3,000 square foot storage
facility in Woodbine, Iowa is leased on a month to month basis for $450 per
month.
<PAGE>
MANAGEMENT
The following table sets forth certain information regarding the
directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- ------- --------------------------------------
<S> <C> <C>
John H. Easterling 46 President, Chief Executive Officer and
Director
Michael J. Perry 44 Vice-President and Director
Elaine O'Dell 41 Vice-President - Bulk Sales and Marketing
Connie Lynch 45 Secretary/Treasurer
Robert S. Kaufman 60 Director
Ted Nicholas 64 Director
Robert Butwin 46 Director
</TABLE>
TERMS OF OFFICE
The directors of the Company hold office until the next annual meeting of
stockholders of the Company or until their successors are elected and duly
qualified. All officers serve at the discretion of the directors.
BUSINESS EXPERIENCE
JOHN H. EASTERLING has served as President, Chief Executive Officer and Director
since the Company's founding in 1990. Mr. Easterling obtained his Bachelor of
Arts degree in Environmental Studies from the University of North Carolina in
1976. He has over 21 years of experience in the Amazon Rainforest. Prior to
founding the Company, Mr. Easterling owned and operated Andes Trading Company
d/b/a Raiders of the Lost Art, Inc., which was sold in 1990. He is a frequent
speaker and presenter on health, rainforest and environmental business issues.
MICHAEL J. PERRY has served as Vice-President and Director since 1992. Mr. Perry
obtained his Bachelor of Arts degree from Georgia State University in 1982, and
his MBA from the same university in 1985.
ELAINE O'DELL has served as Vice-President - Bulk Sales and Marketing of Amazon
Herb Company since November, 1995. From January 1993 until September 1995, Ms.
O'Dell was a Territory Sales Manager for Galaxy Carpet Mills of Chatsworth,
Georgia. Ms. O'Dell has 23 years experience in sales and marketing.
CONNIE LYNCH has served as Treasurer of Amazon Herb Company since 1996, and
Secretary of the Company since December, 1997. From October 1994 to September
1996, Ms Lynch served as an accountant for Kruh Knits, a machine knitting mail
order company in Simsbury, Connecticut. From September 1990 until August 1993,
she was Financial Administrator for Rightair Compressor Engineering, Inc. of
Bloomfield, Connecticut. From July 1980 until July 1990, Ms. Lynch was the
Comptoller for Kenny, Webber, & Lowell, Inc., an insurancy agency in Avon,
Connecticut. Ms. Lynch has 22 years experience in accounting, auditing and
financial management. She attended Central Connecticut State University in New
Britain, Connecticut and Northwestern Community College in Winsted, Connecticut.
<PAGE>
ROBERT S. KAUFMAN has served as a Director of the Company since May, 1998. Mr.
Kaufman has been a shareholder and officer of Kaufman & Young, P.C., a law firm
located in Southern California, since 1989. He received his Juris Doctorate
degree from Southwestern University in 1963 and his Bachelor of Arts degree from
the University of California at Los Angeles (UCLA) in 1959. Mr. Kaufman served
as an Adjunct Professor at Pepperdine Law School from 1991 to 1996. He is a
member of the State Bar of California, the American Bar Association, the
American Trial Lawyers Association and the Los Angeles County Bar Association.
ROBERT BUTWIN has served as a Director of the Company since May, 1998. Mr.
Butwin has been active in the network marketing industry since 1985. He was
twice named Distributor of the Year by the Multi-Level Marketing International
Association, the industry's professional organization. He has been a
contributing editor for the professional trade journal UPLINE and has a monthly
column in Money Makers Monthly, an MLM magazine. Mr. Butwin is the author of a
recently published book, Street Smart Networking.
TED NICHOLAS has served as a Director of the Company since May, 1998. Mr.
Nicholas is the President of Nicholas Direct, Inc. which markets his books,
audio and video tapes, newsletter, seminars and other information products. He
founded Enterprise Publishing in 1972 and sold the company to Dearborn
Publishing in 1991. In 1973 he founded The Company Corporation, which was also
sold in 1991. He is the author of fourteen books relating to direct marketing,
entrepreneurship, and business subjects. Mr. Nicholas consults with clients
regarding marketing and self-publishing, and has appeared on radio and
television programs including "Good Morning America", "Today" and "Oprah
Winfrey". Since starting his first business at age 22, he has founded 22
companies.
EXECUTIVE COMPENSATION.
The following table sets forth information as to the compensation paid or
accrued to each officer and director receiving compensation of at least $100,000
and the Chief Executive Officer for the three years ended June 30, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION YEAR SALARY ALL OTHER COMPENSATION
- ----------------------------- ------- ----------------- -------------------------
<S> <C> <C> <C>
John H. Easterling 1997 86,716 39,230
President, Chief Executive 1996 53,694 57,839
Officer and Director 1995 48,915 67,205
Mike Perry 1997 59,586 -0-
Vice President and Director 1996 99,641 -0-
1995 123,604 -0-
</TABLE>
DIRECTORS COMPENSATION
No Compensation has been paid to any directors for service in such capacity in
the past, and no such compensation is presently payable to directors, but
directors may be reimbursed for certain expenses in connection with attendance
at Board and committee meetings. At such time as the
<PAGE>
Board of Directors deems appropriate, the Company intends to adopt an
appropriate policy to compensate non-employee directors, in order to attract and
retain the services of qualified non-employee directors.
NUTRITIONAL ADVISORY BOARD MEMBERS
The Company has created a Nutritional Advisory Board. The Board consists of
Gabriel Cousins, M.D., author and physician, Jack Hinze, N. D., a Pharmacist,
and homeopathic teacher, Eric Innes, D.C. a Chiropractic physician, James
Hawver, and Donna Schwontkowski, D. C., an author and master nutritionist.
1998 STOCK OPTION PLAN
The Company's 1998 Stock Option Plan (the "1998 Option Plan") was adopted by the
Board of Directors and a majority of the shareholders of the Company on May 1,
1998. A total of 1,000,000 shares of Common Stock are reserved for issuance
under the 1998 Option Plan. The 1998 Option Plan provides for the granting to
participants (including officers, advisors, consultants and directors) of
nonstatutory stock options. The 1998 Option Plan may be administered by the
Board of Directors or a committee of the Board of Directors (the
"Administrator"), which committee shall satisfy the applicable requirements of
Section 16 of the Exchange Act and the Code. The Administrator determines the
terms of options granted under the 1998 Option Plan, including the number of
shares subject to the option, exercise price, term and the rate at which the
options become exercisable. The exercise price of all stock options granted
under the 1998 Option Plan must be at least equal to the fair market value of
the Common Stock of the Company on the date of grant.
The term of all options may not exceed ten years. If not terminated earlier, the
1998 Option Plan will terminate on May 1, 2008.
The Administrator has the authority to amend, and the Board has the authority to
terminate the 1998 Option Plan as long as such action does not adversely affect
any outstanding options.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of the date of this
Prospectus, regarding ownership of the Company's Common Stock (i) by each person
known by the Company to be the beneficial owner of more than 5% of the Company's
outstanding Common Stock, (ii) by each director of the Company, (iii) by certain
related stockholders, and (iv) by all executive officers and directors of the
Company as a group. All persons named have sole voting and investment power with
respect to such shares, subject to community property laws, and except as
otherwise noted.
<TABLE>
<CAPTION>
PERCENT BENEFICIALLY
OWNED
------------------------
NUMBER OF BEFORE AFTER
NAME OF SHAREHOLDER(1) SHARES OWNED OFFERING OFFERING(2)
- ----------------------------------- ------------ -------- -----------
<S> <C> <C> <C>
Evergreen Natural Success Group, Ltd., BVI 1,580,000 57.8% 50.7%
John H. Easterling 120,000 4.4% 3.8%
Michael J. Perry, Jupiter, Florida 150,000 5.5% 4.8%
Barbara Ann Doan, Atlanta, Georgia 140,000 5.1% 4.5%
Elaine O'Dell, Jupiter, Florida 40,400 1.5% 1.3%
Connie Lynch, Jupiter, Florida 400 * *
Robert S. Kaufman, Malibu, California 390,000(3) 14.3% 12.5%
All officers and directors as a group (5 persons) 1,850,800 83.5% 73.1%
</TABLE>
- - ---------------
* Less than 1%.
(1) See table under "Management of the Company" for offices and directorships
held by the persons listed hereunder.
(2) Assumes issuance of the maximum number of shares in the offering (380,000).
(3) Includes shares owned by Mr. Kaufman's IRA.
DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its entirety by the
provisions of the Company's Articles of Incorporation and Bylaws, copies of
which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
COMMON STOCK
GENERAL. The Company is authorized to issue 8,000,000 shares of Common Stock,
$.01 par value per share. At May 1, 1998, there were 2,733,200 shares issued and
outstanding. All shares of Common Stock outstanding are validly issued, fully
paid and non-assessable.
VOTING RIGHTS. Each share of Common Stock entitles the holder thereof to one
vote, either in person or by proxy, at meetings of shareholders. The holders are
not permitted to vote their shares cumulatively. Accordingly, the holders of
Common Stock holding, in the aggregate,
<PAGE>
more than fifty percent (50%) of the total voting rights can elect all of the
directors of the Company.
DIVIDEND POLICY. All shares of Common Stock are entitled to participate ratably
in dividends when and as declared by the Company's Board of Directors out of the
funds legally available therefore and subject to the rights, if any, of the
holders of outstanding shares of preferred stock. Any such dividends may be paid
in cash, property or additional shares of Common Stock. The Company has not paid
any dividends since its inception and presently anticipates that all earnings,
if any, will be retained for development of the Company's business and that no
dividends on the shares of Common Stock will be declared in the foreseeable
future. Any future dividends will be subject to the discretion of the Company's
Board of Directors and will depend upon, among other things, future earnings,
the operating and financial condition of the Company, its capital requirements,
general business conditions and other pertinent facts. Therefore, there can be
no assurance that any dividends on the Common Stock will be paid in the future.
MISCELLANEOUS RIGHTS AND PROVISIONS. Holders of Common Stock have no preemptive
or other subscription rights, conversion rights, redemption or sinking fund
provisions. In the event of the dissolution, whether voluntary or involuntary,
of the Company, each share of Common Stock is entitled to share ratably in any
assets available for distribution to holders of the equity of the Company after
satisfaction of all liabilities and payment of the applicable liquidation
preference of any outstanding shares of Preferred Stock.
CERTAIN PROVISIONS OF FLORIDA LAW AND OF THE COMPANY'S ARTICLES OF INCORPORATION
AND BYLAWS. The Company's Articles of Incorporation and Bylaws require the
Company to indemnify its directors and officers to the fullest extent permitted
by Florida law. Florida law presently provides that in the case of a
nonderivative action (that is, an action other than by or in the right of a
corporation to procure a judgment in its own favor), a corporation has the power
to indemnify any person who was or is a party or is threatened to be made a
party to any proceeding by reason of the fact that the person is or was an agent
of the corporation, against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with the proceeding if
that person acted in good faith and in a manner the person reasonably believed
to be in the best interests of the corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe that the conduct of the person
was unlawful. The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent does not, of
itself, create a presumption that the person did not act in good faith and in a
manner that the person reasonably believed to be in the best interests of the
corporation or that the person had reasonable cause to believe that the person's
conduct was unlawful.
With respect to derivative actions, Florida law provides that a corporation has
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
the person is or was an agent of the corporation, against expenses actually and
reasonably incurred by that person in connection with the defense or settlement
of the action if the person acted in good faith, in a manner the person believed
to be in the best interests of the corporation and its shareholders.
Indemnification is not permitted to be made in respect of any claim, issue, or
matter as to which the person shall have been adjudged to be liable to the
corporation in the performance of that person's duty to the corporation and its
shareholders, unless and only to the extent that the court in which the
proceeding is or was pending determines that, in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for
expenses, and then only to the extent that the court shall determine.
<PAGE>
TRANSFER AGENT._____________________, has been appointed the transfer agent of
the Company's Common Stock and Preferred Stock, and can be reached at
___________________________________.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offer and sale of the maximum number of shares offered
hereby, the Company will have outstanding 3,113,200 shares of Common Stock. The
380,000 shares of Common Stock sold in this offering will be freely tradable
without restrictions under the Securities Act, except for any shares held by an
"affiliate" of the Company, which will be subject to the resale limitations of
Rule 144 under the Securities Act.
All of the 2,733,200 shares of Common Stock currently outstanding are
"restricted securities" within the meaning of Rule 144 promulgated under the
Securities Act, and may not be sold except in compliance with the registration
requirements of the Securities Act or an applicable exemption under the
Securities Act, including an exemption pursuant to Rule 144 thereunder.
In general, under Rule 144 as currently in effect, any affiliate of the Company
and any person (or persons whose sales are aggregated) who has beneficially
owned his or her restricted shares for at least one year, is entitled to sell in
the open market within any three-month period a number of shares of Common Stock
that does not exceed the greater of (i) 1% of the then outstanding shares of the
Company's common stock, or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding such sale. Sales under Rule 144
are also subject to certain limitations on manner of sale, notice requirements,
and availability of current public information about the Company. Non-affiliates
of the Company who have held their restricted shares for one year are entitled
to sell their shares under Rule 144 without regard to any of the above
limitations, provided they have not been affiliates for the three months
preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited resales
of certain restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows the existing stockholders of the Company to sell
their shares of Common Stock to such institutions and registered broker-dealers
without regard to any volume or other restrictions. Unlike under Rule 144,
restricted securities sold under Rule 144A to nonaffiliates do not lose their
status as restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in the public market beginning 90 days after the
date of this Prospectus.
Prior to this offering, no public market for the Company's securities has
existed. Following this offering, no predictions can be made of the effect, if
any, of future public sales of restricted securities or the availability of
restricted securities for sale in the public market. Moreover, the Company
cannot predict the number of shares of Common Stock that may be sold in the
future pursuant to Rule 144 because such sales will depend on, among other
factors, the market price of the Common Stock and the individual circumstances
of the holders thereof. The availability for sale of substantial amounts of
Common Stock under Rule 144 could adversely affect prevailing market prices for
the Company's securities.
<PAGE>
PLAN OF DISTRIBUTION
The Company is offering to sell, on a best efforts basis, up to 380,000 newly
issued shares of its Common Stock at $5.50 per share.
The Company is offering two programs to investors to encourage (i) early
participation and (ii) purchases of larger quantities of stock:
1. Purchase Inducement. For each properly completed Share Purchase
Agreement, attached hereto as Appendix A, to purchase at least 500 shares
offered hereby, accompanied by full payment received by the Company, the Company
will issue a $100 gift certificate, redeemable for goods through the Company.
2. Volume Purchase Discount. The Company will offer the following volume
purchase discounts for all persons purchasing the following numbers of
shares of the Company's Common Stock to be registered in a single name:
NUMBER OF SHARES DISCOUNT
---------------- --------
2000-4999 3.0%
5000-9999 5.0%
10,000-99,999 8.0%
100,000 or more 13.0%
This offering is being made directly by the Company through written
announcements, under the direction of John H. Easterling, the Company's
President and CEO. The Company will publish announcements of the offering in its
catalogs, newsletters and Internet web site, and will mail and e-mail copies of
the announcement to its shareowners, customers and inquirers. The announcements
will provide the very limited information permitted under applicable securities
laws and will give the Company's telephone number, mailing address and e-mail
address for requesting this Prospectus. Similar announcements will be published
in other selected media and mailed to other selected individuals. The Prospectus
will be accompanied by a Share Purchase Agreement, attached hereto as Appendix
A, and a return envelope. The electronic prospectus will be available on line at
the Company's website with an electronic Share Purchase Agreement. Assistance in
connection with the offering will be available from the selling agents, if any;
from John H. Easterling, President of the Company; and from ________________,
the Company's Stockholder Relations Coordinator.
Compensation will be paid only to any registered securities broker-dealer
selected by the Company as a selling agent, and then only as a percent of the
offering price. No compensation related to sales of shares will be paid to any
employees of the Company. The Company will indemnify the selling agents against
liabilities for claimed misstatements or omissions in this Prospectus.
Only residents of those states in which the Common Stock offered hereby has been
qualified for sale under applicable securities or Blue Sky laws may purchase
shares in this offering. Each potential investor will be required to execute a
Share Purchase Agreement, attached hereto as Appendix A, which, among other
things, requires the potential investor to certify his or her state of
residence. A potential investor who is a resident of a state other than a state
in which the Common Stock offered hereby has been qualified for sale may request
that the Company register
<PAGE>
the shares in the state in which such investor resides; however, the Company is
under no obligation to do so and may refuse any such request.
Shares may be purchased by completing and delivering the Company's Share
Purchase Agreement, attached hereto as Appendix A, along with the purchase price
by check to the Company. Within 10 days after its receipt of a Share Purchase
Agreement accompanied by a check for the purchase price, the Company will send
by electronic mail or first class mail a written confirmation to notify the
subscriber of the extent, if any, to which such subscription has been accepted
by the Company.
In addition, investors will be able to execute Share Purchase Agreements on the
Internet at the Company's web site and purchase shares by charging to their
credit cards. The Company expects to permit persons purchasing their shares at
the Company's web site to download a non-negotiable replica of the stock
certificate which will be issued to such purchasers by the transfer agent.
The offering will begin on the date of this Prospectus and continue until either
all of the Shares have been sold or the Company terminates the offering.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon for the
Company by Hackney, Miller & Robbins, P.A., Palm Beach Gardens, Florida.
EXPERTS
The Financial Statements of the Company for the period June 30, 1995 to June 30,
1996 and June 30, 1996 to June 30, 1997 and for the period ended therein, have
been included in this Prospectus in reliance upon the report appearing elsewhere
herein, of Bernard J. Donth, C.P.A. independent certified public accountants,
and upon the authority of said independent certified public accountants as
experts in accounting and auditing.
AVAILABLE INFORMATION
Amazon Herb Company, a Florida corporation (the "Company") has filed with the
Commission a Registration Statement on Form SB-2 (Registration No. ___________ )
under the Securities Act for the registration of the shares of Common Stock
offered hereby. This Prospectus omits certain of the information contained in
the Registration Statement, and reference is hereby made to the Registration
Statement and exhibits and schedules thereto for further information with
respect to the Company and the securities to which this Prospectus relates.
Statements made herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference. Items of information
omitted from this Prospectus but contained in the Registration Statement may be
inspected without charge at the Public Reference Room of the Commission, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
Upon consummation of the offering of the Common Stock, the Company will become
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith will file reports and other
information with the Commission. Such reports
<PAGE>
and other information can be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's New York Regional Office, 26 Federal Plaza,
New York, New York 10007, and its Chicago Regional Office, Everett McKinley
Dirksen Building, 219 South Dearborn Street, Room 1204, Chicago, Illinois 60604.
Copies of such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549, at prescribed rates. The Commission also
makes electronic filings publicly available on the Internet within 24 hours of
acceptance. The Commission's Internet address is http://www.sec.gov. The
Commission web site also contains reports, proxy and information statements, and
other information regarding registrants that file electronically with the
Commission.
The Company intends to deliver annual reports to the holders of its securities,
which will contain, among other information, audited financial statements
examined and reported upon by its independent certified public accountants.
<PAGE>
AMAZON HERB COMPANY
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants.......................................... F-2
Balance Sheet as of June 30, 1996.......................................... F-3
Statement of Operations for the period from July 1, 1995,
to June 30, 1996.......................................................... F-4
Statement of Stockholders' Equity for the period from July 1, 1995,
to June 30, 1996.......................................................... F-5
Statement of Cash Flows for the period from July 1, 1995,
to June 30, 1996.......................................................... F-6
Notes to Financial Statements.............................................. F-7
Report of Independent Accountants.......................................... F-8
Balance Sheet as of June 30, 1997.......................................... F-9
Statement of Operations for the period from July 1, 1996,
to June 30, 1997.......................................................... F-10
Statement of Stockholders' Equity for the period from July 1, 1996,
to June 30, 1997.......................................................... F-11
Statement of Cash Flows for the period from July 1, 1996,
to June 30, 1997.......................................................... F-12
Notes to Financial Statements.............................................. F-13
Interim Financial Statements:
Balance Sheet as of March 31, 1998 (unaudited)............................. F-14
Interim Statement of Operations for the nine month period ended March
31, 1998 (unaudited)...................................................... F-15
Interim Statement of Stockholders' Equity for the nine month period
ended March 31, 1998 (unaudited).......................................... F-16
Interim Statement of Cash Flows for the nine month period
ended March 31, 1998 (unaudited).......................................... F-17
Notes to Interim Financial Statements...................................... F-18
<PAGE>
BERNARD J. DONTH
CERTIFIED PUBLIC ACCOUNTANT
2560 RCA BOULEVARD
SUITE 108
PALM BEACH GARDENS, FLORIDA 33410
MEMBER
AMERICAN INSTITUTE OF TELEPHONE (561) 626-7338
CERTIFIED PUBLIC ACCOUNTANTS FAX (561) 627-4128
FLORIDA INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Amazon Herb Company
Jupiter, Florida
We have audited the accompanying balance sheet of Amazon Herb Company (a Florida
Corporation) as of June 30, 1996, and the related statements of income, retained
earnings, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amazon Herb Company as of June
30, 1997, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Schedule of General and
Administrative Expenses on page nine is presented for the purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/S/ BERNARD J. DONTH
- -----------------------------
Bernard J. Donth
November 18, 1996
<PAGE>
AMAZON HERB COMPANY
BALANCE SHEET
JUNE 30, 1996
ASSETS
------
Current Assets:
Cash $ 13,635
Accounts receivable 81,379
Note Receivables - shareholder 56,777
Inventory 755,313
Prepaid expenses 1,378
---------
Total current assets 908,482
---------
Property and equipment 95,587
Less accumulated depreciation 85,327
---------
10,260
---------
Other Assets: 4,607
Deposits
Start up Costs (net of accumulated
amortization Of $7,081) 2,320
---------
6,927
---------
$925,669
---------
<PAGE>
AMAZON HERB COMPAMY
BALANCE SHEET
JUNE 30, 1996
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Accounts payable $159,315
Accrued expenses 21,512
Loans from stockholder 110,936
Current income taxes payable 37,537
Current maturities of long-term debt 96,865
----------
Total current liabilities 426,165
----------
Long-term debt, less current maturities 9,691
----------
Stockholder's equity:
Common stock, $.0l par value, 8,000,000
shares authorized, 6,680,000 shares
issued and outstanding 66,800
Additional paid-in capital 372,000
Retained earnings 51,013
----------
489,813
----------
$ 925,669
----------
The accompanying notes and independent auditor's report
should be read with this financial statement.
<PAGE>
AMAZON HERB COMPANY
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED
JUNE 30, 1996
Sales $ 2,118,514
-----------
Cost of sales:
Beginning inventory 192,339
Purchases 960,462
Other costs 363,286
Less ending inventory (755,313)
-----------
760,774
-----------
Gross profit 1,357,740
-----------
Expenses:
General and administrative 1,230,567
Interest 14,733
-----------
1,245,300
-----------
Income from operations 112,440
-----------
Other Income:
Interest 4,378
Miscellaneous 467
Gain on sale of equipment 3,351
-----------
8,196
-----------
Net income before income taxes 120,636
-----------
Income taxes:
Current (37,537)
Deferred -0-
-----------
(37,537)
-----------
Net income 83,099
Retained earnings - beginning of year (32,086)
-----------
Retained earnings - end of year $ 51,013
-----------
The accompanying notes and independent auditor's report
should be read with this financial statement.
<PAGE>
AMAZON HERB COMPANY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities
Net income $ 83,099
Adjustments to reconcile net income to net cash
used by operations
Depreciation and amortization (including
capitalized amounts) 26,595
(Increase) decrease in:
Accounts receivable (net) (41,108)
Inventory (562,974)
Prepaid expenses (1,079)
Note receivable-shareholder 7,906
Other receivables (224)
Increase (decrease) in:
Accounts payable 113,524
Accrued expenses 3,892
Loans from stockholder 110,936
Current income taxes payable 37,537
------------
Net cash provided by operating activities $ (221,896)
------------
Cash flows from investing activities
Purchases of property and equipment (17,637)
Disposition of property and equipment 1,889
------------
Net cash used by investing activities (15,748)
------------
Cash flows from financing activities
Proceeds from issuance of common stock 4,780
Proceeds from additional paid-in capital 163,620
New borrowings:
Long-term 6,528
Short-term 93,000
Debt-reduction:
Long-term (294)
Short-term (73,583)
------------
Net cash used by financing activities 194,051
------------
Net decrease in cash (43,593)
Cash at beginning of year 57,228
------------
Cash at end of year $ 13,635
------------
</TABLE>
The accompanying notes and independent auditor's report
should be read with this financial statement.
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS ACTIVITY
The Company imports, processes and sells herbs and herbal extracts.
They also operate a network marketing business to assist in these
sales.
BASIS OF ACCOUNTING
The Company uses the accrual basis of accounting for financial
statement and income tax reporting purposes. Revenues are recognized
and billed when sales are ordered and shipped.
INVENTORY
Inventory is stated at the lower of cost or market. Cost is determined
by the first-in, first-out method, and market represents the lower of
replacement cost or estimated net realizable value.
DEPRECIATION
Property and equipment are stated at cost. Depreciation is computed
under the modified accelerated cost recovery system. Use of the
modified accelerated cost recovery system approximates generally
accepted accounting principles. No material variance is produced
between the use of this method.
CASH
The Company considers all short term investments with an original
maturity of three months or less to be cash equivalents.
2. ACCOUNTS RECEIVABLE:
Management considers all accounts receivable to be collectible. Thus,
no allowance for uncollectibles has been established in these financial
statements.
3. INVENTORY:
The inventory at June 30, 1996 consisted of the following:
Raw materials $ 651,655
Finished products 103,658
---------
$ 755,313
=========
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
4. PROPERTY AND EQUIPMENT:
Property and Equipment consists of the following:
Furniture and fixtures $ 2,217
Equipment 93,370
--------
$ 95,587
--------
5. LONG-TERM DEBT:
Long-term debt at June 30, 1996 consists of the following:
Unsecured note payable to a minority shareholder,
payable in monthly installments of $2,932, including interest
at 12%. 30,398
Unsecured note payable to a minority shareholder,
payable in monthly installments of $2,221, including interest
at 12%. 23,029
Note payable to bank, payable in monthly
installments of $224, including interest at 14.25%. 6,234
Note payable to bank, payable in monthly
installments of $224, including interest. 3,797
Note payable to bank, payable in monthly
installments of $513, including interest. 9,813
Unsecured note payable to a minority shareholder,
payable in monthly installments of $2,665, including interest
at 12%. 33,285
--------
106,556
Less current maturities 96,865
--------
$ 9,691
--------
Annual requirements to amortize long-term debt are as follows:
YEAR ENDED JUNE 30
------------------
1997 $96,865
1998 7,591
1999 2,100
2000 -0-
2001 -0-
Thereafter -0-
----------
$ 106,556
----------
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
6. RELATED PARTY TRANSACTION:
Loans from the majority stockholder totaling $110,936 were outstanding
on June 30, 1996.
7. STOCKHOLDERS' EQUITY:
During the year the company issued 478,000 additional shares of stock
for a total of $168,400. This amount included common stock and
additional paid-in capital.
8. LEASING AGREEMENTS:
The Company leases its office and storage facility under two (2)
two-year leases and one sixteen (16) month lease. One lease began
December, 1995 and expires March 31, 1997. The monthly rent including
sales tax on this lease is $1,137. The other two leases began April,
1995 and expire on March 1997. The monthly rent including sales tax on
these leases is $2,129. The following is a schedule of future rental
payments as of June 30, 1996.
YEAR ENDED JUNE 30
------------------
1997 $ 29,394
---------
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
INTEREST AND INCOME TAXES PAID
Cash paid for interest and income taxes during the year ended June 30,
1996 were as follows:
Interest $14,733
-------
Income taxes $ -0-
-------
10. FINANCIAL INSTRUMENTS:
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and trade accounts receivables. The Company places its
temporary cash investments with financial institutions and limits the
amount of credit exposure to any one financial institution.
Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's
customer base and their dispersion across different geographic areas.
As of June 30, 1996, the Company had no significant concentrations of
credit risk.
<PAGE>
AMAZON HERB COMPANY
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED JUNE 30, 1996
Commissions $ 590,964
Officers' Salaries 140,073
Salaries 96,846
Postage 64,160
Telephone 42,064
Bank charges and credit card fees 36,839
Rent 34,729
Professional fees 34,306
Office 33,570
Outside services / consultant 28,224
Depreciation and amortization 26,595
Taxes 16,971
Insurance 14,591
Repairs 9,969
Lease Expense 9,383
Entertainment 9,277
Research 8,763
Penalties 4,966
Auto 4,906
Travel 4,818
Dues and subscriptions 3,846
Utilities 3,498
Storage/Equipment rental 2,722
Miscellaneous 2,474
Advertising 2,213
Contributions 2,000
Gifts 829
Security 603
Supplies 368
------------
$ 1,230,567
------------
<PAGE>
BERNARD J. DONTH
CERTIFIED PUBLIC ACCOUNTANT
2560 RCA BOULEVARD
SUITE 108
PALM BEACH GARDENS, FLORIDA 33410
MEMBER
AMERICAN INSTITUTE OF TELEPHONE (561) 626-7338
CERTIFIED PUBLIC ACCOUNTANTS FAX (561) 627-4128
FLORIDA INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Amazon Herb Company
Jupiter, Florida
We have audited the accompanying balance sheet of Amazon Herb Company (a Florida
Corporation) as of June 30, 1997, and the related statements of income, retained
earnings, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amazon Herb Company as of June
30, 1997, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/S/ BERNARD J. DONTH
- ---------------------------
Bernard J. Donth
August 26, 1997
<PAGE>
AMAZON HERB COMPANY
BALANCE SHEET
JUNE 30, 1997
ASSETS
------
Current Assets: 18,154
Cash 169,394
Accounts receivable - trade 20,674
Other receivables 594,368
Inventory 1,140
Prepaid expenses
--------
Total current assets 803,730
--------
Property and equipment 95,442
Less accumulated depreciation 90,749
--------
4,693
--------
Other Assets: 4,607
Deposits
Start up Costs (net of accumulated
amortization of $8,612) 1,110
--------
5,717
--------
$814,140
--------
<PAGE>
AMAZON HERB COMPAMY
BALANCE SHEET
JUNE 30, 1997
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Current Liabilities:
Accounts payable $110,288
Accrued expenses 6,441
Current income taxes payable 40,158
Current maturities of long-term debt 7,053
--------
Total current liabilities 163,940
--------
Long-term debt, less current maturities 2,296
--------
Stockholder's equity:
Common stock, $.0l par value, 8,000,000
shares authorized, 6,833,000 shares
issued and outstanding 68,330
Additional paid-in capital 436,770
Retained earnings 142,804
--------
647,904
--------
$814,140
--------
The accompanying notes and independent auditor's report
should be read with this financial statement.
<PAGE>
AMAZON HERB COMPANY
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED
JUNE 30, 1997
Sales $ 2,377,528
-----------
Cost of sales:
Beginning inventory 755,313
Purchases 552,704
Other costs 318,021
Less ending inventory (594,368)
-----------
1,031,670
-----------
Gross profit 1,345,585
-----------
Expenses:
General and administrative 1,192,135
Interest 14,528
Depreciation and Amortization 7,398
-----------
1,245,300
-----------
Income from operations 131,797
-----------
Other Income:
Interest 152
-----------
Net income before income taxes 131,949
-----------
Income taxes:
Current (40,158)
Deferred -0-
-----------
(40,158)
-----------
Net income 91,791
Retained earnings - beginning of year 51,013
-----------
Retained earnings - end of year 142,804
-----------
The accompanying notes and independent auditor's report
should be read with this financial statement.
<PAGE>
AMAZON HERB COMPANY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1997
Cash flows from operating activities
Net income $ 91,791
Adjustments to reconcile net income to net cash
used by operations
Depreciation and amortization (including
capitalized amounts) 7,398
(Increase) decrease in:
Accounts receivable (net) (88,015)
Inventory 160,945
Prepaid expenses 238
Note receivable-shareholder 56,777
Other receivables (20,674)
Increase (decrease) in:
Accounts payable (49,027)
Accrued expenses (15,071)
Loans from stockholder (110,936)
Current income taxes payable 2,621
----------
Net cash provided by operating activities $ 36,047
-----------
Cash flows from investing activities
Purchases of property and equipment (621)
-----------
Net cash used by investing activities (621)
-----------
Cash flows from financing activities
Proceeds from issuance of common stock 1,530
Proceeds from additional paid-in capital 64,770
New borrowings:
Long-term -0-
Short-term 20,000
Debt-reduction:
Long-term (7,395)
Short-term (109,812)
-----------
Net cash used by financing activities (30,907)
-----------
Net increase in cash 4,519
Cash at beginning of year 13,635
-----------
Cash at end of year $ 18,154
-----------
The accompanying notes and independent auditor's report
should be read with this financial statement.
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS ACTIVITY
The Company imports, processes and sells herbs and herbal extracts.
They also operate a network marketing business to assist in these
sales.
BASIS OF ACCOUNTING
The Company uses the accrual basis of accounting for financial
statement and income tax reporting purposes. Revenues are recognized
and billed when sales are ordered and shipped.
INVENTORY
Inventory is stated at the lower of cost or market. Cost is determined
by the first-in, first-out method, and market represents the lower of
replacement cost or estimated net realizable value.
DEPRECIATION
Property and equipment are stated at cost. Depreciation is computed
under the modified accelerated cost recovery system. Use of the
modified accelerated cost recovery system approximates generally
accepted accounting principles. No material variance is produced
between the use of this method.
CASH
The Company considers all short term investments with an original
maturity of three months or less to be cash equivalents.
2. ACCOUNTS RECEIVABLE:
Management considers all accounts receivable to be collectible. Thus,
no allowance for uncollectibles has been established in these financial
statements.
3. INVENTORY:
The inventory at June 30, 1997 consisted of the following:
Raw materials $ 466,724
Finished products 127,644
---------
$ 594,368
---------
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
4. PROPERTY AND EQUIPMENT:
Property and Equipment consists of the following:
Furniture and fixtures $ 2,217
Equipment 93,225
--------
$ 95,442
--------
5. LONG-TERM DEBT:
Long-term debt at June 30, 1997 consists of the following:
Note payable to bank, payable in monthly installments
of $224, including interest
at 14.25%. 4,484
Note payable to bank, payable in monthly
installments of $224, including interest. 1,726
Note payable to bank, payable in monthly
installments of $513, including interest. 3,139
--------
9,349
Less current maturities 7,053
--------
$ 2,296
--------
Annual requirements to amortize long-term debt are as follows:
YEAR ENDED JUNE 30
1998 $7,053
1999 2,296
2000 -0-
2001 -0-
2002 -0-
Thereafter -0-
---------
$ 9,349
---------
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
6. STOCKHOLDERS' EQUITY:
During the year the company issued 153,000 additional shares of stock
for a total of $66,300. This amount included common stock and
additional paid-in capital.
7. LEASING ARRANGEMENTS:
The Company leases its office and storage facility under three (3)
two-year leases. The leases began April 1, 1997 and expire March 31,
1999. The monthly rent including sales tax on these leases is $3,402.
The following is a schedule of future rental payments as of June 30,
1997.
YEAR ENDED JUNE 30
------------------
1998 $40,824
1999 30,618
-------
$71,442
-------
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
INTEREST AND INCOME TAXES PAID
Cash paid for interest and income taxes during the year ended June 30,
1997 were as follows:
Interest $14,525
-------
Income taxes $37,537
-------
9. FINANCIAL INSTRUMENTS:
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and trade accounts receivables. The Company places its
temporary cash investments with financial institutions and limits the
amount of credit exposure to any one financial institution.
Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's
customer base and their dispersion across different geographic areas.
As of June 30, 1997, the Company had no significant concentrations of
credit risk.
<PAGE>
AMAZON HERB COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
10. SUBSEQUENT EVENTS:
Subsequent to the balance sheet date the company is considering
entering into an acquisition agreement with a public company. The
acquisition agreement states the company will be acquired by the public
company through a stock exchange whereby all of the shares of the
company will be exchanged for approximately 88% of the outstanding
shares of the public company.
<PAGE>
Amazon Herb Company
Balance Sheet
ASSETS
<TABLE>
<CAPTION>
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Current Assets:
Cash $20,104 $35,497
Accounts Receivable 192,725 232,420
Inventory 660,509 554,336
Prepaid Expenses 1,140 1,378
Notes receivable - shareholder -0- 18,226
--- ------
Total Current Assets 874,478 841,857
------- -------
Property and Equipment 95,442 93,370
Less Accumulated Depreciation 92,972 87,353
------ ------
2,470 6,017
----- -----
Other Assets:
Deposits 4,607 4,607
Start up Costs (net of accumulated
amortization of $7,081) 273 1,412
--- -----
4,880 6,019
----- -----
Total Assets $881,828 $853,893
-------- --------
</TABLE>
<PAGE>
Amazon Herb Company
Balance Sheet
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Current Liabilities:
Accounts Payable $91,175 $83,495
Accrued Expenses 541 31,713
Loans from stockholder -0- 35,103
Current Maturities of Long-Term Debt 3,045 9,360
-------- --------
Total Current Liabilities 94,761 159,671
-------- --------
Long-Term Debt, Less Current Maturities 0 37,952
-------- --------
Stockholder's Equity
Common Stock, $.0l par value, 8,000,000
shares authorized, 6,680,000(1997)
2,733,200 (1998) shares
issued and outstanding 27,332 66,800
Offering Expenses (19,540) -0-
Additional Paid in Capital 497,768 402,000
Retained Earnings 281,507 187,470
-------- --------
Total Stockholder's Equity 787,067 656,270
-------- --------
Total Liabilities and Stockholder's Equity $881,828 $853,893
-------- --------
</TABLE>
<PAGE>
Amazon Herb Company
Statement of Income and Retained Earnings
For the 9 Month Period Ending
<TABLE>
<CAPTION>
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Sales $1,799,770 $1,855,861
---------- ----------
Cost of Sales: 585,739 590,381
Gross Profit 1,214,031 1,265,479
---------- ----------
Expenses:
Selling Expenses 528,937 579,744
General and Administrative 509,791 503,476
Interest 2,187 12,702
Depreciation and Amortization 3,060 5,151
---------- ----------
1,043,975 1,101,073
---------- ----------
Income from Operations 170,056 164,406
---------- ----------
Other Income:
Interest 0 0
Net Income Before Taxes 170,056 164,406
---------- ----------
Taxes Paid (30,168) (27,949)
Retained Earnings - Beginning of Year 142,804 51,013
---------- ----------
Retained Earnings - End of Third Quarter 282,692 187,470
---------- ----------
NET INCOME (9 MONTHS) $139,888 $136,457
--------------------- ---------- ----------
</TABLE>
<PAGE>
APPENDIX A
AMAZON HERB COMPANY
725 NORTH A1A, SUITE C-115
JUPITER, FLORIDA 33447
SUBSCRIPTION AGREEMENT AND SIGNATURE PAGE
(ALL INVESTORS MUST SIGN THIS SUBSCRIPTION AGREEMENT)
- - --------------------------------------------------
================================================================================
SUBSCRIBER DATA: (Must be completed in full)
================================================================================
FULL NAME OF SUBSCRIBER: (Do not use initials)
_____________________________________________________________________________
First Full Name (Do not use initials) Middle Initial Last Name
_____________________________________________________________________________
RESIDENCE ADDRESS, INCLUDING ZIP CODE: (Do not use P.O. box)
TELEPHONE NUMBER:_____________________________________________________________
SOCIAL SECURITY: ____________________ OR TAX I.D. NUMBER: __________________
================================================================================
SUBSCRIPTION: (Must be completed in full)
================================================================================
NUMBER OF SHARES BEING PURCHASED: _______________ X $5.50 PER SHARE =
VOLUME DISCOUNT________________________
TOTAL PURCHASE PRICE FOR SHARES: $__________________
The undersigned subscriber hereby authorizes and directs the immediate deposit
of his/her subscription amount into the____________ Bank as Escrow Agent for
Amazon Herb Company.
================================================================================
SIGNIFICANT DISCLOSURE
================================================================================
THIS SUBSCRIPTION IS MADE PURSUANT TO, AND IS SUBJECT TO, THE TERMS AND
CONDITIONS OF THE QUALIFICATION APPROVED BY THE SECURITIES COMMISSIONS OF THE
STATES IN WHICH THE COMMON STOCK IS BEING OFFERED.
SIGNATURE MUST BE IDENTICAL TO NAME OF REGISTERED OWNER
- ------------------------------------------------------
Printed Name of Subscriber
- ------------------------------------------------------
<PAGE>
Signature of Subscriber Date
- ------------------------------------------------------
Printed Name of Subscriber (if more than one)
- ------------------------------------------------------
Signature of Subscriber Date
================================================================================
ADDITIONAL INFORMATION
================================================================================
In order to facilitate processing of your subscription, please be sure you have
completed each of the following:
- A check made payable to "___________________. as Escrow Agent for
Amazon Herb Company"
- Enter the number of shares of Common Stock being purchased and total
cash contribution on this Subscription Agreement.
- Enter the state in which you are a legal resident in the "Residence
Address" column above.
- Please mail check and this Subscription Agreement to:
Amazon Herb Company
725 North A1A
Suite C-115
Jupiter, Florida 33447
Attn: John H. Easterling
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION IN THIS PROSPECTUS IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
Prospectus Summary...................................................
Risk Factors.........................................................
Use of Proceeds......................................................
Dividend Policy......................................................
Dilution.............................................................
Capitalization.......................................................
Selected Financial Data..............................................
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................
Business of the Company..............................................
Management...........................................................
Principal Stockholders...............................................
Description of Securities............................................
Shares Eligible for Future Sale......................................
Plan of Distribution.................................................
Legal Matters........................................................
Experts............................... ..............................
Available Information................................................
Index to Financial Statements........................................ F-1
Subscription Agreement (Appendix A)................................ A-1
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS.
======================================================
[COMPANY LOGO]
380,000 SHARES OF COMMON STOCK
PROSPECTUS
, 1998
======================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation and the Bylaws of the Registrant contain
provisions providing for the indemnification by the Registrant of all past and
present directors, officers, employees or agents of the Registrant. Such parties
are indemnified from and against any and all liability and expense that may be
imposed upon or incurred by such person in connection with or resulting from any
claim, action, suit, or proceeding, civil or criminal, in which the person has
become involved, as a party or otherwise, by reason of being or having been a
director, officer or employee of the corporation, whether or not the person
continues to be such at the time of such liability or expense shall have been
imposed or incurred. However, no such director, officer or employee shall be
entitled to claim such indemnity with respect to any matter as to which there
shall have been a final adjudication that the person has committed or allowed
some act or omission, (a) otherwise than in good faith in what the person
considered to be the best interests of the corporation, and (b) without
reasonable cause to believe that such act or omission was proper and legal. In
addition, there shall be no indemnity in the event of a settlement of such
claim, action, suit, or proceeding unless (a) the court having jurisdiction of
the matter shall have approved of such settlement with knowledge of the
indemnity provided in the Articles, or (b) a written opinion of independent
legal counsel, selected by or in manner determined by the Board of Directors,
shall have been rendered substantially concurrently with such settlement. A
conviction or judgment (whether based on a plea of guilty, or nolo contendere or
its equivalent, or after trial) in a criminal action, suit or proceeding shall
not be deemed an adjudication that such director, officer or employee has
committed or allowed some act or omission as provided above if independent legal
counsel, selected as set forth above, shall substantially concurrently with such
conviction or judgment give to the corporation a written opinion that such
director, officer or employee was acting in good faith in what he or she
considered to be the best interests of the corporation or was not without
reasonable cause to believe that such act or omission was proper and legal.
The specific provisions of the Articles of Incorporation of the Registrant with
respect to the indemnification of directors and officers are as follows:
ARTICLE NINE
LIABILITY OF DIRECTORS AND OFFICERS
No director or officer of the Company shall have any personal liability to the
Company or its Shareholders for monetary damages for breach of fiduciary duty as
a director notwithstanding any provision of law imposing such liability;
provided, however, that this Article Nine shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Company or its Shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
the General Business Corporation Law of the State of Florida, or (iv) for any
transaction from which the director or officer derived an improper personal
benefit. No amendment to or repeal of this Article Nine shall apply to or have
any effect on the elimination pursuant hereto of liability or alleged liability
of any director or officer of the Company for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal. Nothing
in this Article Nine shall limit any lawful right to indemnification existing
independently of this Article.
<PAGE>
ARTICLE TEN
INDEMNITY
Every person now or in the future serving as a director, officer or employee of
the corporation shall be indemnified and held harmless by the corporation from
and against any and all loss, cost, liability and expense that may be imposed
upon or incurred by such person in connection with or resulting from any claim,
action, suit, or proceeding, civil or criminal, in which the person may become
involved, as a party or otherwise, by reason of being or having been a director,
officer or employee of the corporation, whether or not the person continues to
be such at the time of such loss, cost, liability or expense shall have been
imposed or incurred. As used in these Articles, the term "loss, cost, liability
and expense" shall include, but shall not be limited to, counsel fees and
disbursements and amounts of judgments, fines or penalties against, and amounts
paid in settlement by, any such director, officer or employee; provided,
however, that no such director, officer or employee shall be entitled to claim
such indemnity: (1) with respect to any matter as to which there shall have been
a final adjudication that the person has committed or allowed some act or
omission, (a) otherwise than in good faith in what the person considered to be
the best interests of the corporation, and (b) without reasonable cause to
believe that such act or omission was proper and legal; or (2) in the event of a
settlement of such claim, action, suit, or proceeding unless (a) the court
having jurisdiction of the matter shall have approved of such settlement with
knowledge of the indemnity provided in these Articles, or (b) a written opinion
of independent legal counsel, selected by or in manner determined by the Board
of Directors, shall have been rendered substantially concurrently with such
settlement, to the effect that it was not probable that the matter as to which
indemnification is being made would have resulted in a final adjudication as
specified in clause (1) above, and that the loss, cost, liability or expense may
properly be borne by the corporation. A conviction or judgment (whether based on
a plea of guilty, or nolo contendere or its equivalent, or after trial) in a
criminal action, suit or proceeding shall not be deemed an adjudication that
such director, officer or employee has committed or allowed some act or omission
as provided above if independent legal counsel, selected as set forth above,
shall substantially concurrently with such conviction or judgment give to the
corporation a written opinion that such director, officer or employee was acting
in good faith in what he or she considered to be the best interests of the
corporation or was not without reasonable cause to believe that such act or
omission was proper and legal.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses of this offering are estimated as follows:
SEC Registration Fee................................... $ 721
Chicago Stock Exchange Listing Fee..................... 15,000
Blue Sky fees and expenses............................. *
Transfer Agent and Registrar fees...................... 3,000
Printing and engraving expenses........................ 60,000
Legal fees and expenses................................ 50,000
Accounting fees and expenses........................... 10,000
Miscellaneous.......................................... *
Total................................... $
=======
* To be filed by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
All references in this Item 26 to Common Stock reflect a 1-for-2.5 reverse split
<PAGE>
effective immediately prior to the consummation of the offering of the Common
Stock pursuant to this Registration Statement.
Within the past three years, the Registrant sold securities without registration
under the Securities Act of 1933, as amended (the "Act") as follows:
<TABLE>
<CAPTION>
SECURITIES SOLD NAMES OF INVESTORS CONSIDERATION PAID EXEMPTION FROM REGISTRATION
- --------------- ------------------ ------------------ ---------------------------
<S> <C> <C> <C>
72,000 Shares of
common stock Robert Kaufman $54,000 Section 4(2) of the Securities Act
8,000 Shares of
common stock Cheryl Davidson $11,000 Section 4(2) of the Securities Act
6,400 Shares of
common stock Jim & Nancy Chuda $6,300 Section 4(2) of the Securities Act
71,200 Shares of
common stock Kaufman IRA $53,400 Section 4(2) of the Securities Act
40,000 Shares of
common stock George & Gail Reams $50,000 Section 4(2) of the Securities Act
12,000 Shares of
common stock 5 persons(1) $60,000 Section 4(2) of the Securities Act
42,800 Shares of
common stock 9 persons(2) services Section 4(2) of the Securities Act
Options to
acquire 50,000
Shares of
common stock 10 persons(3) $100,000 Section 3(b) of the Securities Act
and Rule 504 of Regulation D
promulgated thereunder.
</TABLE>
(1) The five persons who acquired 12,000 shares of common stock are Jeff & Cindy
McGovern (2,000), Warren Bridges (2,000), Alfred Peskoe (4,000), Jason Hawver
(2,000), and Diana Rajacic (2,000).
(2) The nine persons who acquired 42,800 shares of common stock are John
Easterling (20,000), Martin Ccorisapra (20,000), Jill Greiner (400), Autumn
Howard (400), Melissa Grant (400), Julie Saporito (400), Darby Rivette (400),
Connie Lynch (400), Elaine O'Dell (400).
(3) The ten persons who acquired options for 50,000 shares of common stock are
Debra Campa (5,000) Nancy Harrelson (2,500), Alfred & Eleanor Peskoe (5,000),
Lisa & Jeffrey Margulies (3,550), L. T. Easterling Trust(5,000), Eleanor
Haspel-Portner (15,000), Sarah Mallory Trust ( 2,500), Success Strategies, Inc.
(5,000), Jason Hawver (3,950), Elaine O'Dell (2,500).
ITEM 27. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
----- ------------------------------------------------------------
1.1 Form of Escrow Agreement by and between Amazon Herb Company and Bank
3.0 Amended Articles of Incorporation of Amazon Herb Company
3.1 Bylaws of Amazon Herb Company
<PAGE>
4.0 Specimen Stock Certificate
5.0 Opinion of Hackney, Miller & Robbins, P.A., as to legality
10.0 Amazon Herb Company 1998 Stock Option Plan
10.1 Purchase Agreement by and between Amazon Herb Company and Terradyne
Naturale, Inc.
10.2 Business Lease Agreement by and between Amazon Herb Company and
Jupiter Industrial Associates
15.0 Letter in unaudited interim financial information*
23 Consent of Bernard J. Donth, C.P.A., independent certified public
accountants
24.1 Consent of Hackney, Miller & Robbins, P.A. (included in Exhibit 5.0)
27.0 Financial Data Schedule
*To be filed by amendment
ITEM 28. UNDERTAKINGS
A. Undertaking pursuant to Rule 415.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof), which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment will be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration, by means of a post-effective
amendment, any of the securities being registered that remain unsold at the
termination of the offering.
B. Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and other agents of the Company, the Company
has been informed that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
<PAGE>
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Jupiter,
State of Florida, on the day of June 15, 1998.
AMAZON HERB COMPANY
/s/ JOHN H. EASTERLING
--------------------------------------
John H. Easterling
Chairman of the Board and President
/s/ CONNIE LYNCH
--------------------------------------
Connie Lynch
Chief Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------- ------------------------ -------------------
<S> <C> <C>
/s/ JOHN H. EASTERLING Chairman of the Board June 15, 1998
- -------------------------------------- President and Director
John H. Easterling
/S/ CONNIE LYNCH Secretary and Treasurer June 15, 1998
- --------------------------------------
Connie Lynch
/S/ TED NICHOLAS Director June 15, 1998
- --------------------------------------
Ted Nicholas
/S/ ROBERT BUTWIN Director June 15, 1998
- --------------------------------------
Robert Butwin
/S/ ROBERT S. KAUFMAN Director June 15, 1998
- --------------------------------------
Robert S. Kaufman
/S/ MICHAEL J. PERRY Vice President and Director June 15, 1998
- --------------------------------------
Michael J. Perry
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
1.1 Form of Escrow Agreement by and between Amazon Herb Company and Bank
3.0 Amended Articles of Incorporation of Amazon Herb Company
3.1 Bylaws of Amazon Herb Company
4.0 Specimen Stock Certificate
5.0 Opinion of Hackney, Miller & Robbins, P.A., as to legality
10.0 Amazon Herb Company 1998 Stock Option Plan
10.1 Purchase Agreement by and between Amazon Herb Company and Terradyne
Naturale, Inc.
10.2 Business Lease Agreement by and between Amazon Herb Company and Jupiter
Industrial Associates
23 Consent of Bernard J. Donth, C.P.A., independent certified public
accountants
27.0 Financial Data Schedule
EXHIBIT 1.1
EXHIBIT 1.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of
___________, 1998, by and among . (the "Escrow Agent"), having its principal
place of business Palm Beach Gardens, Florida and Amazon Herb Company, a Florida
corporation (the "Company"), having its principal place of business at 725 North
A1A, Suite C-115, Jupiter, Florida 33447.
RECITALS
A. The Company proposes to offer for sale to investors up to 380,000 shares of
Common Stock, par value $.01 per share, for a maximum aggregate offering price
of $2,090,000 (the "Proceeds").
B. The Company desires to establish an escrow account in which funds received
from subscribers for the Common Stock will be deposited pending completion of
the escrow period. agrees to serve as Escrow Agent in accordance with the terms
and conditions set forth herein and subject to the approval of the state
securities administrators set forth on the list attached hereto as Exhibit "A"
(hereinafter referred to as the "State Administrators"). The purpose of this
Agreement is to comply with the provisions of Rules 10(b)-9 and 15c2-4
promulgated under the Securities Exchange Act of 1934, as amended, and under the
applicable securities laws of all states in which the offering of Common Stock
(the "Offering") is made.
C. The Escrow Agent must be satisfactory to the State Administrators and it is
not affiliated with the Company.
AGREEMENT
1. ESTABLISHMENT OF ESCROW ACCOUNT. Effective as of the date of the
commencement of the Offering, the parties hereby establish an escrow account
with the Escrow Agent, which escrow account shall be entitled "Amazon Herb
Company/ Escrow Account (the "Escrow Account"). The Company will instruct
subscribers to make checks for subscriptions payable to " , AS ESCROW AGENT FOR
AMAZON HERB COMPANY" until a minimum of 275,000 shares of Common Stock have been
sold in the Offering. Any checks received that are made payable to a party other
than the Escrow Agent shall be returned to the Company.
2. ESCROW PERIOD. The period for the existence of the escrow (the "Escrow
Period") shall begin with the commencement of the Offering and shall terminate
upon the earlier to occur of the following dates:
A. The date upon which the Escrow Agent confirms to the State
Administrators as hereinafter provided that it has received in the Escrow
Account gross proceeds of $1,512,500 in deposited funds (the "Minimum Offering
Amount"); or
B. The expiration of ninety (90) days from the date of commencement
of the Offering (unless extended as permitted in the Registration Statement
filed with the Securities and Exchange Commission in connection with the
Offering for an additional ninety (90) days at the sole discretion of the
Company with a copy of such extension to the Escrow Agent and the State
Administrators); or
C. The date upon which a determination is made by the Company to
terminate the Offering prior to the sale of the Minimum Offering Amount.
<PAGE>
During the Escrow Period, the Company is aware and understands that it is
not entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Company or any other entity, or
be subject to the debts of the Company or any other entity.
3. DEPOSITS INTO THE ESCROW ACCOUNT. All monies received from subscribers
of the Common Stock will be deposited with the Escrow Agent by twelve o'clock
noon of the next business day after receipt of said monies from subscribers,
together with a written account of each sale, which account shall set forth,
among other things, the subscriber's name and address, the number of shares of
Common Stock purchased, the amount paid therefor, whether the consideration
received was in the form of a check, draft, or money order, the date of said
check, draft, or money order, and the date received and delivered to the Escrow
Agent. All monies so deposited in the Escrow Account are hereinafter referred to
as the "Escrow Amount." The State Administrators shall have the authority to
inspect the Escrow Account without obtaining any further permission from the
Company and/or the Escrow Agent.
Unless and until all of the State Administrators order the release of the
Escrow Amount to the Company, such Escrow Amount shall not be, nor shall such
Escrow Amount be considered to be, assets of the Company.
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
A. In the event the Escrow Agent does not receive deposits totaling
the Minimum Offering Amount prior to the termination of the Escrow Period, the
Escrow Agent shall promptly notify the State Administrators by telephone,
confirmed in writing, of such fact and shall, upon approval by the State
Administrators, promptly thereafter refund to each subscriber the amount
received from the subscriber, without deduction, penalty, or expense to the
subscriber, and the Escrow Agent shall notify the Company of its distribution of
the funds. The purchase money returned to each subscriber shall be free and
clear of any and all claims of the Company or any of its creditors.
B. In the event the Escrow Agent receives the Minimum Offering
Amount prior to termination of the Escrow Period, the Escrow Amount will not be
released to the Company until such amount is received by the Escrow Agent in
collected funds and the release provisions set forth in paragraph C below are
complied with. For purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal banking
channels and are in the form of cash. The Minimum Offering Amount may be met by
funds that are deposited from the effective date of the Offering up to and
including the date on which the contingency must be met, i.e., during the Escrow
Period. However, escrow cannot be broken and the Offering may not proceed to
closing until customer checks have been collected through the normal banking
channels in an aggregate amount sufficient to meet the Minimum Offering Amount.
Purchases made after the Escrow Period has terminated, but prior to the date
escrow is broken pending clearance of subscribers' funds, may not subsequently
be counted to meet the Minimum Offering Amount should checks tendered prior to
the termination of the Escrow Period fail to clear the banking system.
C. In no event will funds be released to the Company until the State
Administrators have entered an Order authorizing the release of funds in the
Escrow Account. Such Order will be entered only five business days after receipt
by the State Administrators of an application that includes the following:
(1) A verified statement duly executed by the Escrow Agent
setting forth the total amount in collected funds on deposit with the Escrow
Agent on the termination date (including purchases for which check or other
payment had been received by the purchaser and were subsequently collected as
provided in paragraph 4B hereof) and states therein that all of the conditions
of this Agreement have been met.
(2) A verified statement duly executed by the Company which
states:
(a) That all required proceeds from the sale of the
Common Stock have been placed with the Escrow Agent in accordance with the terms
and conditions of this Agreement and that there have been no material omissions
or changes in the financial condition of the Company, or other changes of
circumstances, that would
<PAGE>
render the amount of the proceeds inadequate to finance the Company's proposed
plan of operations, business or enterprise;
(b) That the required proceeds are represented by
unconditional subscription agreements which are not loans and are not subject to
rescission or rejection by the Company or the subscribers;
(c) That there have been no material omissions or changes
that would render the representations contained in the Registration Statement to
be fraudulent, false or misleading; and
(d) Such other information as the State Administrators may
require.
5. COLLECTION PROCEDURE. The Escrow Agent is hereby authorized to forward
each check for collection and, upon collection of the proceeds of each check,
deposit the collected proceeds in the Escrow Account. As an alternative, the
Escrow Agent may telephone the bank on which the check is drawn to confirm that
the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Company. In such cases, the Escrow Agent will promptly notify the Company of
such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check to
the rejected subscriber. If the Company rejects any subscription for which the
Escrow Agent has not yet collected funds but has submitted the subscriber's
check for collection, the Escrow Agent shall promptly issue a check in the
amount of the subscriber's check to the rejected subscriber after the Escrow
Agent has cleared such funds. If the rejected subscriber's check which has been
submitted for collection by the Escrow Agent is uncollectible, and if the Escrow
Agent has issued a check to the rejected subscriber hereunder, then the Escrow
Agent shall notify the Company and the Company shall immediately reimburse the
Escrow Agent for the amount of such funds. If the Escrow Agent has not yet
submitted a rejected subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber.
6. INVESTMENT OF ESCROW AMOUNT. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in (1) bank accounts,
(2) bank money-market accounts, (3) short-term certificates of deposit issued by
a bank, or (4) short-term securities issued or guaranteed by the U.S.
Government.
7. COMPLIANCE WITH TAXATION MATTERS. The Company shall provide the Escrow
Agent with a completed Internal Revenue Service ("IRS") Form W-8 or Form W-9
upon the execution of this Agreement. The Escrow Agent may delay accepting
escrow funds until the IRS forms have been provided. For purposes of reporting
to tax authorities, the Escrow Agent will treat all income earned by the Escrow
Agent as paid to the Company at the time income is received by the Escrow
Account.
The Company shall be responsible for determining any requirements for paying
taxes or reporting any payments for tax purposes. The Company shall give written
directions to the Escrow Agent to prepare and file tax information or to
withhold any payments hereunder for tax purposes. The Company covenants and
agrees to indemnify and hold the Escrow Agent harmless against all liability for
tax withholding and/or reporting for any payments made by the Escrow Agent
pursuant to this Agreement.
8. COMPENSATION OF ESCROW AGENT. The Company shall pay the Escrow Agent a
fee for its escrow services hereunder in accordance with the fee schedule
attached hereto as Exhibit "B". However, no such fee or any monies whatsoever
shall be paid out of or chargeable to the funds on deposit in the Escrow
Account.
In the event Escrow Agent performs any service not specifically provided
hereinabove, or that there is any assignment or attachment of any interest in
the subject matter of this escrow or modification thereof, or that any
<PAGE>
controversy arises hereunder, or that Escrow Agent is named a party to, or
intervenes in, any litigation pertaining to this escrow or the subject matter
thereof, Escrow Agent shall be reasonably compensated therefor and reimbursed
for all costs and expenses including attorneys' fees occasioned thereby. Escrow
Agent shall have a first lien on the property and papers held by it hereunder
for such compensation and expenses, and the Company agrees to pay the same.
9. RESIGNATION OF ESCROW AGENT. The Escrow Agent may not resign as escrow
agent without the express consent of the State Administrators, and may further
do so upon giving ten (10) days written notice of such resignation to the
Company at the address set forth hereinbelow. On the effectiveness of such
resignation, the Escrow Agent shall deliver to any escrow agent appointed by the
Company (or if there is no escrow agent appointed by the Company, then to the
purchasers of the Common Stock), all documents and money in the Escrow Account,
and thereupon the Escrow Agent will be released of any further responsibility or
obligation in connection with the Escrow Account or this Agreement.
10. LIABILITY OF THE ESCROW AGENT. The Escrow Agent may rely on and shall
be protected, indemnified and held harmless by the Company in acting upon the
written or oral instructions of any officer or director of the Company or of the
Company's counsel, and the Escrow Agent will be entitled to request that further
instructions be given by such persons or to request that instructions be given
in writing.
In performing duties under this Agreement, the Escrow Agent is authorized
to rely upon any statement, consent, agreement or other instrument not only as
to its due execution, its validity, and the effectiveness of its provisions, but
also as to the truth and accuracy of any information contained therein, which
the Escrow Agent in good faith believes to be genuine or to have been
represented or signed by a proper person or persons. The Escrow Agent shall not
be liable for any error of judgment made in good faith by one of its officers or
directors, unless it shall be proved that the Escrow Agent or such officer or
director was grossly negligent in ascertaining the pertinent facts or acted
intentionally in bad faith. The Escrow Agent will have no liability for any
action or omission to act with respect to its duties under this Agreement
undertaken in good faith reliance upon reasonable advice of its counsel or the
Company's counsel.
Should the Escrow Agent, before or after the performance of its
obligations under this Agreement, receive or become aware of any conflicting
demands or claims with respect to funds deposited in the Escrow Account or the
rights of the Company or any of the subscribers, the Escrow Agent shall have the
right to discontinue any or all acts conducted pursuant to the terms of this
Agreement until such conflict has been resolved to its satisfaction. The Escrow
Agent shall have a further right to commence or defend any actions or
proceedings for the determination of such conflicting demands or complaints. The
Company hereby covenants and agrees to indemnify the Escrow Agent and hold it
harmless against any loss, liability or expense, and pay all costs, damages,
judgments and expenses, including reasonable attorneys' fees, suffered or
incurred by the Escrow Agent in connection with, or arising out of, this
Agreement, including without limitation, any suit in interpleader brought by the
Escrow Agent, except, that the Escrow Agent will not be indemnified against any
such loss, liability or expense arising out of the Escrow Agent's gross
negligence or willful misconduct. The Escrow Agent will be under no obligation
to institute, or defend any action, suit or legal proceeding in connection
herewith unless first indemnified and held harmless to the Escrow Agent's
satisfaction in accordance with the foregoing. In the event the Escrow Agent
shall bring a suit in interpleader, the Escrow Agent shall ipso facto be fully
released and discharged from all its obligations to perform any and all duties
or obligations under this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement or resignation of the Escrow Agent.
11. MAINTENANCE OF RECORDS. The Escrow Agent shall at all times keep and
maintain a complete set of books, records and accounts relating to the
subscriptions received by the Escrow Agent hereunder, and the disposition by the
Escrow Agent of the proceeds thereof. All such records maintained by the Escrow
Agent shall be available for inspection by the State Administrators, and the
Escrow Agent shall furnish to the State Administrators, upon demand, at such
place designated in such demand, true, correct, complete and current copies of
any or all of such records.
12. MISCELLANEOUS.
<PAGE>
A. All notices, reports, instructions, requests and other
communications given under this Agreement shall be either (a) sent in writing
and served personally by delivery to a responsible officer at the party's
offices listed on the signature pages hereto; or delivered by first class
registered or certified U.S. mail, return receipt requested, postage prepaid; or
(b) sent by telex or telecopier and then acknowledged as received by return
telex or telecopier by the intended recipient. Notices shall be deemed received
only upon receipt. Notices shall be directed to the addresses or telex or
telecopier numbers indicated on the signature pages hereto; provided that a
party may change its address or numbers for notices by giving notice to all
other parties in accordance with this paragraph. Escrow Agent shall be protected
in acting upon any notice, request, waiver, consent, receipt or other paper or
document believed by Escrow Agent to be signed by the proper party or parties.
B. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Florida. This Agreement, together
with any exhibits and/or schedules referred to herein, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and undertakings of the
parties in connection herewith.
C. All of the terms, covenants, conditions and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto and to their
respective representatives, successors and assigns.
D. No failure or delay on the part of the Escrow Agent in exercising
any right, power or remedy may be, or may be deemed to be, a waiver thereof; nor
may any single or partial exercise of any right, power or remedy preclude any
other or further exercise of any other right, power or remedy.
E. The invalidity of any provision hereof shall in no way affect the
validity of any other provision hereof. Each of the parties hereto shall at the
request of the other party, deliver to the requesting party all further
documents or other assurances as may reasonably be necessary or desirable in
connection with this Agreement.
F. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
G. In the event of any dispute arising out of the subject matter of
this Agreement, the prevailing party shall recover, in addition to any other
damages assessed, its attorneys' fees and court costs incurred in litigating or
otherwise settling or resolving such dispute.
H. Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the instructions provided hereunder or Escrow Agent's
duties thereunder, and Escrow Agent shall incur no liability and/or expense
therefor by acting in accordance with instructions of legal counsel.
I. Escrow Agent shall not be required to take or be bound by notice
of such default involving any expense or liability, unless notice in writing is
given to the Escrow Agent at the office above named, and unless it is
indemnified in a manner satisfactory to it against such expense or liability.
J. In the event the escrow created by this Agreement is canceled for
any reason, the Company will nevertheless pay the escrow fee, plus all other
costs and expenses of Escrow Agent, as established under Section 8 of this
Agreement. Should the Escrow Agent resign as escrow hereunder pursuant to
Section 9 of this Agreement, Escrow Agent shall be entitled to reimbursement
only for those costs and expenses incurred by Escrow Agent to date of such
resignation.
The Company and the Escrow Agent have entered into this Agreement on this
___ day of _____, 1998 in multiple counterparts, each of which shall be
considered an original. Escrow Agent, by its signature hereon, accepts the
escrow agency created by this Agreement, and agrees to carry out its duties as
escrow agent pursuant to the terms and conditions contained herein.
<PAGE>
AMAZON HERB COMPANY
By:________________________________________
President
Address for Notices:
725 North A1A
Suite C-115
Jupiter, Florida 33447
ESCROW AGENT
By:________________________________________
Authorized Officer
Address for Notices:
EXHIBIT A
STATE SECURITIES COMMISSIONS
1. Colorado Department of Regulatory Agencies, Division of Securities
2. Delaware Division of Securities
3. Florida Division of Securities and Investor Protection
4. Georgia Secretary of State, Securities Division
5. Illinois Securities Department
6. Maryland Office of the Attorney General, Division of Securities
7. New Jersey Department of Law and Public Safety, Division of Consumer
Affairs, Bureau of Securities
8. New York Department of Law
9. North Carolina Secretary of State, Securities Division
10. Ohio Division of Securities
11. Virginia Corporation Commission, Division of Securities and Retail
Franchising
EXHIBIT B
ESCROW FEE SCHEDULE
EXHIBIT 3.0
EXHIBIT 3.0
ARTICLES OF INCORPORATION
OF
MARCO POLO TRADING CO., INC.
The undersigned, for the purpose of forming a corporation under the
Florida General Corporation Act, hereby adopt the following articles of
incorporation:
ARTICLE ONE
The name of this corporation is Marco Polo Trading Co., Inc.
ARTICLE TWO
The corporation is to have perpetual existence.
ARTICLE THREE
The corporation may transact any and all lawful business for which
corporations may be incorporated under the Florida General Corporation Act.
ARTICLE FOUR
4.01 The aggregate number of shares which the corporation shall have
the authority to issue is 1000, all of which shall be common shares with a par
value of $1.00 per share.
4.02 The minimum amount of paid-in capital with which the corporation
shall begin business shall be not less then Five Hundred Dollars ($500.00).
ARTICLE FIVE
5.01 The street address of the initial corporate office of the
corporation is 801 Seafarer Circle, #403, Jupiter, Florida 33477.
5.02 The name and address of the initial Resident Agent for this
corporation to accept service of process within the State of Florida is Mark J.
Nowicki, 1155 U. S. Highway One, Suite 302, Juno Beach, Florida 33408.
ARTICLE SIX
6.01 The name and address of the incorporator of this corporation is
Mark J. Nowicki, 1155 U. S. Highway One, Suite 302, Juno Beach, Florida 33408.
<PAGE>
6.02 Said incorporator is over the age of eighteen (18) years; is sui
juris, and is a citizen of the United States.
ARTICLE SEVEN
7.01 One director shall constitute the initial Board of Directors of
the corporation, but the Bylaws may provide for such increase or decrease in
number thereof as is authorized by law.
7.02 The name(s) and addresses of the member(s) of the first Board of
Directors are:
NAME ADDRESS
---- -------
John Easterling 801 Seafarer Circle, #403
Jupiter, Florida 33477
ARTICLE EIGHT
Nothing in these articles of incorporation shall be taken to limit the
power of this corporation.
IN WITNESS WHEREOF, the undersigned has made and subscribed these
articles of incorporation this 24th day of May, 1990.
By:_________________________________
Incorporator
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
MARCO POLO TRADING COMPANY, INC.
1. ARTICLE FOUR of the Articles of Incorporation of Marco Polo Trading
Company, Inc. is amended to read as follows:
ARTICLE FOUR
4.01 The aggregate number of shares which the corporation shall
have authority to issue is 8,000,000, all of which shall be
common shares with a par value of .010 per share.
4.02 The minimum amount of paid in capital with which the
corporation shall begin business shall not be less than
$500.00.
2. The foregoing amendment was adopted by the shareholders of this
corporation on October 18, 1991, and this action was taken by the
directors of the corporation through a major vote.
3. This amendment is pursuant to and approved by a unanimous vote of all
shareholders entitled to vote.
IN WITNESS WHEREOF, the undersigned president, vice president and
secretary/treasurer of this corporation have executed these Articles of
Amendment on this 21st day of October, 1991.
--------------------------------
President
--------------------------------
Vice President
--------------------------------
Secretary/Treasurer
STATE OF FLORIDA
COUNTY OF PALM BEACH
<PAGE>
BEFORE ME, the undersigned authority, duly appeared John Easterling,
who, after being duly sworn, deposes and states that he executed the foregoing
Articles of Amendment f or the purposes therein expressed.
DATED this 21st day of October, 1991.
--------------------------------------
Notary Public, State of Florida (Notary Seal)
My Commission Expires:_______________
<PAGE>
ARTICLES OF AMENDMENT
OF
MARCO POLO TRADING CO., INC.
1. The following provisions of the Articles of Incorporation of Marco Polo
Trading Co., Inc., L78953, a Florida corporation, filed in Tallahassee on June
6, 1990, be and they hereby are amended in the following particulars:
The following Article is hereby deleted in its entirety:
"ARTICLE ONE"
The name of this corporation is "Amazon Herb Company"
2. The foregoing amendments were adopted by all of the stockholders and
Directors of the corporation on the 26th day of December, 1992.
3. IN WITNESS WHEREOF, the undersigned incorporator of this corporation
has executed these Articles of Amendment this 6th day of January, 1993.
-----------------------------
John Easterling, President
STATE OF FLORIDA
COUNTY OF PALM BEACH
BEFORE ME, the undersigned authority, personally appeared John
Easterling, President, ( ) known to me, (X ) who produced the following
identification FLORIDA DRIVERS LICENSE #E236-468-52-130-0 to be the person who
executed the foregoing Articles of Amendment and he acknowledged before me that
he executed such instrument for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6th day
of January, 1993.
-----------------------------------
Notary Public - State of Florida
My Commission Expires:
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
AMAZON HERB COMPANY
1. The following provisions of the Articles of Incorporation of Amazon
Herb Company, a Florida corporation, filed in Tallahassee on June 6,
1990, be and they hereby are amended in the following particulars:
2. Article Four of the Articles of Incorporation is hereby amended to read
as follows:
"4.1 The aggregate number of shares which the corporation is authorized to
issue is 10,000,000 shares, of which 8,000,000 shares of the par value of $.Ol
per share shall be designated as "Common Shares" and 2,000,000 of the par
value of $1.00 shall be designated as "Preferred Shares".
4.2 The Board of Directors, by resolution, has the authority to grant rights
to subscribe for or purchase and issue in one (1) or more series, Preferred
Shares, having such preferences, rights, and limitations as therein set forth.
The voting powers, if any, of a holder of one Preferred Share, may not exceed
the voting rights of one Common Share.
Article Four of the Articles of Incorporation is further amended by adding a
paragraph 4.3 as follows:
Paragraph 4.3: The 6,833,000 shares of Common Stock of the company without par
value, either issued and outstanding or held by the company as treasury stock,
immediately prior to the time this amendment becomes effective shall be and
are automatically reclassified and changed (without any further act) into
2,733,200 fully paid and nonassessable shares of the Common Stock of the
Company without par value without increasing or decreasing the amount of
stated capital or paid-in surplus of the company, provided that no fractional
shares shall be issued. The fractional share interests that occur as a result
of the foregoing reclassification and change shall be rounded up to the next
nearest whole number.
The Articles of Incorporation are hereby amended by adding Articles Nine and
Ten which shall read as follows:
ARTICLE NINE
LIABILITY OF DIRECTORS AND OFFICERS
<PAGE>
No director or officer of the Company shall have any personal liability to the
Company or its Shareholders for monetary damages for breach of fiduciary duty as
a director notwithstanding any provision of law imposing such liability;
provided, however, that this Article Nine shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the Company or its Shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
the Florida Business Corporation Act, or (iv) for any transaction from which the
director or officer derived an improper personal benefit. No amendment to or
repeal of this Article Nine shall apply to or have any effect on the elimination
pursuant hereto of liability or alleged liability of any director or officer of
the Company for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal. Nothing in this Article Nine shall
limit any lawful right to indemnification existing independently of this
Article.
ARTICLE TEN
INDEMNITY
Every person now or in the future serving as a director, officer or employee of
the corporation shall be indemnified and held harmless by the corporation from
and against any and all loss, cost, liability and expense that may be imposed
upon or incurred by such person in connection with or resulting from any claim,
action, suit, or proceeding, civil or criminal, in which the person may become
involved, as a party or otherwise, by reason of being or having been a director,
officer or employee of the corporation, whether or not the person continues to
be such at the time of such loss, cost, liability or expense shall have been
imposed or incurred. As used in these Articles, the term "loss, cost, liability
and expense" shall include, but shall not be limited to, counsel fees and
disbursements and amounts of judgments, fines or penalties against, and amounts
paid in settlement by, any such director, officer or employee; provided,
however, that no such director, officer or employee shall be entitled to claim
such indemnity: (1) with respect to any matter as to which there shall have been
a final adjudication that the person has committed or allowed some act or
omission, (a) otherwise than in good faith in what the person considered to be
the best interests of the corporation, and (b) without reasonable cause to
believe that such act or omission was proper and legal; or (2) in the event of a
settlement of such claim, action, suit, or proceeding unless (a) the court
having jurisdiction of the matter shall have approved of such settlement with
knowledge of the indemnity provided in these Articles, or (b) a written opinion
of independent legal counsel, selected by or in manner determined by the Board
of Directors, shall have been rendered substantially concurrently with such
settlement, to the effect that it was not probable that the matter as to which
indemnification is being made would have resulted in a final adjudication as
specified in clause (1) above, and that the loss, cost, liability or expense may
properly be borne by the corporation. A conviction or judgment (whether based on
a plea of guilty, or nolo contenders or its equivalent, or after trial) in a
criminal action, suit or proceeding shall not be deemed an adjudication that
such director, officer or employee has committed or allowed some act or omission
as provided above if independent legal counsel, selected as set forth above,
shall substantially concurrently with such conviction or judgment give to the
corporation a written opinion that such director, officer or employee was acting
in good faith in what he or she considered to be the best interests of the
corporation or was not without reasonable cause to believe that such act or
omission was proper and legal.
3. The foregoing amendments were adopted by the Stockholders of the
corporation on the 1st day of May, 1998.
4. The number of votes cast for the Amendments by the shareholders was
sufficient for approval.
IN WITNESS WHEREOF, the undersigned President and Secretary of this corporation
have executed these Articles of Amendment this 1st day of May, 1998.
AMAZON HERB COMPANY
- ----------------------------------
John H. Easterling, President
- ----------------------------------
Connie Lynch, Secretary
EXHIBIT 3.1
EXHIBIT 3.1
BYLAWS OF
AMAZON HERB COMPANY
(A Florida Corporation)
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal executive office of the
Corporation shall be at such place as the Board of Directors may from time to
time determine, but until a change is effected such principal office shall be
at: 725 North A1A, Suite C-115, Jupiter, Florida 33447.
SECTION 2. Other Offices. The Corporation may also have other offices at
such places, within or without the State of Florida, as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. Time and Place of Meetings. A meeting of stockholders for
any purpose may be held at such time and place, within or without the State of
Florida, as shall be stated on the notice thereof or in a duly executed waiver
of notice thereof.
SECTION 2. Annual Meeting. The annual meeting of the stockholders of
the Corporation shall be held on the tenth day of May in each year if not a
legal holiday, and if a legal holiday, at such place, either within or without
the State of Florida, and at such time as set forth in the notice of the meeting
or in a duly executed waiver of notice thereof, for the election of the Board of
Directors and for the transaction of such other business as may properly be
brought before the meeting. In the event the annual meeting is not held on the
date above provided, the Board of Directors shall cause the meeting to be held
as soon thereafter as may be convenient. Such subsequent meeting shall be called
in the same manner as hereinafter provided for special meetings of stockholders.
SECTION 3. Special Meetings. Special meetings of the stockholders,
unless otherwise prescribed by statute, may be called at any time for any
purpose or purposes by the Board of Directors or the holders of not less than 10
percent of all the shares entitled to be cast in any issue proposed to be
considered at the proposed special meeting; provided that said persons sign,
date and deliver to the Corporation one or more written demands for the meeting
describing the proposal for which it is to be held, and shall be held at such
place, either within or without the State of Florida, and at such hour as may be
designated by the Board of Directors in the notice of the meeting; provided,
however, that the time so fixed shall permit the giving of notice as provided in
Section 4 of this Article II, unless such notice is waived as provided by law or
by these Bylaws. At a special meeting only such matters as may be specified in
the notice thereof shall be considered. Special meetings shall also be called
and held in such cases and in such manner as may be specifically required by law
or by the Articles of Incorporation.
SECTION 4. Notice of Meetings. Written notice of each meeting of the
stockholders, which shall state the place, date and hour of the meeting and, in
the case of a special meeting or where otherwise required by law, the purpose or
purposes for which it is called, shall be given, unless a different period is
required by law, not less than ten (10) nor more than sixty (60) days before the
date of such meeting, by or at the direction of the person
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calling the meeting. If mailed, the notice of a meeting of stockholders shall be
deemed to be given when deposited in the United States mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Corporation. No business other than that stated in the notice shall be
transacted at any meeting without the unanimous consent of all the stockholders
entitled to vote thereat. Any such notice for any meeting other than the annual
meeting shall, if issued at the direction of the Board of Directors, so
indicate. When a meeting is adjourned to another time or place, notice need not
be given if the time and place thereof are announced at the meeting at which the
adjournment is taken. At such an adjourned meeting, any business may be
transacted that might have been transacted on the original date of the meeting.
If the adjournment is for more than thirty days after the date of the original
meeting, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 5. Quorum. Except as otherwise required by law, the Articles of
Incorporation or these Bylaws, the holders of a majority of the shares entitled
to vote at any meeting of shareholders, present in person or represented by
proxy, shall constitute a quorum for the transaction of any business at any such
meeting, provided that when a specified item of business is required to be voted
on by a class or series (if the corporation shall then have outstanding shares
of more than one class or series) voting as a class, the holders of a majority
of the shares of such class or series shall constitute a quorum (as to such
class or series) for the transaction of such item of business. When a quorum is
once presented to organize a meeting of shareholders, it is not broken by the
subsequent withdrawal of any shareholders or their proxies. The holders of a
majority of shares present in person or represented by proxy at any meeting of
shareholders, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. When a meeting is
adjourned to another time or place, it shall not be necessary to give notice of
the adjourned meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken and at the
adjourned meeting any business may be transacted that might have been transacted
on the original date of the meeting.
The absence from any meeting of the number of shares required by law, the
Articles of Incorporation or these Bylaws for action upon one matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting, if the number of shares required in respect of
such other matters shall be present.
SECTION 6. Organization. At each meeting of the stockholders, the
Chairman of the Board or, in his absence or inability to act, the Vice-Chairman
or, in his absence or inability to act, the President or, in his absence or
inability to act, a Vice President or, in his absence or inability to act any
person as may be designated by the Board of Directors or, in the absence of such
person or if there shall be no such designation, a chairman present in person or
represented by proxy shall act as chairman of the meeting. The Secretary or, in
his absence or inability to act, an Assistant Secretary, or in his absence or
inability to act, any person as may be designated from time to time by the Board
of Directors shall act as secretary of each meeting of stockholders and keep the
minutes thereof; if no such person is present or has been chosen, the holders of
record of a majority of shares of stock present in person or represented by
proxy and entitled to vote at the meeting shall choose any person present to act
as secretary of the meeting.
SECTION 7. Order of Business. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting and Required Vote. At each meeting of stockholders,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder except as otherwise provided in the Articles of
Incorporation. Except as otherwise provided in the Articles of Incorporation,
and subject to statute, at each meeting of stockholders if there shall be a
quorum, the affirmative vote of the holders of a majority of shares present in
person or represented by proxy and entitled to vote thereat, shall decide all
matters brought before such meeting.
SECTION 9. Proxies. Each stockholder entitled to vote at any meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Any such proxy shall be delivered to the secretary of such meeting at or
prior to the time
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designated in the order of business for so delivering such proxies. Each such
proxy shall be in writing and executed by the stockholder or his duly authorized
attorney-in-fact, but no such proxy shall be voted after eleven (11) months from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
SECTION 10. List of Stockholders. A complete list of the stockholders
entitled to vote at any annual or special meeting, arranged in alphabetical
order, with the address of each, and the number of shares held by each, shall be
prepared, or shall be caused to be prepared, by the Secretary and shall be open
to examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city in which the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present. The stock ledger shall be
the only evidence as to the stockholders entitled to examine the stock ledger,
the list required by these Bylaws or the books of the Corporation, or to vote in
person or by proxy at any meeting of the stockholders.
SECTION 11. Voting by Fiduciary, and Joint Owners. Persons holding
stock in a fiduciary capacity shall be entitled to vote the shares so held.
Persons whose stock is pledged shall be entitled to vote, unless in the transfer
by the pledgor on the books of the corporation he has expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or his proxy, may
represent such stock and vote thereon.
If the shares or other securities having voting power stand of record
in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants-in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect:
(a) if only one votes, his act binds all;
(b) if more than one votes, the act of the majority so voting
binds all;
(c) if more than one votes, but the vote is evenly split on any
particular matter, each fraction may vote the securities in
question proportionally, or any person voting the shares, or a
beneficiary, if any, may apply to the Circuit Court or such
other court as may have jurisdiction to appoint an additional
person to act with the persons so voting the shares, which
shall then be voted as determined by a majority of such
persons and the person appointed by the court. If the
instrument so filed shows that any such tenancy is held in
unequal interest, a majority or even-split for the purpose of
this paragraph shall be a majority or even-split in interest.
SECTION 12. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided by the Articles of Incorporation, any action required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock of each voting group
entitled to vote thereon having not less than the minimum number of votes with
respect to each voting group that would be necessary to authorize or take such
action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted, as provided by law. Within ten (10) days after
obtaining such authorization by written consent, notice shall be given to those
shareholders who have not consented in writing or who are not entitled to vote,
said notice shall fairly summarize the material features of the authorized
action and if the action requires the providing of dissenters' rights, said
notice shall comply with the disclosure requirements pertaining to dissenters'
rights of Florida law.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors, which may
exercise all such authority and powers of the Corporation and do all such lawful
acts and things as are not by statute, by the Articles of Incorporation or by
these Bylaws directed or required to be exercised or done by the stockholders or
such other persons as provided therein.
SECTION 2. Qualification. Directors must be natural persons of 18 years
of age or older but need not be residents of the State of Florida and need not
be shareholders of the Corporation.
SECTION 3. Number of Directors. The Corporation shall have no fewer
than five (5) nor more than seven (7) directors; the exact number to be
determined from time to time by resolution adopted by approval of the
outstanding shares or by the affirmative vote of a majority of the whole Board
of Directors, and such exact number shall be five (5) until otherwise
determined.
SECTION 4. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which an action on any
corporate matter is taken will be presumed to have assented to the action unless
such director votes against such action or abstains from voting in respect
thereto because of an asserted conflict of interest.
SECTION 5. Resignations. Any director may resign at any time upon
written notice to the Board of Directors, the Chairman or the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt thereof by the Board of Directors or by any such officer. If the
resignation is made effective at a date later than the date of receipt of the
written resignation by the Board of Directors or an authorized officer, then the
Board of Directors may fill the pending vacancy before the effective date if the
Board of Directors provides that the successor does not take office until the
effective date.
SECTION 6. Annual Meetings. The annual meeting of the Board of
Directors for the purpose of organizing the Board, appointing officers and
members of committees and transacting other business, shall be held immediately
following the annual meeting of the stockholders at the same place where such
meeting of stockholders shall be held. No notice shall be required for any such
meeting if held immediately after the adjournment, and at the site, of the
meeting of the stockholders. If not so held, notice shall be given in the same
manner as required for special meetings of the Board of Directors.
SECTION 7. Regular Meetings. Additional regular meetings of the Board
of Directors may be held without notice at such times and places (within or
without the State of Florida) as shall have been approved and agreed to at any
prior meeting of the Board of Directors.
SECTION 8. Special Meetings. A special meeting of the Board of
Directors may be called at any time by the Chairman of the Board, the Vice
Chairman, the President or any Vice President or by two or more directors and
shall be held at such time and place (within or without the State of Florida) as
may be fixed by the person or persons calling the meeting; provided, however,
that the time so fixed shall permit the giving of notice as provided in Section
9 of this Article III.
SECTION 9. Notice of Special Meeting. Written notice of the time and
place of each special meeting of the Board of Directors shall be delivered at
least five (5) business days before the day on which such meeting is to be held
to each director personally, or by certified, registered or express mail,
postage prepaid, or telegram or cablegram or nationwide overnight courier
service addressed to such director at his address as it appears on the records
of the Corporation, confirmed on the same day by telegraph, telex, cable,
facsimile, wireless or telephone, and the method used for notice of such special
meeting need not be the same for each director being notified except as
otherwise required by law, the Articles of Incorporation or these Bylaws.
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SECTION 10. Organization. The Chairman of the Board shall preside over
all meetings of the Board of Directors at which he is present. In his absence or
inability to act, the Vice Chairman shall preside. In the absence or inability
to act of the Chairman and Vice Chairman, the Board of Directors shall select a
chairman of the meeting from among the directors present. The Secretary or, in
his absence or inability to act, an Assistant Secretary, or in his absence or
inability to act, another director selected by the Board of Directors shall act
as secretary of the meeting and keep the minutes thereof.
SECTION 11. Quorum. A majority of the number of directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of the directors present at a meeting at which a quorum is present
will be the act of the Board of Directors. At any meeting of the Board of
Directors, no action shall be taken (except adjournment, in the manner provided
below) until after a quorum has been established, except as otherwise provided
by law, the Articles of Incorporation or these Bylaws.
Except as otherwise provided by law, the Articles of Incorporation or
these Bylaws, the act of a majority of directors who are present at a regular
meeting at which a quorum previously has been established (or at any adjournment
of such meeting, provided that a quorum shall have previously been established
at such adjourned meeting) shall be the act of the Board of Directors,
regardless of whether or not a quorum is present at the time such action is
taken. In determining the number of directors who are present at the time any
such action is taken, any director who is in attendance at such meeting but who,
for just cause, is disqualified to vote on such matter, shall not be considered
as being present at the time of such action for the purpose of establishing the
number of votes required to take action on any matter submitted to the Board of
Directors, but shall be considered as being present for purposes of determining
the existence of a quorum.
In the event a quorum cannot be established at the beginning of a
meeting, a majority of the directors present at the meeting, or the Secretary of
the Corporation, if there be no director present, may adjourn the meeting from
time to time until a quorum be present. Only such notice of such adjournment
need be given as the Board of Directors may from time to time prescribe.
SECTION 12. Regulations. The Board of Directors may adopt such rules
and regulations for the conduct of its meetings and for the management of the
business and affairs of the Corporation as it may deem proper and not
inconsistent with law, the Articles of Incorporation and these Bylaws.
SECTION 13. Written Consent in Lieu of Meetings. Any action required to
be taken at a meeting of the Board of Directors, or any action which may be
taken at a meeting of the Board of Directors or a committee thereof, may be
taken without a meeting if a consent in writing, setting forth the action to be
so taken, signed by all the directors, or all the members of the committee, as
the case may be, is filed in the minutes of the proceedings of the board or of
the committee. Such consent will have the same effect as a unanimous vote.
SECTION 14. Telephonic Participation. Any and all members of the Board
of Directors may participate in a meeting of the Board of Directors by means of
a conference telephone or similar communications equipment by means of which all
persons participating in such meeting can hear each other. Participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
SECTION 15. Compensation. Directors shall be entitled to such
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending meetings of the Board of Directors as
may from time to time be fixed by the Board of Directors. The compensation of
directors may be on such basis as is determined by the Board of Directors. Any
director may waive compensation for any meeting. Any director receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and receiving compensation and reimbursement
for reasonable expenses for such other services.
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ARTICLE IV
COMMITTEES
SECTION 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the total number of directors constituting the entire
Board, whether then in office or not, may appoint an Executive Committee
consisting of one or more directors, one of whom shall be designated as Chairman
of the Executive Committee. Each member of the Executive Committee shall
continue as a member thereof until the expiration of his term as a director or
his earlier resignation or removal as a member of the Executive Committee or as
a director or until his death.
SECTION 2. Powers. The Executive Committee shall have and may exercise
those rights, powers and authority of the Board of Directors to the extent
permitted by law, and may authorize the seal of the Corporation to be affixed to
all papers that may require it, but shall not have the power or authority with
respect to approving or recommending to shareholders actions or proposals
required by law to be approved by shareholders, filling vacancies on the Board
of Directors or any committee thereof, adopting, amending or repealing these
Bylaws, authorizing or approving the reacquisition of shares unless pursuant to
a general formula or method specified by the Board of Directors and authorizing
or approving the issuance or sale or contract for the sale of shares, or
determine the designation and relative rights, preferences, and limitations of a
voting group except that the Board of Directors may authorize the Executive
Committee to do so within limits specifically prescribed by the Board of
Directors.
SECTION 3. Procedure and Meetings. The Executive Committee shall fix
its own rules of procedure and shall meet at such times and at such place or
places as may be provided by such rules or as the members of the Executive
Committee shall fix. The Executive Committee shall keep minutes of its meetings,
which it shall deliver to the Board of Directors from time to time. The Chairman
of the Executive Committee or, in his absence, a member of the Executive
Committee chosen by a majority of the members present shall preside at meetings
of the Executive Committee, and the Secretary, or in his absence, an Assistant
Secretary, or in his absence another member of the Executive Committee chosen by
the Executive Committee, shall act as secretary of the Executive Committee.
SECTION 4. Quorum. All of the members of the Executive Committee must
be present in person or by electronic means for the transaction of business, and
the affirmative vote of all of the members shall be required for any action of
the Executive Committee.
SECTION 5. Audit Committee. There shall be an audit committee composed
of such number of directors (not less than three) as the board of directors, by
resolution passed by the vote of a majority of the entire board may appoint,
none of whom shall be an employee of the corporation.
The audit committee shall have the following duties:
(a) To recommend to the board of directors for approval by
the shareholders the appointment of a firm of independent
public accountants (the "auditors") to audit the accounts of
the corporation as the committee may recommend for the
financial year in respect of which such appointment is made;
(b) To make, or cause to be made by the auditors, such
examinations or audits of the affairs and operations of the
corporation of such scope, with such objects, and at such
times or intervals as the committee may determine in its
discretion or as may be ordered by the board of directors or
the executive committee;
(c) To submit to the board of directors as soon as may be
convenient following the conclusion of each examination or
audit made by or at the direction of the committee, a written
report relative thereto;
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(d) To oversee the activities of the general auditor and
his or her staff, and to conduct periodic performance
evaluations and to establish the compensation of the general
auditor; and
(e) To review matters associated with internal control and
the management of risk.
A notation with respect to each report made to the board of directors
by the audit committee and of the action taken thereon by the board of directors
shall be made in the minutes of the board of directors.
SECTION 6. Other Committees. The Board of Directors, by resolutions
adopted by a majority of the total number of directors constituting the entire
Board, whether then in office or not, shall establish compensation committee and
may appoint such other committee or committees as it shall deem advisable and
with such rights, powers, and authority as it shall prescribe. Each such
committee shall consist of one or more directors. Unless otherwise provided by
the Board of Directors, a majority of the members of each such other committee
shall constitute a quorum, and the acts of a majority of the members present at
a meeting at which a quorum is present shall be the act of such committee.
SECTION 7. Vacancies; Committee Changes. In the absence or
disqualification of a member of any committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
The Board of Directors shall have the power at any time to fill
vacancies in, to change the membership of, and to discharge, any committee or
any member of any committee.
SECTION 8. Compensation. Members of the committees shall be entitled to
such compensation for their services as members of the committee and to such
reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any
committee member receiving compensation under these provisions shall not be
barred from serving the Corporation in any other capacity and from receiving
compensation and reimbursement of reasonable expenses for such other services.
SECTION 9. Telephonic Participation. Any and all members of the
committee designated by the Board of Directors may participate in a meeting of
such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in such meeting can hear
each other, and participation in such a meeting pursuant to this Section shall
constitute presence in person at such meeting.
SECTION 10. Action by Consent. Any action required or permitted to be
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent thereto shall be signed by all members of
the committee then in office, provided that the number of such members is
sufficient to constitute a quorum for such action, if any, and such written
consent is filed with the minutes of its proceedings.
ARTICLE V
NOTICES
SECTION 1. Waiver of Notice. Whenever any notice is required to be
given by law, the Articles of Incorporation or these Bylaws, a written waiver
thereof, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice.
Neither the business to be transacted at, nor the purpose of any regular or
special meeting of stockholders, any meeting of other security-holders, the
Board of Directors, or any committee of the Board of Directors need be specified
in any written waiver of notice unless so required by law, the Articles of
Incorporation or these Bylaws.
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SECTION 2. Attendance at Meeting. Attendance of a person at any
meeting, whether of stockholders or other security-holders (in person or by
proxy), or the Board of Directors or any committee of the Board of Directors,
shall constitute a waiver of notice of such meeting, except when such person
attends such meeting for the express purpose of objecting, and objects, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not legally called or convened.
ARTICLE VI
OFFICERS
SECTION 1. Number and Qualifications. The officers of the Corporation
shall include the Chairman, the Vice Chairman, the President, one or more Vice
Presidents, a Treasurer, and a Secretary and such other officers as may elected
or appointed in accordance with the provisions of Section 2 of this Article VI.
Any number of offices may be held by the same person. The Board of Directors
shall determine who shall be the chief executive officer of the Company.
SECTION 2. Selection, Term of Office and Qualification. The officers
shall be elected from time to time by the Board of Directors at its first
regular meeting after each annual meeting of stockholders. Each officer shall
hold his office until his successor is elected and qualified or until he shall
resign in the manner provided in Section 3 of this Article VI, or until he shall
have been removed in the manner provided in Section 4 of this Article VI, or
until his death. Other officers, including without limitation one or more
Assistant Treasurers and one or more Assistant Secretaries shall be chosen in
such manner, hold office for such period, have such authority, perform such
duties and be subject to removal as may be prescribed by the Board of Directors.
SECTION 3. Resignations. Any officer may resign at any time upon
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt thereof by the Board of Directors or any such officer.
SECTION 4. Removal. Any officer may be removed at any time, either with
or without cause, by the Board of Directors; and any officer not elected by the
Board of Directors may be removed in such manner as may be determined by the
Board of Directors. Removal from office however, shall not prejudice the
contract rights, if any, of the person removed except as provided in such
contract.
SECTION 5. Vacancies. Any vacancy occurring in any office of the
Corporation which is required by Section 2 of this Article VI to be elected by
the Board of Directors, whether by death, resignation, removal or otherwise,
shall be filled for the unexpired portion of the term by the Board of Directors.
A vacancy in any other office shall be filled in such manner as may be
determined by the Board of Directors.
SECTION 6. Chairman. The Chairman may be the chief executive officer of
the Corporation if the Board of Directors shall so determine and, in such case
and subject to the direction of the Board of Directors, shall have general
charge of the business, affairs and property of the Corporation, shall have
general supervision over its other officers and agents and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
SECTION 7. Vice Chairman. The Vice Chairman shall have such powers and
perform such duties as may from time to time be assigned to him by the Board of
Directors and shall report to the Chairman, subject to the control of the Board
of Directors.
SECTION 8. The President. The President shall have, subject to the
control of the Chairman, if the Chairman is designated as the chief executive
officer of the Corporation and the Board of Directors, general and active
management of the business of the Corporation and general and active supervision
and direction over the business operations and affairs of the Corporation and
over its several officers, agents and employees. He shall be an ex officio
member of all committees of the Board. In general, he shall have such other
powers and shall
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perform such other duties as usually pertain to the office of the President or
as from time to time may be assigned to him by the Board or these Bylaws. The
President may be the chief executive officer of the Corporation if the Board of
Directors shall so determine and, in such case and subject to the direction of
the Board of Directors, shall have general charge of the business, affairs and
property of the Corporation, shall have general supervision over its other
officers and agents and shall see that all orders and resolutions of the Board
of Directors are carried into effect.
SECTION 9. Vice President. The Vice President or, in the event there be
more than one, the Vice Presidents in the order designated, or in the absence of
any designation, in the order of their seniority, shall have such powers and
perform such duties as from time to time may be assigned to them by the Board of
Directors.
SECTION 10. The Treasurer and Assistant Treasurers. The Treasurer
shall:
(a) have charge and custody of, and be responsible for, all the
funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements
in books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the
credit of the Corporation in such depositories as may be
designated by the Board of Directors;
(d) receive moneys due and payable to the Corporation from any
source whatsoever and give receipts for moneys so paid;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board
of Directors, taking proper vouchers therefor;
(f) render to the President and the Board of Directors at the
regular meetings of the Board, or whenever they may request
it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation; and
(g) in general, have all the powers and perform all the duties
incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the Board of
Directors or the President. The Assistant Treasurer or
Assistant Treasurers, if any, shall in the absence or
disability of the Treasurer or at his request, perform his
duties and exercise his powers and authority as may be
assigned to him by the Board of Directors or the President.
SECTION 11. The Secretary and Assistant Secretaries. The Secretary
shall:
(a) attend all meetings of the Board of Directors, any committee
of the Board of Directors, stockholders and other
security-holders and record all votes and the proceedings of
such meetings in minute books to be kept by him for that
purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law;
(c) be custodian of the records and the seal of the Corporation
and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided)
and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and
filed are properly kept and filed; and
<PAGE>
(e) in general, have all the powers and perform all the duties
incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Board of
Directors or the President. The Assistant Secretary or
Assistant Secretaries, if any, shall, in the absence or
disability of the Secretary or at his request, perform his
duties and exercise his powers and authority as may be
assigned to him by the Board of Directors or the President.
SECTION 12. Compensation. The compensation of all officers of the
Corporation shall be fixed from time to time by the Board of Directors; no
officer of the Corporation shall be prevented from receiving compensation
because he is also a director of the Corporation.
ARTICLE VII
CAPITAL STOCK AND DIVIDENDS
SECTION 1. Stock Certificates for Shares. Every holder of shares of
capital stock of the Corporation will be entitled to have a certificate
representing all shares to which he is a holder. No certificate representing
shares will be issued until such shares are fully paid. Certificates for shares
of the capital stock of the Corporation shall be in such form, not inconsistent
with the Articles of Incorporation, as shall be approved by the Board of
Directors and shall be signed by or in the name of the corporation by the
Chairman or Vice-Chairman or by the President or a Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
provided that the signatures of any such officers thereon may be facsimiles. The
seal of the Corporation shall be impressed, by original or by facsimile, printed
or engraved, on all such certificates. A certificate may also be signed by the
transfer agent and a registrar as the Board of Directors may determine, and in
such case the signature of the transfer agent or the registrar may also be
facsimile, engraved or printed. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may nevertheless be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
SECTION 2. Stock Records. The Corporation shall keep at such place or
places, within or without the State of Florida, as the Board of Directors may
from time to time determine, the stock record books in which shall be recorded
the number of shares issued, the names of the owners of the shares, the number
of shares owned by them respectively, and the transfer of such shares with the
date of transfer. Blank stock certificate books shall be kept by the Secretary
or by any officer or agent designated by the Board of Directors.
SECTION 3. Registration of Transfers. Registration of transfer of
certificates representing shares of stock of the Corporation shall be effected
only on the books of the Corporation only upon authorization by the registered
holder thereof, or by his attorney duly executed and filed with the Secretary or
with a designated transfer agent or transfer clerk, and upon surrender to the
Corporation or any transfer agent of the Corporation of the certificate or
certificates being transferred, which certificate or certificates shall be
properly endorsed or accompanied by a duly executed stock transfer power and the
payment of all taxes thereon. Whenever a certificate is endorsed by or
accompanied by a stock power executed by someone other than the person or
persons named in the certificate, evidence of authority to transfer shall also
be submitted with the certificate. Whenever any transfers of shares shall be
made for collateral security and not absolutely, and both the transferor and
transferee request the Corporation to do so, such fact shall be stated in the
entry of the transfer.
SECTION 4. Determination of Stockholders. Except as otherwise provided
by law, the Corporation shall be entitled to recognize the exclusive right of a
person in whose name any share or shares stand on the record of stockholders as
the owner of such share or shares for all purposes, including, without
limitation, the right to receive dividends or other distributions, and to vote
as such owner. The Corporation may hold any such stockholder of record liable
for calls and assessments and the Corporation shall not be bound to recognize
any equitable or legal claim to or interest in any such share or shares on the
part of any other person whether or not it shall have express or other notice
thereof.
<PAGE>
SECTION 5. Regulations Governing Issuance and Transfer of Shares. The
Board of Directors shall have the power and authority to make all such rules and
regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
SECTION 6. Fixing of Record Date. In order that the Corporation may
determine the stockholders of record entitled to notice of, or to vote at, any
meeting of stockholders or any adjournment thereof, or entitled to express
consent to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting, nor more than sixty
(60) days prior to any other action. Except as otherwise provided by law, the
Articles of Incorporation, these Bylaws or by resolution of the Board of
Directors:
(1) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at the close
of business on the day next preceding the day on which the
meeting is held;
(2) The record date for determining stockholders entitled to
express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent
is expressed; and
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which
the Board adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board
may affix a new record date for the adjourned meeting.
SECTION 7. Lost, Stolen or Destroyed Stock Certificates. The holder of
any certificates representing shares of stock of the Corporation shall
immediately notify the Corporation of any loss, theft, destruction or mutilation
of such certificate, and the Board of Directors may authorize the issuance of a
new certificate of stock in lieu thereof upon satisfactory proof of such loss,
theft or destruction upon the giving of an open penalty bond with surety
satisfactory to the Treasurer and the Corporation's counsel, to protect the
Corporation or any person injured on account of the alleged loss, theft or
destruction of any such certificate or the issuance of a new certificate from
any liability or expense which it or they may incur by reason of the original
certificates remaining outstanding and upon payment of the Corporation's
reasonable costs incident thereto.
SECTION 8. Dividends and Reserves. Subject to the provisions of law or
of the Articles of Incorporation, the Board of Directors may, out of funds
available therefor at any regular or special meeting, declare dividends upon the
capital stock of the Corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
may from time to time in their discretion deem proper as a reserve fund for
working capital, to meet contingencies, or for equalizing dividends, or for the
purpose of repairing, maintaining or increasing the property or business of the
Corporation, or for such other purposes as the Board of Directors shall deem to
be in the best interests of the Corporation. The Board of Directors may, in its
discretion, modify or abolish any such reserve at any time.
ARTICLE VIII
BOOKS AND RECORDS
<PAGE>
SECTION 1. Books and Records. The Corporation shall keep as permanent
records minutes of all meetings of its shareholders and Board of Directors, a
record of all actions taken by the shareholders or Board of Directors without a
meeting, and a record of all actions taken by a committee of the Board of
Directors in place of the Board of Directors on behalf of the Corporation.
Furthermore, the Corporation shall maintain accurate accounting records.
Furthermore, the corporation shall maintain the following:
(i) A record of its shareholders in a form that permits
preparation of a list of the names and addresses of all
shareholders in alphabetical order by class of shares showing
the number and series of shares held by each;
(ii) The Corporation's Articles or Restated Articles of
Incorporation and all amendments thereto currently in effect;
(iii) The Corporation's Bylaws (or Restated Bylaws and all
amendments thereto currently in effect;
(iv) Resolutions adopted by the Board of Directors creating
one or more classes or series of shares and fixing their
relative rights, preferences and limitations if shares issued
pursuant to those resolutions are outstanding;
(v) The minutes of all shareholders' meeting and records of
all actions taken by shareholders without a meeting for the
past three years;
(vi) Written communications to all shareholders generally or
all shareholders of a class or series within the past three
years including the financial statements furnished for the
past three years to shareholders as may be required under
Florida law;
(vii) A list of the names and business street addresses of the
corporation's current directors and officers; and
(viii) A copy of the Corporation's most recent annual report
delivered to the Department of State.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form.
SECTION 2. Shareholder's Inspection Rights. A shareholder of the
Corporation (including a beneficial owner whose shares are held in a voting
trust or a nominee on behalf of a beneficial owner) may inspect and copy, during
regular business hours at the Corporation's principal office, any of the
corporate records required to be kept pursuant to Section 1 of this Article of
these Bylaws, if said shareholder gives the Corporation written notice of such
demand at least five business days before the date on which the shareholder
wishes to inspect and copy. The foregoing right of inspection is subject however
to such other restrictions as are applicable under Florida law, including, but
not limited to, the inspection of certain records being permitted only if the
demand for inspection is made in good faith and for a proper purpose (as well as
the shareholder describing with reasonable particularity the purpose and records
desired to be inspected and such records are directly connected with the
purpose).
SECTION 3. Financial Information. Unless modified by resolution of the
shareholders within 120 days of the close of each fiscal year, the Corporation
shall furnish the shareholders annual financial statements which may be
consolidated or combined statements of the Corporation and one or more if its
subsidiaries as appropriate, that include a balance sheet as of the end of the
fiscal year, an income statement for that year, and a statement of cash flow for
that year. If financial statements are prepared on the basis of generally
accepted accounting principles,
<PAGE>
the annual financial statements must also be prepared on that basis. If the
annual financial statements are reported on by a public accountant, said
accountant's report shall accompany said statements. If said annual financial
statements are not reported on by a public accountant, then the statements shall
be accompanied by a statement of the Chairman or the person responsible for the
Corporation's accounting records by;
(a) stating his reasonable belief whether the statements were
prepared on the basis of generally accepted accounting
principles and if not, describing the basis of preparation;
and
(b) describing any respects in which the statements were not
prepared on a basis of accounting consistent with the
statements prepared for the preceding year. The annual
financial statements shall be mailed to each shareholder of
the Corporation within 120 days after the close of each fiscal
year or within such additional time as is reasonably necessary
to enable the Corporation to prepare same, if, for reasons
beyond the Corporation's control, said annual financial
statement cannot be prepared within the prescribed period.
SECTION 4. Other Reports to Shareholders. The Corporation shall report
any indemnification or advanced expenses to any director, officer, employee, or
agent (for indemnification relating to litigation or threatened litigation) in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status, at the time of such payment, of the litigation or
threatened litigation.
Additionally, if the Corporation issues or authorizes the issuance of
shares for promises to render services in the future, the Corporation shall
report in writing to the shareholders the number of shares authorized or issued
and the consideration received by the Corporation, with or before the notice of
the next shareholders' meeting.
ARTICLE IX
CORPORATE INDEMNIFICATION
Subject to the provisions of the Company's Articles of Incorporation, the
Corporation shall indemnify any person:
(1) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by, or in the
right of, the Corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
Corporation, partnership, joint venture, trust, or other enterprise against such
costs and expenses, and to the extent and in the manner provided under Florida
law.
(2) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against such costs and expenses, and to the extent and in the manner
provided under Florida law.
The extent, amount, and eligibility for the indemnification provided
herein will be made by the Board of Directors. Said determinations will be made
by a majority vote to a quorum consisting of directors who were not parties to
such action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action suit or
proceeding.
The corporation will have the power to make further indemnification as
provided under Florida law except to indemnify any person against gross
negligence or willful misconduct.
<PAGE>
The Corporation is further authorized to purchase and maintain
insurance for indemnification of any person as provided herein and to the extent
provided under Florida law.
ARTICLE X
GENERAL PROVISIONS
SECTION 1. Execution of Contracts, Papers and Documents. Except as otherwise
required by law, the Articles of Incorporation or these Bylaws, any contract or
other instrument may be executed and delivered in the name and on behalf of the
Corporation by such officers or employees of the Corporation as the Board of
Directors may from time to time determine, or in the absence of such
determination, by the Chairman or the President. Such may be general or confined
to specific instances as the Board of Directors may determine. Unless authorized
by the Board of Directors or expressly permitted by these Bylaws, no officer or
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to incur a pecuniary
liability for any purpose.
SECTION 2. Voting Shares in Other Corporations. The Corporation may
vote any and all shares of stock and other securities having voting rights which
may at any time and from time to time be held by it in any other corporation or
corporations and such vote may be cast either in person or by proxy by such
officer of the Corporation as the Board of Directors may appoint or, in the
absence of such appointment, by the Chairman or President.
SECTION 3. Checks, Drafts, etc. All checks, drafts, bills of exchange
or other orders for the payment of money out of the funds of the Corporation,
and all notes or other evidences of indebtedness of the Corporation, shall be
signed in the name and on behalf of the Corporation by such persons and in such
manner as shall from time to time be authorized by the Board.
SECTION 4. Corporate Seal. The Board of Directors shall provide a
suitable seal which shall bear the name of the Corporation, the year of
incorporation and shall include the words "Corporate Seal, Florida." Said seal
shall be in the custody of the Secretary of the Corporation, and the Board of
Directors may prescribe that one or more duplicates thereof be kept in the
custody of such other officer or officers of the Corporation.
SECTION 5. Fiscal Year. The fiscal year of the Corporation shall be a
period of either fifty-two (52) or fifty-three (53) weeks as may be determined
by the Board of Directors from time to time.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
SECTION 1. Affiliated Transactions. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be valid unless, at the time of the
contract or transaction, the Board of Directors consists of at least two (2)
independent directors, and a majority of such independent directors, after
having access, at the Corporation's expense, to the Corporation's or independent
legal counsel, approve such contract or transaction. For purposes of this
Section 1 of this Article XI of the Bylaws, an independent director shall be a
member of the Board of Directors who is not an officer or employee of the
Corporation, its subsidiaries or affiliates, a promoter or does not have a
material business or professional relationship with the Corporation.
SECTION 2. Determining Quorum. Interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee thereof which authorized an affiliated contract or transaction.
<PAGE>
ARTICLE XII
AMENDMENT
The power to adopt, amend or repeal these Bylaws shall be in the
stockholders entitled to vote and may be exercised by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed amendment or repeal be contained in the notice of such special
meeting. Such power shall also be conferred upon the directors and may be
exercised by the affirmative vote of a majority of the Board of Directors at any
regular meeting of the Board of Directors or at any special meeting of the Board
of Directors if notice of the proposed amendment or repeal be contained in the
notice of such special meeting, but the fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal the Bylaws.
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of Amazon
Herb Company, a Florida corporation (the "Corporation"), and that the foregoing
Amended and Restated Bylaws were adopted as the Bylaws of the Company on April
6, 1998, by the duly elected directors of the Company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal the _____ day of April, 1998.
_______________________________
Connie Lynch, Secretary
EXHIBIT 4.0
EXHIBIT 4.0
Specimen Stock Certificate
- - -------------------------------------------------
- - ----------- -----------
NUMBER SHARES
- - ----------- -----------
***000*** ***000***
- - ----------- -----------
AMAZON HERB COMPANY
- - -------------------------------------------------
ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA
8,000,000 Common Stock Shares $.01 par value
2,000,000 Preferred Stock Shares $1.00 par value
- - -------------------------------------------------
THIS CERTIFIES THAT ______________ is the registered holder of _________ shares
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
CORPORATION WILL NOT TRANSFER THIS CERTIFICATE UNLESS (i) THERE IS AN EFFECTIVE
REGISTRATION COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE
SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST
RECEIVES A LETTER OF OPINION FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD OF
DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY THE
PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, (iii) THE TRANSFER IS MADE
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF 1933.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ___ day of ___________, 19__, A.D.
------------------------ ---------------------
President Secretary
- - -------------------------------------------------
EXHIBIT 5.0
HACKNEY, MILLER & ROBBINS, P.A.
ATTORNEYS & COUNSELORS AT LAW
ADMIRALTY OFFICE TOWER TWO
4400 PGA BOULEVARD, SUITE 505
PALM BEACH GARDENS, FLORIDA 33410
Telephone (561) 627-0677
Facsimile (561) 625-4685
______________, 1998
Amazon Herb Company
725 North A1A, Suite C-115
Jupiter, Florida 33447
Gentlemen:
At your request, we have examined the Registration Statement on Form SB-2 that
you have filed with the Securities and Exchange Commission in connection with
the registration under the Securities Act of 1933, as amended, of up to 380,000
shares of the common stock, $.01 par value of Amazon Herb Company (the "Common
Stock"). We are familiar with the proceedings taken and to be taken by you in
connection with the authorization, issuance and sale of the shares of Common
Stock.
Based upon the foregoing, it is our opinion that the Common Stock, upon the
issuance or transfer and sale thereof in the manner referred to in said
Registration Statement, will constitute legally and validly issued and
outstanding securities of Amazon Herb Company fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to said Registration
Statement and to the use of our name in said Registration Statement and to
references to our firm in the prospectus incorporated therein.
Very truly yours,
HACKNEY, MILLER & ROBBINS, P. A.
By: /s/ ROBERT C. HACKNEY
-----------------------------------
Robert C. Hackney
EXHIBIT 10.0
AMAZON HERB COMPANY
1998 STOCK OPTION PLAN
Amazon Herb Company, a Florida corporation (the "Company"), hereby
establishes this 1998 Stock Option Plan (the "Plan") effective as of May 1,
1998.
1. Purpose. The purpose of the Plan is to attract and retain the best
available talent and encourage the highest level of performance by executive
officers, key employees, directors, advisors and consultants, and to provide
them with incentives to put forth maximum efforts for the success of the
Company's business, in order to serve the best interests of the Company and
its stockholders. All options granted under the Plan are intended to be
nonstatutory stock options.
2. Definitions. The following terms, when used in the Plan with initial
capital letters, will have the following meanings:
(a) "Act" means the Securities Exchange Act of 1934, as in effect from time
to time.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the U. S. Internal Revenue Code, as in effect from time to
time.
(d) "Common Stock" means the common stock, par value $.01 per share, of the
Company or any security into which such common stock may be changed by
reason of any transaction or event of the type described in Paragraph
6.
(e) "Compensation Committee" means the Compensation Committee which is a
committee of the Board whose members are appointed by the Board from
time to time. All of the members of the Compensation Committee, which
may not be less than two, are intended at all times to qualify as
"outside directors" within the meaning of Section 162(m) of the Code
and as "Non-Employee Directors" within the meaning of Rule 16b-3;
provided, however, that the failure of a member of such committee to so
qualify shall not be deemed to invalidate any Stock Option granted by
such committee.
(f) "Date of Grant" means the date specified by the Compensation Committee
or the Board, as applicable, on which a grant of Stock Options will
become effective (which date will not be earlier than the date on which
such committee or the Board takes action with respect thereto).
<PAGE>
(g) "Market Value per Share" means the fair market value per share of the
Common Stock on the Date of Grant as determined by the Compensation
Committee or the Board, as applicable.
(h) "Option Price" means the purchase price per share payable on exercise
of a Stock Option.
(i) "Participant" means a person who is selected by the Compensation
Committee or the Board, as applicable, to receive Stock Options under
Paragraph 5 of the Plan and who is at that time (i) an executive
officer or other key employee of the Company or any Subsidiary, (ii) an
advisor or consultant to the Company or any Subsidiary, or (iii) a
member of the Board.
(j) "Rule 16b-3" means Rule 16b-3 under Section 16 of the Act, as such Rule
is in effect from time to time.
(k) "Stock Option" means the right to purchase a share of Common Stock upon
exercise of an option granted pursuant to Paragraph 5.
(l) "Subsidiary" means any corporation, partnership, joint venture or other
entity in which the Company owns or controls, directly or indirectly,
not less than 50% of the total combined voting power or equity
interests represented by all classes of stock issued by such
corporation, partnership, joint venture or other entity.
3. Shares Available Under Plan. The shares of Common Stock which may be issued
under the Plan will not exceed in the aggregate 1,000,000 shares, subject
to adjustment as provided in this Paragraph 3. Such shares may be shares of
original issuance or treasury shares or a combination of the foregoing.
(a) Any shares of Common Stock which are subject to Stock Options that are
terminated unexercised, forfeited or surrendered or that expire for any
reason will again be available for issuance under the Plan.
(b) The shares available for issuance under the Plan also will be subject
to adjustment as provided in Paragraph 6.
4. Individual Limitation on Stock Options. The maximum aggregate number of
shares of Common Stock with respect to which Stock Options may be
granted to any Participant during any calendar year will not exceed
100,000 shares.
5. Grants of Stock Options. The Compensation Committee or the Board may
from time to time authorize grants to any Participant of Stock Options
upon such terms and conditions as such committee or the Board, as
applicable, may determine in accordance with the provisions set forth
below.
<PAGE>
(a) Each grant will specify the number of shares of Common Stock to which
it pertains.
(b) Each grant will specify the Option Price, which will not be less than
100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify whether the Option Price will be payable (i) in
cash or by check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock owned by the Participant for at least
six months (or, with the consent of the Compensation Committee or the
Board, as applicable, for less than six months) having an aggregate
fair market value per share at the date of exercise equal to the
aggregate Option Price, (iii) with the consent of the Compensation
Committee or the Board, as applicable, by authorizing the Company to
withhold a number of shares of Common Stock otherwise issuable to the
Participant having an aggregate fair market value per share on the date
of exercise equal to the aggregate Option Price or (iv) by a
combination of such methods of payment; provided, however, that the
payment methods described in clauses (ii) and (iii) will not be
available at any time that the Company is prohibited from purchasing or
acquiring such shares of Common Stock. Any grant may provide for
deferred payment of the Option Price from the proceeds of sale through
a bank or broker of some or all of the shares to which such exercise
relates.
(d) Successive grants may be made to the same Participant whether or not
any Stock Options previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods (if any) of
continuous service by the Participant with the Company or any
Subsidiary and/or any other conditions to be satisfied before the Stock
Options or installments thereof will become exercisable, and any grant
may provide, or may be amended to provide, for the earlier exercise of
the Stock options in the event of a change in control of the Company
(as defined in the stock option agreement evidencing such grant or in
any agreement referred to in such stock option agreement) or in the
event of any other similar transaction or event.
(f) Each Stock Option granted pursuant to this Paragraph 5 may be made
subject to such transfer restrictions as the Compensation Committee or
the Board, as applicable, may determine.
(g) Each grant will be evidenced by a stock option agreement executed on
behalf of the Company by the Chief Executive Officer (or another
officer designated by the Compensation Committee or the Board, as
applicable) and delivered to the Participant and containing such
further terms and provisions, consistent with the Plan, as such
committee or the Board, as applicable, may approve.
6. Adjustments. The Compensation Committee or the Board will make or provide
for such adjustments in the maximum number of shares specified in Paragraph 3
and Paragraph
<PAGE>
4, in the number of shares of Common Stock covered by outstanding Stock
Options granted hereunder, in the Option Price applicable to any such Stock
Options, and/or in the kind of shares covered thereby (including shares of
another issuer), as such committee or the Board, as applicable, in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any
other corporate transaction or event having an effect similar to any of the
foregoing. In the event the Compensation Committee disagrees with the Board
with respect to the foregoing adjustments, the Board's determination will be
final and conclusive. Any fractional shares resulting from the foregoing
adjustments will be eliminated.
7. Withholding of Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any
benefit realized by a Participant under the Plan, or is requested by a
Participant to withhold additional amounts with respect to such taxes, and
the amounts available to the Company for such withholding are insufficient,
it will be a condition to the realization of such benefit that the
Participant make arrangements satisfactory to the Company for payment of the
balance of such taxes required or requested to be withheld. In addition, if
permitted by the Compensation Committee or the Board, a Participant may elect
to have any withholding obligation of the Company satisfied with shares of
Common Stock that would otherwise be transferred to the Participant on
exercise of the Stock Option.
8. Administration of the Plan.
(a) The Plan will be administered by Compensation Committee and the Board.
(b) The Compensation Committee and the Board have the full authority and
discretion to administer the Plan and to take any action that is
necessary or advisable in connection with the administration of the
Plan, including without limitation the authority and discretion to
interpret and construe any provision of the Plan or of any agreement,
notification or document evidencing the grant of a Stock Option. The
interpretation and construction by the Compensation Committee or the
Board, as applicable, of any such provision and any determination by
the Compensation Committee or the Board pursuant to any provision of
the Plan or any such agreement, notification or document will be final
and conclusive; provided, that in the event the Compensation Committee
disagrees with the Board with respect to such interpretation,
construction or determination, the Board's determination will be final
and conclusive. No member of the Compensation Committee or the Board
will be liable for any such action or determination made in good faith.
(c) Notwithstanding any provision of the Plan to the contrary, the
Compensation Committee will have the exclusive authority and discretion
to take any action required or permitted to be taken under the
provisions of Paragraph 6, Paragraph 8(b),
<PAGE>
Paragraph 9(a) and Paragraph 9(b) with respect to Stock Options granted
under the Plan that are intended to comply with the requirements of
Section 162(m) of the Code.
9. Amendments and Related Matters.
(a) The Compensation Committee or the Board, as applicable, may, without
the consent of the Participant, amend any agreement evidencing a Stock
Option granted under the Plan, or otherwise take action, to accelerate
the time or times at which the Stock Option may be exercised, to extend
the expiration date of the Stock Option, to waive any other condition
or restriction applicable to such Stock Option or to the exercise of
such Stock Option, to reduce the exercise price of such Stock Option,
to amend the definition of a change in control of the Company (if such
a definition is contained in such agreement) to expand the events that
would result in a change in control of the Company and to add a change
in control provision to such agreement (if such provision is not
contained in such agreement) and may amend any such agreement in any
other respect with consent of the Participant.
(b) The Plan may be amended from time to time by the Board or any duly
authorized committee thereof. In the event any law, or any rule or
regulation issued or promulgated by the Internal Revenue Service, the
Securities and Exchange Commission, the National Association of
Securities Dealers, Inc., any stock exchange upon which the Common
Stock is listed for trading, or any other governmental or
quasi-governmental agency having jurisdiction over the Company, the
Common Stock or the Plan, requires the Plan to be amended, or in the
event Rule 16b-3 is amended or supplemented (e.g., by additional of
alternative rules) or any of the rules under Section 16 of the Act are
amended or supplemented, in either event to permit the Company to
remove or lessen any restrictions on or with respect to Stock Options,
the Compensation Committee and the Board each reserves the right to
amend the Plan to extent of any such requirement, amendment or
supplement, and all Stock Options then outstanding will be subject to
such amendment.
(c) The Plan may be terminated at any time by action of the Board. The
termination of the Plan will not adversely affect the terms of any
outstanding Stock Option. The term of all options may not exceed ten
years. If not terminated earlier, the 1998 Stock Option Plan will
terminate on May 1, 2008.
(d) The Plan will confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate a
Participant's employment or other service at any time.
EXHIBIT 10.1
PURCHASE AGREEMENT BY AND BETWEEN
AMAZON HERB COMPANY AND TERRADYNE NATURALE, INC.
AGREEMENT
IT IS HEREBY AGREED, by and between, Terradyne Naturale, Inc., hereinafter
referred to as "Supplier" and Amazon Herb Company, hereinafter referred to as
"Purchaser", for and in consideration of the covenants contained herein as
follows:
WHEREAS, the Supplier can supply a sufficient amount of "Cat's Claw Extract"
hereinafter referred to as "Extract" to meet the needs of the Purchaser, and
WHEREAS, in order for the Supplier to produce the amount of "Extract" needed
they will need to purchase a substantial amount of new equipment, and
WHEREAS, it will be approximately April 1, 1998, before sufficient "Extract" can
be produced, and
WHEREAS, said parties desire to document this supply-purchase agreement,
SAID PARTIES AGREE AS FOLLOWS:
1. That the Supplier will supply and the Purchaser will purchase 1,000 kilos
of "Cat's Claw Extract" per month, starting April 1, 1998.
2. That the Purchaser will pay the sum of $44.00 per kilo of said Extract,
f.o.b. Woodbine, Iowa.
3. That the purchaser will purchase 1,000 kilos of Extract per month
commencing April 1, 1998, and will continue for a total of 12 months a
minimum order for this product.
4. That the Purchaser shall pay for said "extract" within 30 days, and any
delinquent account shall bear interest at the rate of 1.5 percent per
month until paid.
5. That the Supplier agrees not to market or sell any of said "Extract" to
another purchaser within the period of this initial contract.
6. That the Supplier does guarantee that it can process the volume of
"Extract" as stated herein. This guarantee is subject to the condition
that the purchaser supplies the necessary raw materials of "Cat's Claw
Herb", on a timely basis so that the supplier can process said "Extract."
<PAGE>
7. As liquidated damages, in the event the purchaser does not purchase the
full amount of "Extract" in accordance with this purchase agreement, the
purchaser agrees that the supplier shall be entitled to 25% of the gross
contract price remaining unpaid at the time as liquidated damages for its
failure to complete the contract.
Dated this 5th day of February, 1998.
TERRADYNE NATURALE, INC. AMAZON HERB COMPANY
BY:/S/ SHANE HINZE, PRESIDENT BY: /S/ JOHN EASTERLING, PRESIDENT
-------------------------- -------------------------------
Shane Hinze, President John Easterling, President
EXHIBIT 10.2
BUSINESS LEASE
STANDARD LEASE AGREEMENT
THIS LEASE AGREEMENT made and entered into the date first appearing below, by
and between the below specified Landlord, Tenant and Guarantor(s).
For and in consideration of these premises, the rents reserved, and the
agreements and covenants herein contained, the Landlord does hereby lease and
demise unto the Tenant, and the Tenant hereby lease from the Landlord, the
premises specified below upon the terms and conditions set forth herein.
ARTICLE I. GENERAL SPECIFICATIONS
<TABLE>
<S> <C> <C>
DATE: 5/8/98
LANDLORD: Name JUPITER INDUSTRIAL ASSOCIATES
Address 880 JUPITER PARK DRIVE, #14 Phone 747-0600
TENANT: Name: AMAZON HERB COMPANY
Address 725 N A1A, #C-115 Phone 575-7663
BROKER: Name(s) REBEL COOK REAL ESTATE & COLLINS GROUP Phone 622-9920
GUARANTOR(S): Name(s)
__________________________________________________________________
Address
__________________________________________________Phone_________________
PREMISES: Address 1002 JUPITER PARK LANE
Unit Number 1 Approximate Sq. Ft 5,194 Percentage__________
PARKING: ________________________ USE: OFFICE WAREHOUSE
SECURITY DEPOSIT: $4111.91 1st $4358.62 Last Month $4358.62
TERM: Original Term for _24 Months, commencing the _15TH_ day of __JULY____ 1998
______ Option(s) to Extend Term for _________ Months (each) (adjusted
each year according to Article IV).
BASE RENTS: $36,358.00 per year for year 1, payable $3029.83 per month
(adjusted each year according to Article IV).
</TABLE>
<PAGE>
OTHER CHARGES: $12,985.00_ per year for year 1, payable $_1,082.08_
per month (estimated cost for taxes, insurance and
maintenance) at the rate of $2.50_ per square foot of tenant
square footage for the first year and subject to adjustment as
per Article IV.
Plus 6% SALES TAX $ 2,960.58 Annually, Payable $246.71 per
month.
TOTAL RENT & CHARGES: Year 1 $4358. per month.
Initialed by: _______________ ________________
Landlord Tenant
ARTICLE II. DEFINITIONS
The following definitions shall apply:
A. Base Rent: The Base Rent to be paid by Tenant pursuant to the provisions
herein and the rental of the first term.
B. Adjusted Annual Rent: The Base Rent as defined above, hereafter increased
in accordance with the provisions hereof, but in no event less then the Base
Rent stipulated for the applicable term.
C. Rentable Area: All space in the building rentable to tenants, whether or
not rented or occupied.
D. Tenant's Share: The percentage which the area of said premises is of the
total rentable area of the building, which percentage is agreed upon as
specified under Article I. In the event that additional areas shall be added to
or included under this Lease, said agreed percentage shall be proportionately
increased.
E. Common Areas and Facilities: All that part of the Premises not leased to
tenants of the premises and intended for the common use of all tenants of the
Premises, including among other facilities, parking areas, private streets and
allies, landscaping, curbs, loading areas, sidewalks and lighting facilities,
pylon signs, maintained by the Landlord in the Premises.
ARTICLE III. TERM OF LEASE
A. ORIGINAL TERM: The Tenant hereby takes and holds the Premises specified
under Article I for the entire duration of the Original Term as specified
thereunder.
B. COMMENCEMENT DATE: The Original Term will commence on the date specified
under Article I.. The Premises will be ready for occupancy by the Tenant on or
prior to the commencement date. However, in the event the Landlord is unable to
deliver possession of the premises to the Tenant as soon as practicable
thereafter, and the rental under this lease will be abated proportionately
during such time Tenant does not have possession. Tenant shall be deemed to have
possession upon issuance of a certificate of completion or certificate of
occupancy for the demised premises. In no event shall the Tenant have any claim
for damages (except for the abatement of rent as herein specified) due to the
failure of the Landlord to deliver possession of the premises to the Tenant on
or before said date.
C. OPTIONS TO EXTEND: Providing Tenant is not in default in respect to any
provision of this lease at the time of extension, Tenant shall have the right to
extend the term of this lease for the number of additional periods of time, and
for the length of each such additional period, as designated in Article I,
provided however that written notice is given the Landlord of such intention to
extend the lease not less than one hundred twenty days prior to the expiration
of the Original Term or any prior extended term thereof. During any extended
term of the lease, all provisions of this lease shall remain in full force and
effect, except that the Base Rent for each year of any Option Term shall be
adjusted as herein provided, but in no event to be less than the year previous
to the option term. Lessee shall have no further right or option to renew or
extend the term of this Lease.
<PAGE>
D. HOLDING OVER: In the event Tenant remains in possession of the Premises
after the expiration of this lease or any extended term thereof, it shall be
deemed a tenancy from month to month, subject to all conditions, provisions and
obligations of such tenancy, except that the monthly rental shall be twice the
monthly rental last in effect on this Lease.
ARTICLE IV. RENT AND OTHER CHARGES
A. BASE RENT: Tenant shall pay in advance to the Landlord, without prior
demand, in lawful money of the United States, on the first day of each month,
without any deduction or off-set whatsoever throughout the term of this Lease,
the sum specified as Base Rent under Article I, together with all other
additional rent and all other sums and charges payable by Tenant hereunder as
herein provided, plus any Florida State Sales or Use Tax. Such payment shall be
made at the office of the Landlord or at such place Landlord may from time to
time designate by written notice directed to Tenant at the Demised Premises. In
the event the commencement date of the Original Term is other than the first day
of a month, then the Tenant shall pay rent for such fractional month prorated on
basis of a thirty day month.
B. ADJUSTED ANNUAL RENT: The base rent shall be adjusted for each lease year,
as of the first day of January, in proportion to the increase in the Consumer
Price Index as of January 1st, to the CPI index at the commencement date of this
lease. The standard for measuring such adjustments shall be the Consumer Price
Index, United States average on all items and commodity groups, issued by the
Bureau of Labor Statistics of the United States, hereinafter referred to as the
"Index". The "Index" for the first month of the first term of this lease shall
be the comparison number from which future adjustments are made. Not
withstanding anything contained herein to the contrary the annual minimum base
rent adjustment shall be Three Percent (3%) for each lease year and the maximum
adjustment to base rent shall be Five Percent (5%) for each lease year.
C. TAXES PAYABLE BY TENANT: The Tenant agrees to pay to Landlord, as
additional rental, in addition to the rental and other sums due hereunder,
during the term of this lease and any extended term thereof, his proportionate
share of all Real Estate Taxes, and all assessments which may be levied against
the Complex, immediately when first due, together with all costs and expenses
(including attorneys' fees and expenses) incurred by Landlord in connection
therewith, for such calendar year. The copy of the tax bill submitted by
Landlord to Tenant shall be sufficient evidence of the amount of taxes assessed
or levied against the parcel of real property to which such bill relates. CAM
rent increases shall be a maximum of Five Percent (5%) increase over the
previous year excluding increases for real estate taxes and insurance which will
be billed at Tenants actual proportionate share.
D. MANNER OF PAYMENT OF TAXES BY TENANT: The amounts payable by Tenant
pursuant to the foregoing provision of this Lease shall be estimated by Landlord
for such period as Landlord may determine, not exceeding one year, and Tenant
agrees to deposit with Landlord such amounts in monthly installments in advance
on the first day of each calendar month during such period, such installments to
be in addition to all other payments of rent provided for in this Lease.
E. PRORATIONS OF TAXES: Proportionate share of all Real Property Taxes
required to be paid by Tenant hereunder during the first and last calendar years
of the term of this Lease shall be prorated as of the first and last days of the
term of this lease.
F. INSURANCE: Tenant shall pay as additional rent its proportionate share of
all premiums for insurance policies carried by the Landlord for its protection
of the complex against all perils, liability and rent loss due to perils, and
Tenant shall pay such amounts to Landlord in the manner hereinafter specified.
G. INSURANCE - MANNER OF PAYMENT OF INSURANCE PREMIUMS BY TENANT: The
Proportionate Share of Insurance premiums payable by Tenant pursuant to the
foregoing provision of this Lease may, at the option of Landlord, be estimated
by Landlord for such period in advance as Landlord may determine not exceeding
one (1) year, and Tenant agrees, upon the request of the Landlord, to deposit
with Landlord such
<PAGE>
amounts in monthly installments in advance on the first day of each calendar
month during such period; such installments to be in addition to all other
payments of rent provided for in this Lease.
H. COST OF MAINTENANCE OF COMMON AREAS AND FACILITIES: In each Lease year,
Tenant will pay to Landlord, in addition to the rental specified in Article I
hereof, as additional rent, its Proportionate Share of Landlord's costs and
expenses of maintaining, operating and repairing the Common Areas and Facilities
(including parking areas), during such Lease Year, including all common area
utilities (gas, water, sewer, trash removal and electric), monthly condominium
dues if any, and administrative fee of fifteen (15%) percent of such total
costs.
I. MANNER OF PAYMENT OF TENANT'S PROPORTIONATE SHARE OF MAINTENANCE OF COMMON
AREAS: The amounts of which Tenant is to pay its proportionate share pursuant to
Section H above, shall be estimated by Landlord for such period as Landlord may
determine not exceeding one year, and Tenant agrees to pay Landlord such
estimated amount of its proportionate share of such amounts in monthly
installments in advance on the first day of each month together with and in
addition to all other rental payments provided for in this Lease.
J. UTILITY CHARGES: Tenant shall be solely responsible for and shall promptly
pay all charges for heat, air conditioning, water, electricity, telephone, storm
and sanitary sewer service, janitor service, garbage removal, window cleaning,
and all other services and utilities supplied to or used or consumed in the
Leased Premises. In no event shall Landlord be liable for any interruption or
failure in the supply of any such utilities to Tenant or to the Leased Premises,
nor shall any such failure or interruption constitute an actual or constructive
eviction of Tenant from the Leased Premises or result in or give rise to any
abatement in any rent received hereunder, unless such interruption continues for
more than Three (3) business days and has not been caused by an act of God. Rent
will be abated for the length of interruption provided Tenant does not occupy
space during interruption. In the event of an electrical outage where Tenant is
able to occupy the space, should the electrical outage continue for more than
One (1) business day Landlord agrees to reimburse Tenant for the price of
Tenant's cost to rent a generator for Tenant's humidor. In this event, Tenant
shall be responsible for full rental payment.
K. LATE PAYMENT CHARGE: In the event any monthly installment of rent is not
paid within ten (10) days after it is due and payable as set forth in this
lease, Tenant agrees to pay as a late charge an amount equal to five (5%)
percent of the monthly installment of rent that is due and payable. In the event
Tenant tenders any payment(s) to Landlord as required under this lease, which
are returned due to insufficient or uncollected funds in Tenant's account,
Tenant agrees to promptly pay to Landlord the sum of Two-Hundred Dollars ($200.)
per check as a service charge. In such event, Landlord may, at its option,
request Tenant's replacement check to be in the form of a certified check or
cashiers check.
L. INTENTIONALLY DELETED.
M. SECURITY DEPOSIT: As security for the faithful performance by Tenant of
all the terms and conditions of this Lease, Tenant has deposited with Landlord a
sum specified under Article I as the Security Deposit. The Landlord may
commingle the security deposit with its other funds and, in the event of a sale
of the building or of the land on which it stands, the Landlord shall transfer
the security deposit to the Buyer or Tenant and the Landlord shall be released
from all Liability to Tenant for the return of such security, and the Tenant
shall look only to the new Landlord for the return of said Security Deposit. The
security deposit shall not be mortgaged, assigned or encumbered by the Tenant
without the written consent of the Landlord. In the event of a permitted
assignment of this lease by Tenant, the security deposit shall be held by
Landlord as a deposit made by the assignee and the Landlord shall have no
further liability with respect to the return of said security deposit to the
Tenant. The security deposit shall be returned to the Tenant, without interest,
upon the expiration of the lease term and any extended term thereof, providing
that Tenant has fully carried out all the terms, covenants and conditions of
this lease.
ARTICLE V. NET LEASE
<PAGE>
A. NET LEASE INTENDED UNLESS EXPRESSLY PROVIDED OTHERWISE: Tenant
acknowledges and agrees that it is intended that this Lease shall be a
completely net lease for Landlord, that Landlord shall not be responsible during
the term of the Lease for any costs, charges, expenses and outlays of any nature
whatsoever arising from or relating to the Leased Premises, or the contents
thereof, excepting only Landlord's income tax in respect to income received from
leasing the Leased Premises, Landlord's corporation franchise tax, and any
payments to be made by Landlord in connection with any mortgage or mortgages
executed by landlord affecting the Leased Premises, and, Tenant shall pay all
charges, costs and expenses of every nature and kind relating to the Leased
Premises and the operation of Tenant's business, and Tenant covenants with
Landlord accordingly.
ARTICLE VI. PREMISES
A. QUIET ENJOYMENT: Tenant, upon paying the rents and performing all of the
terms on its part to be performed, shall peaceably and quietly enjoy the Demised
Premises subject, nevertheless, to the terms of this Lease and to any mortgage,
ground lease or agreements to which this lease is subordinated.
B. USE OF THE PREMISES: During the entire lease term, and all extended terms
thereof, the Demised Premises must be used and occupied for the sole use
specified under Article I and for no other purpose or purposes without the prior
written consent of the Landlord, at the Landlord's sole discretion.
C. SOLICITATION OF BUSINESS: Tenant and Tenant's employees shall not solicit
business in the parking lot or other common areas of the premises, and Tenant
shall not distribute any handbills or other advertising matter in automobiles
parked in the parking areas or in other Common areas of the premises, nor shall
Tenant display any merchandise outside the Leased Premises.
D. PERMITS AND LICENSES: Tenant shall procure at its sole expense any permits
and licenses required for the transaction of business in the Leased Premises and
will at all times comply with all applicable laws, ordinances and governmental
regulations relating to the business of the Tenant conducted at the Leased
Premises.
E. FIRE SALES, AUCTIONS, ETC., PROHIBITED: Tenant shall not conduct within or
from the Leased Premises any fire, auction, bankruptcy, "going-out-of-business"
, "lost-our-lease" , or similar sales, and shall not advertise the same on the
Leased Premises, or operate within the Leased Premises a "wholesale" or "factory
outlet" store, a "second hand" store, or any store conducted in whole or
principally for the sale of second-hand goods or surplus articles, insurance
salvage stock, fire-sale stock or bankruptcy stock.
F. BUSINESS OPERATIONS: Tenant agrees to conduct its business at all times in
a high class and reputable manner. Tenant agrees to comply with all laws, rules
and regulations of Landlord and all governmental authorities respecting the use
of and operations and activities on the premises and in the Complex, including
sidewalks, streets, approaches, drives, parking areas, and shall not make,
suffer or permit any unlawful, improper or offensive use of the premises or
permit any nuisance therein. Tenant shall not make any use of the premises which
would make void or voidable any policy of fire or extended coverage insurance
covering the Complex, and if by reason of any use by Tenant of the Premises or
the keeping by tenant of any inflammable substance in the premises, the hazard
insurance premiums on policies maintained by Landlord shall be increased over
normal rates for the Complex, the amount of the increase in the premium shall be
paid to Landlord by Tenant on Demand. Tenant shall not burn any trash of any
kind in or about the Complex, nor shall Tenant permit rubbish, refuse or garbage
to accumulate or any fire or health hazard to exist in or about the premises.
Tenant shall not display any merchandise of install any showcase, or other
obstructions on the outside of the premises, or in any lobby or passageway
adjoining the same that will extend beyond the borderline of the premises, nor
shall Tenant maintain any loudspeaker devise or any noise making device in such
manner as to be audible to anyone not within the Tenant's premises. Without
consent of the Landlord, the Tenant shall not use the common areas as herein
defined except for ingress and egress to the Complex and the premises.
G. EXAMINATION OF PREMISES: Tenant, having examined the premises, is familiar
with the condition thereof and relying solely on such examination will take them
in their present condition, unless otherwise expressly agreed upon in writing.
<PAGE>
H. ACCEPTANCE: upon the issuance of a certificate of completion or a
certificate of occupancy for the demised premises, Tenant shall be deemed to
have certified to the Landlord and to the holder of any mortgage encumbering all
or part of the Landlord's estate, That the premises have been delivered to it in
accordance with the terms of this Lease and that possession has been accepted by
Tenant, that the term of this lease and the obligation to pay rents have
commenced, that the premises and all other portions of the Complex have been
completed in accordance with the requirements of this lease, and that there is
not then available to Tenant any defense or offset against rent or any violation
of the lease terms on the part of the Landlord. The foregoing provisions shall
be self-operative and no other instrument or certificate shall be required by
the Landlord or any mortgagee unless the Landlord or mortgagee shall deem the
same appropriate, in which event, in confirmation of the foregoing Tenant shall
promptly execute in writing a certificate containing the foregoing.
I. MAINTENANCE BY TENANT: Tenant shall at all times keep and maintain the
interior of the Leased Premises, and all partitions, doors, fixtures, equipment
thereof and improvements thereto, in good order, condition and repair, normal
wear and tear excepted including, but not limited to , plate glass windows, door
closure devices and other exterior openings; window and door frames, molding,
locks and hardware, interior ( lighting, heating, air-conditioning, plumbing and
other electrical, mechanical and electromotive installation, equipment and
fixtures; sign, placards, decoration or advertising media of any type).
J. ACCESS: Landlord shall have the right to place, maintain and repair all
utility conduits and equipment of any kind, upon and under the Demised Premises
as may be necessary for the servicing of the Demised Premises and other portions
of the Complex. Landlord shall also have the right to enter the Demised Premises
at all reasonable times, upon 24 hours prior notice, to inspect or to exhibit
the same to prospective purchasers, mortgagees, lessees and tenants and to make
such repairs, additions, alterations or improvements as Landlord may deem
desirable. Landlord shall be allowed to take all material into and upon said
premises that may be required therefore without the same constituting an
eviction of Tenant in whole or in part and the rents reserved shall not abate
while said work is in progress by reason of loss or interruption of Tenant's
business or otherwise and Tenant shall have no claim for damages. If Tenant
shall not be personally present to permit an entry into said premises when for
any reasonable reason an entry therein shall be permissible, Landlord may enter
the same by a master key or by the use of force without rendering Landlord
liable therefor and without in any manner affecting the obligations of this
Lease. The provisions of this paragraph shall not be construed to impose upon
Landlord any obligation whatsoever for the maintenance or repair of the building
or any part thereof except as otherwise herein specifically provided. During the
one hundred twenty days prior to the expiration of the Lease or any renewal
term, Landlord may place upon Demised Premises signs indicating that the Demised
Premises are available for rent or sale, which Tenant shall permit to remain
thereon.
K. EASEMENTS: Landlord reserves all rights to the air space over and under
the Demised Premises and the Complex. Site plan schematically portraying the
general lay-out of the Complex and other improvements shall not be deemed to be
a warranty, or representation that such plan will not be altered from time to
time. Landlord reserves the right to make changes, additions and alterations in
and to the Site Plan and the proposed or completed buildings, and common areas,
provided the same do not unreasonably interfere with Tenant's use of the
premises. Landlord reserves the right to use common areas to accommodate future
construction activities in, around, over and under the Complex. The attachment
of a Site Plan to this lease shall not imply any obligation on the part of
Landlord to construct the building as shown thereon nor prohibit a future
modification thereof. Neither Landlord nor any agents or employee of Landlord
has made any representations or promises with respect to the demised premises or
the Complex other than those expressly set forth in this lease: and no rights,
privileges, easements or licenses shall be acquired by Tenant except as
expressly set forth in this lease.
L. IMPROVEMENTS: Should Tenant install air conditioning or other equipment on
the roof of the Demised Premises, Tenant shall assume primary responsibility for
the maintenance and repair of the roof and such installation, operation and
maintenance shall be made in such manner that the right of Landlord under any
roofing bond then in force shall not be affected. Within twenty days from the
date this Lease is executed by Landlord and Tenant and before any of Tenant's
work is started, Tenant shall submit for Landlord's approval detailed plans and
specifications for all Tenant's work, which must include the extent such work
will require mechanical or electrical
<PAGE>
installations which will be connected to utilities furnished by Landlord or will
affect the exterior appearance of the Demised Premises or its structural,
mechanical or electrical components.
All improvements, additions or fixtures that may be made or installed on the
premises by either party (including floor coverings cemented or otherwise
affixed to the floor) shall be the property of the Landlord.
Tenant shall not make any structural alterations in or additions to the
Demised Premises. If alterations become necessary because of the application of
laws or ordinances or of the directions, rules or regulations of any regulatory
body to the business carried on by the tenant or because of any act of default
on the part of the Tenant or because Tenant has overloaded any electrical or
other facility, Tenant shall make any required alterations whether structural or
non-structural at its own cost and expense after first obtaining Landlord's
written approval of plans and specifications and furnishing to Landlord such
indemnification against liens, costs, damages and expenses as Landlord may
reasonably require. All improvements shall be in accordance with all Federal,
State and Local regulations and codes and will not commence prior to obtaining
all applicable permits.
Tenant shall not place or suffer to be placed or maintained on any exterior
door, roof, wall or window of the Complex or demised premises including the
storefront or any other part of the Demised Premises visible from any part of
the common area any sign, awning or canopy, or advertising matter or other thing
of any kind, and will not place or maintain any decoration, lettering or
advertising matter on the glass of any window or door of the demised premises
without first obtaining Landlord's written approval and consent. Landlord agrees
to grant approval of any sign which is in conformity with the sign criteria for
the Complex prepared by Landlord's architect. Tenant further agrees to maintain
such sign, awning, canopy, decoration, lettering, advertising matter or other
thing as may be approved in good condition and repair at all times and to remove
the same at the end of the term if requested by Landlord to do so. Upon removal
thereof Tenant agrees to repair any damage to the premises caused by such
installation.
Landlord shall have at all times a valid lien for all rentals and other sums
of money becoming due hereunder from the Tenant upon all goods, wares,
equipment, fixtures, furniture and other personal property of Tenant situated on
the premises without liability for trespass or conversion, and sell the same
with or without notice at public or private sale, with or without having such
property at the sale, at which Landlord or its assigns may purchase, and apply
the proceeds thereof, less any all expense connected with the taking of
possession and sale of the property, and as a credit against any sums due by
Tenant to Landlord. Any surplus shall be paid to Tenant, and Tenant agrees to
pay any deficiency forthwith. Alternatively, the lien hereby granted may be
foreclosed in the manner and form provided by law or in any form provided by
law. Tenant agrees to execute such Financing Statements and other documents as
may be required by the commercial Code of the state in which the demised
premises are located in order to preserve the priority of the lien created. The
statutory lien for rent is not hereby waived, the express contractual lien
herein granted being in addition and supplementary thereto. Landlord agrees to
subordinate the lien granted herein to a third party institutional lender
financing tenants inventory as well as specific equipment listed on Exhibit A.
Upon expiration of the term of this Lease Tenant agrees to promptly remove
its personal property, trade fixtures and signs and upon Tenant's failure to do
so, the said fixtures, signs and property shall be deemed abandoned by Tenant
and shall become the property of the Landlord. The Landlord shall not be liable
for trespass, conversion or negligence by reason of its acts or acts of anyone
claiming under it or by reason of the negligence of any person with respect to
the acquisition and/or disposition of such property.
Tenant agrees that it will repair any damage done to the premises by the
installation and/or removal of its trade fixtures and signs, and upon failure of
Tenant to do so promptly at the end of the term Tenant agrees to pay Landlord
any cost incurred by Landlord in making such repairs or affecting such removal.
Notwithstanding anything contained herein to the contrary, all renovations that
have been approved by Landlord may be left in the approved state and the end of
the lease. Furthermore Tenant shall have the option to repair any equipment ,
fixtures, etc., in good working order , in leu of replacing any of the above.
M. CONTROL OF COMMON AREAS AND FACILITIES BY LANDLORD: All common areas and
facilities from time to time provided by Landlord, including all automobile
parking areas, driveways, entrances and exits thereto, and other facilities
furnished by Landlord in or near the Premises, including employee parking areas,
loading docks, package pick-up stations, pedestrian sidewalks, ramps, landscaped
areas, exterior stairways, elevators, escalators, restrooms and other areas and
improvements provided by Landlord for the general use, in common, of tenants of
the Premises, their officers, agents, employees and customers, shall at all
times be subject to the exclusive control and management of Landlord, and
Landlord shall have the right from time to time to
<PAGE>
establish, modify and enforce reasonable rules and regulations with respect to
all Common Areas and Facilities. In addition to the rights of Landlord with
respect to the Common Areas and Facilities set forth in this Lease, Landlord
shall have the right to construct, maintain and operate lighting facilities on
all Common Areas and Facilities; to police the same; from time to time to change
the area, level, location and arrangement of parking areas and other Common
Areas and Facilities herein above referred to; to restrict parking by Tenants,
their officers, agents and employees to employee parking areas; to enforce
parking charges, with appropriate provisions for free parking ticket validation
by tenants; to close all or any portion of the Common Areas and Facilities to
such extent as may, in the opinion of Landlord's counsel, be legally sufficient
to prevent a dedication thereof or the accrual of any rights to any person or to
the public therein; to obstruct or close off any or all of the Common Areas and
Facilities to discourage non-customer parking; and to do and perform such other
acts in and to the Common Areas and Facilities or any part thereof, as Landlord
shall determine in its sole discretion. Landlord will operate and maintain the
Common Areas and Facilities in such manner as Landlord, at its sole discretion,
shall determine from time to time. Without limiting the scope of such
discretion, Landlord shall have the full right and authority to employ all
personnel and to make rules and regulations pertaining to and necessary for the
proper operation and maintenance of the Common Areas and Facilities.
N. LIENS: Tenant agrees that it will make a prompt payment when due, of all
costs and expenses incurred in carrying out its agreement herein and of all
costs and expenses of any repairs, constructions or installations which are the
responsibility of Tenant hereunder. Tenant agrees to indemnify and save Landlord
harmless from and against any/all liabilities incurred by Tenant including any
mechanics, materialsmen's, laborers' liens asserted or claimed against the
premises or any part thereof on account of work, labor or materials used in the
premises or in any improvement or change thereof made at the request of, or upon
the order of, or to discharge the obligation of Tenant. Should any mechanic's or
other lien be filed against the Demised Premises or any part thereof for any
reason whatsoever, Tenant shall cause the same to be canceled and discharged of
record by bond or otherwise within twenty (20) days after notice of such filing.
In no event shall anything contained in this paragraph or elsewhere in the Lease
be deemed to subject Landlord's interest in the premises to the lien of any
person doing work or furnishing materials at the instance and request of Tenant.
O. COMMON AREAS: In addition to the premises, Tenant shall have the right to
the non-exclusive use, in common with the Landlord and others to whom Landlord
may grant similar rights, of automobile parking areas, driveways, malls and
footways, and such loading facilities, elevators, escalators and other
facilities as may be located and designated from time to time by landlord
subject to the terms and conditions of this lease. The common areas shall be
subject to the exclusive control and management of Landlord and Landlord shall
have the right to establish, modify, change and enforce reasonable rules and
regulations with respect to common areas so long as such rules are not
discriminatory against Tenant, and Tenant agrees to abide by and conform with
such rules and regulations. Tenant agrees that it and its officers and employees
will park their automobiles only in such areas as Landlord from time to time
designate for employee parking, which areas may be within or without the
Complex. Tenant agrees that it will, within five days after written request
therefor by Landlord, furnish Landlord with the state automobile license numbers
assigned to its cars of all its employees. Tenant has right to accept delivery
and ship in designated area. In the event it is deemed necessary to prevent the
acquisition of public rights, Landlord may from time to time temporarily close
portions of the common areas, and may erect private boundary markers or take
such steps as deemed appropriate for this purpose. Such actions shall not be
considered an eviction or disturbance of Tenant's quiet possession of the
demised premises.
P. DESTRUCTION: If the Demised Premises shall be partially damaged by any
casualty insurable under Landlord's insurance policy, Landlord shall, upon
receipt of the insurance proceeds, repair the same and the minimum rent shall be
abated proportionately as to that portion of the Demised Premises rendered
untenable. If the Demised Premises by reason of such occurrence are rendered
wholly untenable or whether the Demised Premises are damaged or not, if all of
the buildings which then comprise the Complex should be damaged to the extent of
seventy-five percent or more of the then monetary value thereof, or seventy-five
percent of the buildings or common areas of the Complex are damaged, whether or
not the Demised Premises are damaged to such an extent that the Complex cannot,
in the sole judgment of the Landlord, be operated as an integral unit, then or
in any such event, Landlord may elect to repair the damage or may cancel this
Lease by notice of cancellation within one hundred eighty (180) days after such
event and thereupon this lease shall expire, and Tenant shall vacate and
<PAGE>
surrender the Demised Premises to Landlord. Tenant's liability for rent upon the
termination of this lease shall cease as of the day following the event or
damage. Unless this lease is terminated by Landlord, Tenant shall hold the
proceeds of all insurance carried by Tenant on its property and improvements in
trust for the purpose of repair and replacement. In the event Landlord elects to
repair the damage any abatement of rent shall end five days after notice by
Landlord to Tenant that the Demised Premises have been repaired. If any damage
is caused by the negligence of Tenant or its employees, the damages shall be
repaired by Landlord, upon receipt of insurance proceeds, but there shall be no
abatement of rent.
Q. CONDEMNATION: If title to all of the demised premises is taken for any
public or quasi-public use by eminent domain by private purchase in lieu
thereof, on if title to so much of the premises or the Complex is taken that a
reasonable amount of reconstruction thereof will not in Landlord's sole
discretion result in the premises or the Complex being a practical improvement
and reasonably suitable for use for the purpose for which they are designed, the
in either event, this lease shall terminate at the option of either party on the
date that title vests in the condemning authority; provided that Tenant shall
not have the right to terminate this lease unless the taking is such as to
render the premises inaccessible to pedestrian traffic, or unless Tenant's
premises is reduced in size or utility so to be practically unusable for the
purposes for which the premises are requited to be used, If this lease is
terminated under the provisions of this paragraph, rent shall be apportioned and
adjusted as of the date of termination. Tenant shall have no claim against
Landlord or against the condemning authority for the value of its leasehold
estate or for the value of the unexpired term of the lease. If there is a
partial taking of the demised premises or the Complex and this lease is not
thereby terminated under the provisions of this paragraph, then this lease shall
remain in full force and effect, and the Landlord shall, within reasonable time
thereafter, repair and restore the remaining portion of the premises, should
they be affected, to the extent necessary to render the same reasonably suitable
for the purposes for which the premises were leased, and shall repair and
reconstruct the remaining portion of the Complex to the extent necessary to make
the same a complete architectural unit: provided that such work shall not exceed
the scope of the work required to be done by Landlord in originally constructing
such Complex or the demised premises and the landlord shall not be required to
expend more than the net proceeds of the condemnation award which are paid to
Landlord in complying with its obligations hereunder. All compensation awarded
or paid upon a total or partial taking of the demised premises or the Complex
shall belong to and be the property of the Landlord without any participation by
Tenant. Nothing herein shall be construed to preclude Tenant from prosecuting
any claims directly against the condemning authority for loss of business,
damage to, and cost of removal of trade fixtures, furniture and other personal
property belonging to Tenant; provided however, that no such claim shall
diminish or adversely affect the Landlord's award. After any partial taking of
the Demised Premises which does not result in the termination of this lease the
Base Annual Rent for the remainder of the term shall be reduced by the same
percentage as the floor area of the space taken bears to the Leased Square Feet
in the entire demised premises.
R. SUBORDINATION: Tenant agrees that this lease shall be subordinate to any
mortgages, now or hereafter encumbering the Complex or any part or component
thereof, and to all advances made upon the security thereof. This shall be
self-operative and no further instrument of subordination shall be required by
any mortgagee. However, the Tenant, upon request of any party in interest shall
execute promptly such instruments or certificates to carry out the intent hereof
as shall be required by the Landlord. If Tenant does not execute and deliver
such instruments within five (5) business days after receipt of a request by
Landlord, Tenant hereby constitutes and appoints Landlord as its
attorney-in-fact to execute and deliver the instruments on behalf of Tenant.
Tenant shall, in the event any proceedings are brought for the foreclosure of
or in the event of exercise of the power of sale under any mortgage made by the
Landlord covering the demised premises or in the Complex or any part thereof or
to the Landlord certifying (if such be the case) that this lease is unmodified
and is in full force and effect (and if there has been modification, that the
same is in full force and effect as modified and stating the modifications);
that there are no defenses or offsets against the enforcement thereof or stating
those claimed by the Tenant; and stating the day to which rentals and other
charges are paid. Such certificate shall also include such other information as
may be reasonably required by mortgagee.
Tenant shall, in the event any proceedings are brought for the foreclosure of
or in the event of exercise of the power of sale under any mortgage made by the
Landlord covering the demised premises, or in the event of a termination of any
lease under which Landlord may hold title, attorney to the purchaser of the
encumbered interest or the Landlord as the case may be, and recognize such
person as the Landlord under this lease. Tenant
<PAGE>
agrees that the institution of any suit, action or other proceeding by a
mortgagee to realize on Landlord's interest in the Complex or as sale of
Landlord's interest in the Complex pursuant to the powers granted to a mortgagee
under its mortgage, shall not, by operation of law or otherwise, result in the
cancellation or termination of this lease or of the obligations of the Tenant
hereunder. Landlord and Tenant agree that notwithstanding that this lease is
expressly subject and subordinate to any mortgages, any mortgagee, its
successors and assigns or other holder of a mortgage or a note secured thereby,
may sell the Complex in the manner provided in the mortgage and may, at the
option of such mortgagee, his successor's and assigns or other holder of the
mortgage or the note secured thereby make such sale of the complex subject to
this lease.
S. ASSIGNMENT: Tenant shall not assign, mortgage or encumber this lease nor
sublet or suffer or permit the premises or any part thereof to be used by others
without the prior written consent of Landlord in each instance; which consent
shall not be unreasonably withheld. Any request for consent to a subletting or
assignment shall be in writing and accompanied by a true copy of a bonafide
offer to sublet, and the Tenant shall furnish to Landlord all information
requested by Landlord as to the proposed subtenant. If Landlord has not
consented to such request within 15 days after receipt by Landlord of such
request for consent and of any information requested by the Landlord, the
Landlord shall be deemed to have withheld consent. If consent is granted Tenant
shall sublet or assign only upon the terms set forth in the offer submitted to
Landlord. If Tenant is a corporation, any transfer, sale or other disposition of
the controlling stock of the Tenant shall be deemed an assignment of this lease
provided, however, that if the stock of such corporation is regularly traded on
any recognized securities market; the transfer of stock will not be prohibited
hereby. Landlord consents to a transfer of this lease to a wholly owned
subsidiary of Tenant provided that Tenant shall remain primarily liable for the
performance of Tenant's covenants hereunder. If this lease is assigned or if the
premises or any part thereof is sublet or occupied by anyone other than Tenant
whether with or without the written consent of Landlord, Landlord may collect
rent from the assignee, sub-tenant or occupant and apply the net amount
collected to the rents herein reserved, but no assignment, subletting, occupancy
or collection shall be deemed waiver of any covenants or be deemed an acceptance
of the assignee, sub-tenant or occupant, or a release of tenant from any
liability hereunder.
T. SURRENDER: Upon the expiration of the term hereof Tenant shall surrender
the premises to Landlord as in good order and condition as they were in at the
commencement of the term (except for ordinary wear and tear and damage by fire
or other casualties, or causes beyond the Tenant's control) together with all
additions, alterations and improvements which may have been made in or to the
premises pursuant to this lease. Landlord may, at its option, require the Tenant
to remove all such alterations and additions and to restore the premises to the
condition they were in when originally delivered to Tenant, save ordinary wear
and tear except that if tenant has received approval from landlord for
alterations and or additions tenant may at their option leave additions and
alterations at the end of the lease. In good condition ordinary wear and tear
excepted. In the event Tenant continues to occupy the premises after the
expiration of the term, without being given or being entitled to a renewal or
new lease, such occupancy shall be considered a tenancy from month-to-month at a
monthly rental equal to double the rent payment due for the last full month of
the lease term. This provision shall not give Tenant any right to continue
occupancy following the expiration of this lease, except with the consent of
Landlord. Tenant shall be liable to Landlord for all damages occasioned by such
holding over, including claims by any succeeding occupancy of the premises for
such delay.
ARTICLE VII. LIABILITY
A. INDEMNITY: Not withstanding gross negligence, Tenant hereby indemnifies
Landlord and agrees to save Landlord harmless from suits, actions, damages,
liability and expense in connection with loss of life, bodily or personal
injury, property damage or loss of income arising from or out of any occurrence
in, upon or at or from the Demised Premises or the occupancy or use by Tenant of
said premises or any part thereof, or occasioned wholly or in part by any act or
omission of Tenant, its agents, contractors, employees, servants, invitees,
licensees or concessionaires, including the sidewalks and common areas and
facilities within the Complex. Tenant shall store its property in and shall
occupy the Demised Premises and all other portions of the Complex at its own
risk. Landlord shall not be responsible or liable to Tenant or to those claiming
by, through or under Tenant for any loss or damage to either the person or
property of Tenant that may be occasioned by or through the
<PAGE>
acts or omissions of persons occupying adjacent, connecting or adjoining
premises. Landlord shall not be responsible or liable for any defect, latent or
otherwise, in any building in the Complex, or any of the equipment, machinery,
utilities, appliances or apparatus therein nor shall it be responsible or liable
for any injury, loss or damage to any person or to any property of Tenant or
other person caused by or resulting from bursting, breakage or by or from
leakage, steam, running or the overflow of water or sewerage in any part of said
premises or for any injury or damage caused by or resulting from acts of God or
the elements, or for any injury or damage caused by or resulting from any defect
or negligence in the occupancy, construction, operation or use of any of said
premises, buildings, machinery, apparatus or equipment by any person or by or
from the acts of negligence of any occupant of the premises, unless caused by
grossly negligent acts of landlord. Tenant shall give prompt notice to Landlord
in case of fire or accidents in the Demised Premises or in the building of which
the Demised Premises are a part, or of defects therein or in any fixtures or
equipment. In case Landlord shall, without fault on its part, be made a party to
any litigation commenced by or against Tenant, then Tenant shall , at its own
cost and expense, defend any such suits or actions. Tenant shall satisfy and
discharge any judgments that may be recovered against Landlord, and if Tenant
fails to repay the amount for which Landlord becomes liable, Landlord may pay
the same with any interest costs or other charges which may have accrued
thereon. The amount paid by Landlord, with interest at the rate of fifteen
percent (15%) per annum from the date of payment , shall be due and payable by
Tenant as additional rent with the next installment of rent coming due.
B. FORCE MAJEURE: Landlord shall be excused for the period of any delay in
the performance of any obligations hereunder when prevented from so doing by
cause or causes beyond Landlord's control which shall include, without
limitation, all labor disputes, civil commotion, war, war-like operations,
invasion, rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or controls, fire or other casualty, inability to
obtain any material or services or through acts of God.
C. INSURANCE - PROPERTY DAMAGE, LIABILITY, AND OTHER INSURANCE : Tenant shall
maintain at its own cost and expense (with coverage to commence at the time
Tenant enters the Demised Premises to install equipment, etc., or at the
commencement of the term of this Lease, whichever occurs earlier) (1) FIRE
INSURANCE in an amount adequate to cover the cost of replacement of all
decorations and improvements, fixtures, and contents in the Demised Premises in
the event of fire. This insurance must be procured on an "All Risk" basis and
comply with the Southeastern Underwriters Association. Tenant must also procure
"Fire Legal Liability" in an amount not less that $100,000.00. (2) PUBLIC
LIABILITY INSURANCE on a occurrence basis with minimum limits of liability in an
amount of $1,000,000.00 with respect to damage to property (3) PLATE GLASS
INSURANCE covering all outside plate glass in the Demised Premises. In the event
Tenant fails to obtain or maintain the insurance required hereunder, Landlord
may obtain same and any cost incurred by Landlord in connection therewith shall
be deemed additional rent to be paid by Tenant and is payable as such.
Any insurance procured by Tenant as herein required shall be issued in the
name of Landlord or such agents as Landlord may designate and Tenant by a
company licensed to do business in the State of Florida and with a current
Best's Rating of no lower than "A" and shall contain endorsements that (1) such
insurance may not be canceled or amended with respects to Landlord without
thirty (30) days written notice by registered mail to Landlord by the insurance
company; (2) Tenant shall be solely responsible for payment of premiums and
Landlord shall not be required to pay any premiums for such insurance; (3) any
insurance policies herein required to be procured by Tenant shall contain an
express waiver of any right or subrogation by the insurance company against
Landlord. The original policy or policies of all such hazard and liability
insurance shall be delivered to Landlord by Tenant within ten (10) days of the
issuance of each such policy by the respective insurance company.
Tenant shall not stock, use or sell any article or do anything in or about
the Demised Premises which may be prohibited by Landlord's insurance policies or
any endorsements or forms attached thereto, or which will increase any insurance
rates or premiums on the Demised Premises, the building of which they are a part
and all other buildings in the Complex. Tenant shall pay on demand any increase
in premiums for Landlord's insurance that may be charged on such insurance e
carried by Landlord resulting from Tenant's use, occupancy or vacancy of the
Demised Premises. A schedule issued by the organization making the fire
insurance, extended coverage, vandalism and malicious mischief, special extended
coverage or any all-risk insurance rates for said premises or any rule books
issued by the rating organizations or similar bodies or by rating procedures or
rules of Landlord's insurance companies shall be conclusive evidence of the
several items and charges which make-up the insurance rates and premiums on the
Demised Premises and the Complex. If, due to the occupancy, abandonment, or
<PAGE>
Tenant's failure to occupy the Demised Premises as herein provided, any
insurance shall be canceled by the insurance carrier or if the premiums for any
such insurance shall be increased, then, in any of such events, Tenant shall
indemnify and hold Landlord harmless and shall pay on demand the increased cost
of such insurance. Tenant also shall pay in such events, any increased premium
on the rent insurance that my be carried by Landlord for its protection against
rent loss through fire or other casualty.
ARTICLE VIII. PERFORMANCE
A. DEFAULT: The following events shall be deemed to be events of default by
Tenant under this lease:
(1) Tenant shall fail to pay any installment of rent, including
Percentage Rent and additional rent hereby reserved and such failure shall
continue for a period of ten (10) days.
(2) Tenant shall fail to comply with any term, provision, or covenant
of this lease, other than payment of rent and shall not cure such failure within
fifteen (15) days after written notice thereof to tenant, or if the compliance
cannot reasonably be completed within such time, then tenant shall fail to
commence and diligently pursue the compliance and complete same within one
hundred twenty (120) days after notice thereof is provided.
(3) Tenant or guarantor shall become insolvent or shall make a transfer
in fraud of creditors of shall make an assignment for the benefit of creditors.
(4) Tenant or guarantor shall file a petition under any section or
chapter of the National Bankruptcy Act, as amended, or under any similar law or
statute of the United States or any State thereof, or there shall be filed
against Tenant a petition in bankruptcy or insolvency or a similar proceeding,
and any such proceedings shall not have been dismissed within ninety (90) days
after its commencement, or Tenant shall be adjudged bankrupt or insolvent in
proceeding filed against tenant thereunder.
(5) A receiver or Trustee shall be appointed for the Demised Premises
or for all or substantially all the assets of Tenant.
(6) Tenant shall abandon or vacate all or any portion of the premises
or fail to take possession or open for business within the time required by this
lease. Notwithstanding any statutory definition to the contrary, the premises
will be deemed abandoned if Tenant fails to open and operate for the purpose of
conducting business for ten (10) consecutive business days.
(7) Tenant shall do or permit to be done anything which creates a lien
upon the Demised Premises, which is not bonded or released within twenty (20)
days after notice of filing.
B. REMEDIES: Upon the occurrence of any such events of default, Landlord
shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever:
(1) Terminate this lease, in which event Tenant shall immediately
surrender the Demised Premises to Landlord, and, if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which he may have for
possession or arrearages in rent, enter upon and take possession of the Demised
Premises and expel or remove Tenant and any other person who may be occupying
said premises or any part thereof, by reasonable force if necessary, without
being liable for prosecution or any claim of damages therefore; and Tenant
agrees to pay to Landlord on demand the amount of all loss and damage which
Landlord may suffer by reason of such termination, whether through inability to
re-let the premises on satisfactory terms or otherwise.
(2) Enter upon and take possession of the Demised Premises and expel or
remove Tenant and any other person who may be occupying said premises or any
part thereof, by reasonable force if necessary, without being liable for
prosecution or any claim for damages therefor, and, if Landlord so elects,
re-let the premises on such terms as Landlord may deem advisable and receive the
rent therefore. If Tenant is not in possession of the Demised premises and
Landlord terminates this Lease due to Tenant's default hereunder, Tenant shall
surrender Tenant's copy of the lease to Landlord and Tenant shall have no
further rights hereunder. Tenant agrees to pay to landlord on demand any
deficiency, expenses and/or brokerage fees that may arise by reason of such
re-letting.
(3) Enter upon the demised premises by force if necessary without being
liable for prosecution or any claim for damages therefore, and do whatever
Tenant is obligated to do under the terms of this lease; and Tenant agrees to
reimburse Landlord on demand for any expenses including reasonable attorneys
fees which Landlord may incur in thus effecting compliance with Tenant's
obligations under this lease, and Tenant further agrees that Landlord shall not
be liable for any damages, resulting to the Tenant for such action, whether
caused by the negligence of Landlord or otherwise.
<PAGE>
(4) All rent and other charges due under this lease may, at the option
of Landlord, become immediately due and payable.
C. NO WAIVER: Pursuit of any of the foregoing remedies shall not preclude
pursuit of any of the other remedies herein provided or any other remedies
provided by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder or of any damages
accruing to Landlord by reason of the violation of any of the terms, provisions
and covenants herein contained. No action taken by or on behalf of the Landlord
shall be construed to be acceptance of a surrender of this lease. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an event of
default shall not be deemed or construed to constitute a waiver of such default.
In determining the amount of loss of damage which Landlord may suffer by reason
of termination of this lease or the deficiency arising by reason of any
re-letting of the demised premises by landlord as above provided, allowance
shall be made for the expense of repossession, any repairs or remodeling
undertaken by Landlord following repossession. Tenant agrees to pay to Landlord
all costs and expenses incurred by Landlord in the enforcement of this lease,
including all reasonable fees of Landlord's attorneys when such attorneys are
employed by Landlord to effect collection of any sums due hereunder or to
enforce any obligation of the Tenant and right or remedy of Landlord. The
failure of the landlord to insist, in any one or more instances upon strict
performance of any of the covenants or agreements in this Lease, or to exercise
any option herein contained, shall not be construed as a waiver or a
relinquishment for the future of such covenant, agreement, or option, but the
same shall continue and remain in full force and effect. The receipt by the
Landlord of rent, with knowledge of the breach of any covenant or agreement
thereof, shall not be deemed a waiver of such breach and no waiver by the
Landlord of any provision hereof shall be deemed to have been made unless
expressed in writing and signed by the Landlord.
D. RIGHT TO CURE: If Tenant defaults under this lease, Landlord may, at its
option, immediately or at any time thereafter, without waiving any claim for
breach of agreement, and without notice to Tenant, cure such default for the
account of tenant. If the Landlord shall institute an action or summary
proceeding against the Tenant based upon such default, or if the Landlord shall
cure such default or defaults for the account of Tenant, then the Tenant will
pay all costs and expenses incurred by Landlord in curing such default including
reasonable attorney's fees, which sums, together with interest at the rate of
fifteen (15%) percent per annum shall be due and payable on demand, and shall be
deemed to be additional rent. Landlord shall not be responsible to Tenant for
any loss or damage resulting in any manner by reason of its undertaking any acts
in accordance with the provisions of this lease, unless such acts or omissions
of landlord were grossly negligent. Tenant shall have 10 day right to cure for
non-monetary default upon written notification.
E. TIME OF ESSENCE: Time is of the essence of this lease and each and every
provision hereof.
F. NOTICES: Any notice required or permitted to be given under this lease
shall be in writing and shall be posted in the United States mail, registered,
return receipt requested, addressed to the party to be served at the address
shown in Article I of this lease, or to such other address as either the
Landlord or the Tenant shall designate, in the manner herein set forth for the
giving of notice. Any notice required to be given by the Tenant to the Landlord
to be effective hereunder shall also be given in writing by registered mail to
each mortgagee of the Landlord's estate provided that the Tenant shall have
previously received written notice of the name and address of any such
mortgagee. A mortgagee shall have the same rights to cure any default that the
Landlord has under the terms of this lease.
G. SUBMISSION OF LEASE: Submission of this lease for examination does not
constitute an option for the demised premises and becomes effective as a lease
only upon execution and delivery thereof by Landlord to Tenant. If any
provisions contained in a rider is inconsistent with the printed provision of
this lease, the provision contained in said writing shall supersede said printed
provision. The captions, numbers and index appearing herein are inserted only as
a matter of convenience and are not intended to define, limit, construe or
describe the scope or intent of any paragraph, nor in any way affect this Lease.
H. RECORDING: Tenant shall not record this lease or a memorandum thereof
without the written consent of Landlord.
<PAGE>
I. PARTIAL INVALIDITY: If any provision of this lease or application thereof
to any person or circumstance to any extent be invalid, the remainder of this
lease or the application of such provision to persons or circumstances other
than those as to which it is held invalid shall not be affected thereby and each
provision of this lease shall be valid and enforced to the fullest extent
permitted by law.
J. BROKER'S COMMISSION: Tenant represents and warrants that there are no
claims for brokerage commissions or finder's fees in connection with the
execution of this lease except for those payable to landlord's broker(s) and
agrees to indemnify Landlord against and hold it harmless from all liabilities
arising from any such claim, including cost of counsel fees, other than those
claims of landlord's brokers.
K. INTERPRETATION: The covenants and agreements herein contained shall bind,
and the benefits and advantages hereof shall inure to the respective heirs,
legal representatives, successors and assigns of the parties hereto. Whenever
used, the singular number shall include the plural, the plural shall include the
singular, and the use of any gender shall include all genders. This lease may
not be changed orally, but only by an agreement in writing and signed by the
party against whom enforcement of any waiver, change, modification, or discharge
is sought. The marginal notes and headings of this lease are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope or intent or otherwise affect in any way this lease. This agreement
shall create the relationship of Landlord and Tenant between the parties hereto.
No estate shall pass out of the Landlord. Tenant shall have only a lease not
subject to levy and sale, and not subject to assignment except in accordance
with the provisions hereof. This lease shall be governed by, construed and
enforced in accordance with the laws of the state in which the Complex is
located. Should any of the printed provisions of this lease require judicial
interpretation, it is agreed that the court interpreting or construing the same
shall not apply a presumption that the terms of any such printed provision shall
be more strictly construed against one party by reason of the rule of
construction that a document is to be construed most strictly against the party
who itself or through its agent prepared the same, it being agreed that the
agents of all parties have participated in the preparation of the printed
provisions of this lease, and that all terms were negotiable.
L. ENTIRE AGREEMENT: Notwithstanding anything herein contained or contained
in any other writings concerning the Demised Premises by either of the parties
hereto, the parties hereto agreeing hereby that all such other writings are
hereby superseded and/or merged into this Lease which shall be the entire
agreement of the parties concerning said Demised Premises, this Lease shall not
become binding as such upon Landlord unless all preliminary conditions required
to be performed by Tenant are so performed and unless the requirements of the
zoning ordinances and rules and regulations of all public authorities have
jurisdiction are met. Tenant acknowledges that Landlord makes no representations
as to his ability to build or Tenant's ability to conduct the business intended
to be conducted on the premises under said zoning laws and the rules and
regulations of said public authorities having jurisdiction.
Tenant acknowledges that Landlord has not made any statement, promise or
agreement or taken upon itself any engagement whatsoever, verbally or in
writing, in conflict with the terms of this Lease, or that in any way modifies,
varies, alters, enlarges or invalidates any of its provisions, and that no
obligation of the Landlord shall be implied in addition to the obligation herein
expressed.
M. ENFORCEMENT COSTS: If any legal action or other proceeding is brought for
the enforcement of this lease or because of alleged dispute, breach, default in
connection with any provisions of this lease, the successful or prevailing party
shall be entitled to recover reasonable attorney's fees, court cost and all
expenses incurred in that action or proceeding.
ARTICLE IX. GUARANTEE
A. Landlord has accepted financial statement of tenant.
ARTICLE X. RULES AND REGULATIONS
<PAGE>
A. RULES AND REGULATIONS: Tenant agrees to observe and comply with and Tenant
agrees that his agents and all persons visiting in the Demised Premises will
observe and comply with the Rules and Regulations and such other and further
Rules and Regulations as Landlord may from time to time deem needful and
prescribe for reputation, safety, care and cleanliness of the Building, and the
preservation of good order therein and the comfort, quiet and convenience of
other occupants of the Building, which Rules and Regulations shall be deemed
terms and conditions of this Lease.
B. GARBAGE AND REFUSE: All garbage and refuse shall be kept in the containers
specified by Landlord and prepared for collection in the manner and at the
places specified by Landlord. If Landlord shall provide or designate a service
for picking up refuse and garbage, Tenant shall use the same and pay the cost
thereof as reasonably determined by the Landlord for, and shall pay the cost of,
removal of all of Tenant's garbage, refuse or rubbish from the Leased Premises
on a regular periodic basis. Tenant shall not burn any trash or garbage of any
kind in or about the Leased Premises.
C. RADIO AND TELEVISION ANTENNAE: No exterior antennas, electric wires.
telegraph call boxes, or any other electric equipment or apparatus shall be
erected or installed on Leased Premises without the prior written consent of
Landlord. Any antennae so installed without such written consent shall be
subject to removal without notice at any time, at the cost of Tenant.
D. ADJACENT AREAS: The areas immediately adjoining the Leased Premises shall
be kept clean and free from dirt and rubbish by Tenant and Tenant shall not
place any obstructions or merchandise in such areas.
E. PARKING: Tenant and Tenant's employees shall park their motor vehicles
only in those portions of the parking area designated for that purpose by
Landlord. In the event that Tenant or its employees fail to park their motor
vehicles in designated employee parking areas as aforesaid, then Landlord at its
option shall be entitled to charge Tenant, and Tenant agrees to pay to Landlord
on demand as additional rent, Ten Dollars ($10.00) per day per motor vehicle
parked in any area other than those designated as employee parking areas.
F. WINDOWS AND PROJECTIONS: Nothing shall be affixed to or projected beyond
the outside of the Building by Tenant without the prior written consent of
Landlord. If Tenant desires, and Landlord permits, blinds, shades, or other form
of outside or inside window coverings, they shall be furnished and installed at
the expense of Tenant and must be of such shape, color, material and make as are
approved by Landlord.
G. ADVERTISING AND SIGNS: Unless expressly permitted by Landlord, no sign,
advertisement, notice or other lettering shall be exhibited, inscribed, painted
or affixed on any part of the outside or inside of the Building, except on the
glass or panels of the doors of the Leased Premises, and then only of subject
matter and in such color, size, style and material as shall conform to the
specifications of Landlord. Landlord reserves the right to remove all other
signs or lettering, without notice to Tenant, at the expense of Tenant..
H. BICYCLES AND ANIMALS: Landlord permits bicycles on premises.
I. MACHINERY: Unless Landlord gives prior written consent in each and every
instance, Tenant shall not install or operate any steam or internal combustion
engine, boiler, machinery, refrigerating or heating device or air-conditioning
apparatus in or about said Premises. All equipment of any electrical or
mechanical nature shall be placed in settings which absorb and prevent
vibration, noise, or annoyance, or the spillage or leakage of fluids, oils or
grease on the floors of said Premises. Fork lift allowed on premises.
J. LOCKS: Unless expressly permitted by landlord, no visible additional locks
or similar devises shall be attached to any door or window. Upon termination of
this Lease or of Tenant's possession, Tenant shall surrender all keys of said
Premises and shall provide Landlord with the then-current combinations for any
combination locks or safes, cabinets and vaults.
K. NOISES AND OTHER NUISANCES: Tenant shall not make or permit any noise,
odor, or vapor that is objectionable to Landlord or to other occupants of the
Building to emanate from said Premises, and shall not
<PAGE>
create or maintain a nuisance therein, and shall not disturb, solicit or canvass
any occupant of the Building, and shall not do any act tending to injure the
reputation of the Building. Tenant shall not install or operate any phonograph,
musical instrument, radio or television receiver or similar device in the
Building without prior approval of Landlord. The use thereof, if permitted,
shall be subject to control by Landlord to the end that others shall not be
disturbed or annoyed.
L. SAFES OR HEAVY ARTICLES: Tenant shall not overload any floor. Safes,
furniture and all large articles shall be brought into said Premises or removed
therefrom at the Tenant's sole risk and responsibility.
M. HANDIWORK: Tenant will not use or allow the rented space, or surrounding
parking and landscape area to be used for any type of auto repair work, painting
of any kind, fiber glassing of any kind or woodworking of any kind.
N. AWNINGS AND COVERINGS: No awnings, metal bars or metal frame work shall be
placed by the Tenant on any windows, any interior location visible from the
exterior of the Building, any exterior portions of the Building or grounds
without prior written consent of the Landlord.
ARTICLE XI. MISCELLANEOUS
A. GOVERNING LAW: This Lease shall be construed in accordance with and
governed by the laws of the State of Florida..
B. PLUMBING FACILITIES: The plumbing facilities in the Leased Premises shall
not be used for any other purpose than that for which they are constructed, and
no foreign substances of any kind shall be thrown therein; the expense of any
breakage, stoppage, or damage resulting from a violation of this provision shall
be borne by Tenant.
C. HAZARDOUS SUBSTANCES: Tenant shall not cause or permit any Hazardous
Substances to be used, stored, generated or disposed of in, on or about the
Land, Building or Premises by Tenant, its agents, employees, contractors or
invitees, except for such Hazardous Substances as are normally utilized in an
office, warehouse, light manufacturing/assembly and distribution center
environment and are necessary to Tenant's business. Any such Hazardous
Substances permitted on the Premises as herein above provided, and all
containers therefore, shall be used, kept, stored and disposed of in a manner
that complies with all federal, state and local laws or regulations applicable
to any such Hazardous Substances. Tenant shall indemnify and hold Landlord
harmless from any and all claims, damages, fines, judgments, penalties, costs,
expenses or liabilities (including, without limitation, any and all sums paid
for settlement of claims, attorneys' fees, consultant and expert fees) arising
during or after the Lease term from or in connection with the use, storage,
generation or disposal of Hazardous Substances in, on or about the Land,
Building or Premises by Tenant, Tenant's agents, employees, contractors,
invitees, subtenants, or assigns.
D. WAIVER: The waiver by Landlord of any breach of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The Subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. No covenant, term or condition of this Lease shall be deemed to have been
waived by Landlord, unless such waiver be in writing by Landlord.
E. WAIVER OF JURY TRAIL; The parties hereby waive trial by jury in any
action, proceedings or counter claim brought by either against the other on any
matters whatsoever arising out of or any way connected with this lease and
Tenants use or occupancy thereunder.
<PAGE>
F. ADDENDUM AND SCHEDULES: See Addendum and Schedules attached hereto and
made a part hereof.
IN WITNESS WHEREOF this Lease has been duly executed by the parties hereto,
under seal, as of the day and year first above.
Signed, sealed and delivered in the presence of:
LANDLORD:
<TABLE>
<S> <C>
__________________________ L. S. BY: _________________________________
__________________________ L. S. BY: _________________________________
TENANT:
__________________________ L. S. BY: _________________________________
__________________________ L. S. BY: _________________________________
GUARANTOR(S):
__________________________ L. S. BY: ________________________________
__________________________ L. S. BY: ________________________________
</TABLE>
<PAGE>
ADDENDUM
ADDENDUM TO LEASE BY AND BETWEEN PARK PLAZA , J.V. (LANDLORD), AND
_______________________________________________, (TENANT) DATED JANUARY ______,
1998.
1. TENANT IS RESPONSIBLE FOR ALL COSTS OF ALL RENOVATIONS TO UNIT TO MEET ITS
NEEDS. ANY ALTERATIONS OR RENOVATIONS MUST BE APPROVED BY LANDLORD PRIOR TO WORK
COMMENCING.
2. UPON EXECUTION OF THIS LEASE AGREEMENT AND PAYMENT OF SECURITY DEPOSIT, FIRST
MONTH, AND LAST MONTH RENT WHICH TOTALS $12,999.99, TENANTS WILL HAVE COMPLETE
ALTERATIONS. RENT WILL COMMENCE FEBRUARY 1, 1998.
SIGNED:
WITNESS HEREOF:
- ------------------------------ -----------------------------
TENANT
- ------------------------------
- ----------------------------- ----------------------------------------
Park Plaza (J.V.)
- -----------------------------
EXHIBIT 23
BERNARD J. DONTH
Certified Public Accountants
2560 RCA Boulevard
Suite 108
Palm Beach Gardens, Florida 33410
Amazon Herb Company
725 North A1A, Suite C-115
Jupiter, Florida 33447
RE: AMAZON HERB COMPANY
Dear Sir or Madam:
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form SB-2 of our Reports dated November 18,1996 and
August 26, 1997, relating to the financial statements of Amazon Herb Company
which are contained in this Prospectus.
We also consent to the reference to us under the captions "Selected Financial
Data" and "Experts" in the Prospectus.
BERNARD J. DONTH
Jupiter, Florida
June 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
AUDITED FINANCIAL STATEMENTS OF AMAZON HERB COMPANY FOR THE TWELVE MONTH PERIOD
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 18,154
<SECURITIES> 0
<RECEIVABLES> 169,394
<ALLOWANCES> 0
<INVENTORY> 594,368
<CURRENT-ASSETS> 803,730
<PP&E> 95,442
<DEPRECIATION> 90,749
<TOTAL-ASSETS> 814,140
<CURRENT-LIABILITIES> 163,940
<BONDS> 0
0
0
<COMMON> 68,330
<OTHER-SE> 436,770
<TOTAL-LIABILITY-AND-EQUITY> 814,140
<SALES> 2,377,528
<TOTAL-REVENUES> 2,377,528
<CGS> 1,031,670
<TOTAL-COSTS> 1,031,670
<OTHER-EXPENSES> 1,245,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,528
<INCOME-PRETAX> 131,949
<INCOME-TAX> 40,158
<INCOME-CONTINUING> 91,791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,791
<EPS-PRIMARY> (.013)
<EPS-DILUTED> (.013)
</TABLE>
