SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter Ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-23031
DYNAMIC HEALTH PRODUCTS, INC.
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(Exact name of small business issuer as specified in its charter)
STATE OF FLORIDA 34-1711778
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6950 BRYAN DAIRY ROAD, LARGO, FLORIDA 33777
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (727) 544-8866
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
The number of shares outstanding of the Issuer's common stock at $.01 par value
as of November 12, 1999 was 3,535,224 (exclusive of Treasury Shares).
<PAGE>
DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
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(UNAUDITED) (AUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 558,645 $ 899,951
Accounts receivable, net 3,175,213 2,535,274
Inventories, net 3,297,678 2,580,753
Prepaid expenses and other current assets 416,309 221,726
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Total current assets 7,447,845 6,237,704
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Property, plant and equipment, at cost, net 2,627,351 2,476,357
Intangible assets (primarily goodwill), net 1,746,972 1,769,153
Other assets 84,885 57,619
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TOTAL ASSETS $ 11,907,053 $ 10,540,833
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,988,804 $ 2,495,648
Accrued expenses 776,023 371,556
Current portion of long-term obligations 409,162 643,243
Credit lines payable 2,272,320 2,388,729
Obligations to related parties 191,500 38,434
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Total current liabilities 7,637,809 5,937,610
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Long-term obligations, less current portion 1,544,372 1,392,793
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TOTAL LIABILITIES 9,182,181 7,330,403
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Commitments and contingencies -- --
Shareholders' equity:
Series A Convertible Preferred stock, $.01 par value;
400,000 shares authorized; 310,000 shares issued
and outstanding, at face value 775,000 775,000
Series B 6% Cumulative Convertible Preferred stock,
$.01 par value; 800,000 shares authorized;
30,000 shares issued and outstanding, at face value 75,000 75,000
Common stock, $.01 par value; 20,000,000 shares authorized;
3,535,224 shares issued and outstanding 35,352 35,352
Additional paid-in capital 3,398,365 3,400,615
Accumulated deficit (1,558,845) (1,075,537)
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TOTAL SHAREHOLDERS' EQUITY 2,724,872 3,210,430
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,907,053 $ 10,540,833
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Distribution $ 14,785,531 $ 6,970,929 $ 27,391,242 $ 12,770,832
Manufacturing 1,160,484 1,144,279 2,466,533 2,058,823
------------ ------------ ------------ ------------
TOTAL REVENUES 15,946,015 8,115,208 29,857,775 14,829,655
------------ ------------ ------------ ------------
Cost of goods sold:
Distribution 14,102,688 6,708,545 26,211,054 12,265,275
Manufacturing 891,885 985,588 1,911,171 1,582,312
------------ ------------ ------------ ------------
TOTAL COST OF GOODS SOLD 14,994,573 7,694,133 28,122,225 13,847,587
------------ ------------ ------------ ------------
GROSS PROFIT:
Distribution 682,843 262,384 1,180,188 505,557
Manufacturing 268,599 158,691 555,362 476,511
------------ ------------ ------------ ------------
TOTAL GROSS PROFIT 951,442 421,075 1,735,550 982,068
------------ ------------ ------------ ------------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,128,989 617,905 2,100,016 924,409
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) BEFORE
OTHER INCOME AND EXPENSE (177,547) (196,830) (364,466) 57,659
Other income (expense):
Interest income 8,114 3,184 19,544 6,443
Other income and expenses, net 13,518 94,978 144,046 101,332
Interest expense (145,741) (98,293) (282,432) (128,912)
------------ ------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) (124,109) (131) (118,842) (21,137)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY
INTEREST AND INCOME TAXES (301,656) (196,961) (483,308) 36,522
(Income) loss attributable to minority interest -- 14,950 -- 14,950
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (301,656) (211,911) (483,308) 21,572
Income taxes -- -- -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS) (301,656) (211,911) (483,308) 21,572
Preferred stock dividends 1,125 400 2,250 400
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (302,781) $ (212,311) $ (485,558) $ 21,172
============ ============ ============ ============
Basic income (loss) per share $ (0.09) $ (0.08) $ (0.14) $ 0.01
============ ============ ============ ============
Basic weighted number of
common shares outstanding 3,535,224 2,814,955 3,535,224 2,014,534
============ ============ ============ ============
Diluted income (loss) per share $ (0.09) $ (0.08) $ (0.14) $ 0.01
============ ============ ============ ============
Diluted weighted number of
common shares outstanding 3,535,224 2,814,955 3,535,224 2,200,927
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
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<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ (483,308) $ 36,522
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization 197,953 84,779
Gain on involuntary conversion of property -- (81,192)
Minority interest -- (14,950)
Changes in operating assets and liabilities:
Accounts receivable (639,939) (466,257)
Inventory (716,925) (274,770)
Prepaid expenses and other current assets (194,583) (74,020)
Accounts payable 1,493,156 (655,480)
Accrued expenses 402,217 103,119
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 58,571 (1,342,249)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (298,007) (159,946)
Proceeds from involuntary conversion of property -- 99,100
Decrease (increase) in intangible assets (28,758) (6,544)
Decrease (increase) in other assets (27,266) (64,672)
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NET CASH USED IN INVESTING ACTIVITIES (354,031) (132,062)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in revolving line of credit agreements (116,409) 445,000
Proceeds from issuance of long-term obligations 1,048,043 132,219
Payments of long-term obligations (1,130,546) (237,952)
Proceeds from issuance of shareholder loans 166,500 223,000
Payments of shareholder loans (13,434) (60,096)
Distributions to shareholders -- (48,407)
Proceeds from issuance of common stock -- 550,000
Proceeds from issuance of preferred stock -- 50,000
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (45,846) 1,053,764
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NET INCREASE (DECREASE) IN CASH (341,306) (420,547)
CASH AT BEGINNING OF PERIOD 899,951 456,520
----------- -----------
CASH AT END OF PERIOD $ 558,645 $ 35,973
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
DYNAMIC HEALTH PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
CONTINUED (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
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<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 276,379 $ 103,979
Cash paid during the period for income taxes $ -- $ --
Supplemental schedule of non-cash financing activities:
Capital lease obligations incurred for purchase of
property and equipment $ 124,941 $ 56,147
Conversion of related party notes payable and
accrued interest to common stock $ -- $ 81,331
Acquisition of Energy Factors, Inc. through
issuance of 310,000 shares of preferred stock $ -- $ 775,000
Acquisition of Becan Distributors, Inc. through
issuance of 1,500,000 shares of common stock $ -- $2,250,000
Acquisition of J.Labs, Inc. through
issuance of 100,000 shares of common stock $ -- $ 150,000
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
Dynamic Health Products, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1999
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instruction to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month and six
month periods ended September 30, 1999 and 1998 are not necessarily indicative
of the results that may be expected for the year ending March 31, 2000. For
further information, refer to the consolidated financial statements and
footnotes included in the Company's Form 10-KSB for the year ended March 31,
1999.
NOTE B-PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements include
the accounts of Dynamic Health Products, Inc. and its subsidiaries, Innovative
Health Products, Inc., Becan Distributors, Inc. and its subsidiary Discount Rx,
Inc., Incredible Products of Florida, Inc., Dynamic Life, Inc., J.Labs, Inc.,
and Herbal Health Products, Inc. (collectively the "Company"). All intercompany
balances and transactions have been eliminated.
NOTE C-RELATED PARTY OBLIGATIONS
In August and September 1999, the Company issued promissory notes
payable to the Chairman of the Board of the Company totaling $156,500. The notes
bear interest at 10% per annum, and are payable on demand.
NOTE D-LONG-TERM OBLIGATIONS
On September 13, 1999, the Company established a loan with GE Capital
Small Business Finance Corporation. The principal amount of the note is
$880,000. The note bears interest at the lowest Prime Rate as published in the
Wall Street Journal (based on the prime rate in effect on the first business day
of the month in which a change occurs) plus 2.25% per annum.
The term of the note is 25 years and one month from the date of the
note, payable in equal monthly installments of principal and interest. The note
is secured by a mortgage on the Company's land and building in Largo, Florida.
The note is also secured by personal guarantee from the Company's Chairman of
the Board. Proceeds from the note were used to satisfy all outstanding mortgages
on the property and for payment of loan costs associated with the note.
NOTE E-STOCKHOLDERS' EQUITY
Basic earnings (loss) per common share is computed by dividing income
(loss) available to common stockholders by the weighted-average number of common
shares outstanding during the period. Diluted earnings (loss) per share gives
effect to convertible preferred shares which are considered to be dilutive
common stock equivalents.
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<PAGE>
NOTE F-PENDING SALE OF SUBSIDIARY
On September 3, 1999, the Board of Directors of the Company unanimously
agreed that it would be in the best interest of the Company and its shareholders
to enter into an Agreement And Plan of Reorganization with Nutriceuticals.com
Corporation ("Nutriceuticals") to sell all of the shares of capital stock of
Becan Distributors, Inc. ("Becan"), a wholly-owned subsidiary of the Company, to
Nutriceuticals, to further certain of its business objectives, including without
limitation, providing additional working capital to the Company. The Company
agreed to exchange all of the issued and outstanding shares of stock of Becan to
Nutriceuticals for $2,000,000 in cash and 4,000,000 shares of voting common
stock, $.001 par value, of Nutriceuticals. The number of shares of
Nutriceuticals common stock shall be reduced by 50% after the effective time of
a one-for-two reverse split of the common stock of Nutriceuticals. The closing
is subject to the success of a secondary public offering of Nutriceuticals
common stock.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The Company derives its revenues from developing, manufacturing and
wholesaling a wide variety of non-prescription nutritional supplements, and
health and beauty care products, and distributing and wholesaling prescription
pharmaceuticals. Revenues are billed and recognized as product is produced and
shipped, net of discounts, allowances, returns and credits.
Cost of goods sold is comprised of direct personnel compensation,
statutory and other benefits associated with such personnel and other direct
manufacturing and material product costs. Cost of goods sold also includes
indirect costs relating to labor to support the warehousing of production and
manufacturing overhead. Research and development expenses are charged against
cost of goods sold as incurred, and are not material to the Company's
operations. Selling, general and administrative costs include administrative,
sales and marketing and other indirect operating costs. Interest and other
income (expense) consists primarily of interest expense associated with
borrowings to finance capital equipment expenditures and other working capital
needs.
The Company acquired Becan Distributors, Inc. on June 26, 1998. The
merger was accounted for as a combination of entities under common control and
treated as if a "pooling of interests". The financial statements have been
retroactively restated, for all periods presented, to include the results of
operations for Becan.
RESULTS OF OPERATIONS
Three Months and Six Months ended September 30, 1999 and September 30, 1998
REVENUES. Total revenues increased $7,830,807, or 96.5%, to $15,946,015
and $15,028,120, or 101.3%, to $29,857,775 respectively, for the three months
and six months ended September 30, 1999, as compared to the three months and six
months ended September 30, 1998. Distribution revenues increased $7,814,602, or
112.1%, to $14,785,531 and $14,620,410, or 114.5%, to $27,391,242 respectively,
for the three months and six months ended September 30, 1999, as compared to the
corresponding period. The increase was primarily due to increased sales to
existing customers and expansion of the customer base resulting from increased
marketing efforts, and the June 1998 purchase of Innovative Health Products,
Inc. ("Innovative"). Manufacturing revenues increased $16,205, or 1.4%, to
$1,160,484 and $407,710, or 19.8%, to $2,466,533 respectively, for the three
months and six months ended September 30, 1999, as compared to the corresponding
period. The increase was primarily attributable to increased volume of private
label sales resulting from continued expansion of marketing efforts and the
introduction of new products.
GROSS PROFIT. Total gross profit increased $530,367, or 126.0%, to
$951,442 and $753,482, or 76.7%, to $1,735,550 respectively, for the three
months and six months ended September 30, 1999, as compared to the three months
and six months ended September 30, 1998. The total gross margin increased to
6.0% for the three months ended September 30, 1999, from 5.2% in the
corresponding period. For the six months ended September 30, 1999, total gross
margin decreased to 5.8%, from 6.6% in the corresponding period. Distribution
gross profit increased $420,459, or 160.3%, to $682,843 and
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<PAGE>
$674,631, or 133.4%, to $1,180,188 respectively, for the three months and six
months ended September 30, 1999, as compared to the corresponding period. The
gross margin from distribution increased to 4.6% and 4.3% for the three and six
months ended September 30, 1999, from 3.8% and 4.0% in the corresponding
periods. Manufacturing gross profit increased $109,908, or 69.3%, to $268,599
and $78,851, or 16.6%, to $555,362 respectively, for the three months and six
months ended September 30, 1999, as compared to the corresponding period. The
gross margin from manufacturing increased to 23.2% for the three months ended
September 30, 1999, from 13.9% in the corresponding period. For the six months
ended September 30, 1999, the gross margin from manufacturing decreased to
22.5%, from 23.1% in the corresponding period. The variation in gross margins
for the periods presented was primarily attributable to changes in the mix of
sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist primarily of advertising and promotional
expenses; personnel costs related to general management functions, finance,
accounting and information systems, payroll expenses and sales commissions;
professional fees related to legal, audit and tax matters; and depreciation and
amortization expense. Selling, general and administrative expenses increased
$511,084, or 82.7%, to $1,128,989 and $1,175,607, or 127.2%, to $2,100,016
respectively, for the three months and six months ended September 30, 1999, as
compared to the corresponding period. The increase was primarily due to
additional advertising, promotional and payroll expenses to support increased
net sales and the Company's growth, as well as additional amortization of
goodwill and depreciation of fixed assets associated with acquisitions made
during fiscal 1999. As a percentage of net sales, selling, general and
administrative expenses decreased from 7.6% for the three months ended September
30, 1998, to 7.1% for the three months ended September 30, 1999 and increased to
7.0% for the six months ended September 30, 1999, from 6.2% for the six months
ended September 30, 1998.
INTEREST INCOME (EXPENSE), NET. Interest expense, net of interest
income, increased $42,518 to $137,627 for the three months ended September 30,
1999, from $95,109 for the three months ended September 30, 1998. For the six
months ended September 30, 1999, interest expense, net of interest income
increased $140,419 to $262,888, from $122,469 in the corresponding period. The
increase was a result of greater borrowings to finance the purchase of
additional machinery and equipment, to make necessary plant modifications, and
for financing of additional working capital needs with the expansion of the
Company's operations.
INCOME TAXES. The Company has no income tax provision for the periods
presented due to the utilization of net operating losses not previously
recognized. These net operating losses may be carried forward for up to 15
years. As such, the Company does not anticipate any liability for income taxes
for the six months ended September 30, 1999 and 1998.
Management believes that there was no material effect on operations or
the financial condition of the Company as a result of inflation for the six
months ended September 30, 1999 and 1998. Management also believes that its
business is not seasonal; however, significant promotional activities can have a
direct impact on sales volume in any given quarter.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations through available borrowings
under its credit line facilities, loans from within the Company, and the sale of
equity securities issued by the Company. The Company had a working capital
deficit of $189,964 at September 30, 1999, inclusive of current portion of
long-term obligations and credit facilities.
Net cash provided by operating activities was $58,571 for the six
months ended September 30, 1999, as compared to net cash used in operating
activities of ($1,342,249) for the six months ended September 30, 1998. Cash
provided by operating activities was attributable to an increase in accounts
payable $1,493,156, and increase in accrued expenses $402,217, partially offset
by an increase in accounts receivable ($639,939), as a result of increased sales
by the Company during such period, an increase in inventory ($716,925), and an
increase in prepaid expenses and other current assets ($194,583).
Net cash used in investing activities was ($354,031), representing the
purchase of property and equipment, and plant modifications ($298,007), an
increase in intangible assets ($28,758), and an increase in of other assets
($27,266).
Net cash used in financing activities was ($45,846), representing
repayments on lines of credit ($116,409), repayments of long-term obligations
($1,130,546), repayments of shareholder loans ($13,434), partially offset by
proceeds from issuance of long-term obligations $1,048,043, and proceeds from
issuance of shareholder loans $166,500.
Management believes that cash expected to be generated from operations,
current cash reserves, and existing financial arrangements will be sufficient
for the Company to meet its capital expenditures and working capital needs for
its operations as presently conducted. The Company's future liquidity and cash
requirements will depend on a wide range of factors, including the level of
business in existing operations, expansion of facilities, expected results from
recent procedural changes in accounts receivable and inventory procurement, and
possible acquisitions. In particular, if cash flows from operations and
available credit facilities are not sufficient, it will be necessary for the
Company to seek additional financing. While there can be no assurance that such
financing would be available in amounts and on terms acceptable to the Company,
management believes that such financing would likely be available on acceptable
terms.
In May 1999, the Company formed Dynamic Life, Inc., a Florida
Corporation, as a wholly-owned subsidiary of the Company. Dynamic Life, Inc. was
formed to be the successor to Incredible Products of Florida, Inc., a subsidiary
of the Company. Its business operations commenced on July 1, 1999, at which time
all of the former assets, liabilities and business operations of Incredible
Products of Florida, Inc. were transferred to Dynamic Life, Inc..
On September 13, 1999, the Company established a loan with GE Capital
Small Business Finance Corporation. The principal amount of the note is
$880,000. The note bears interest at the lowest Prime Rate as published in the
Wall Street Journal (based on the prime rate in effect on the first business day
of the month in which a change occurs) plus 2.25% per annum.
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<PAGE>
The term of the note is 25 years and one month from the date of the
note, payable in equal monthly installments of principal and interest. The note
is secured by a mortgage on the Company's land and building in Largo, Florida.
The note is also secured by personal guarantee from the Company's Chairman of
the Board. Proceeds from the note were used to satisfy all outstanding mortgages
on the property and for payment of loan costs associated with the note.
In September 1999, Innovative Health Products, Inc., a wholly-owned
subsidiary of the Company, transferred its land and building in Largo, Florida
to the Company at net book value, which management believes approximated fair
market value on the date of transfer, based upon a recent independent appraisal
of the property. In conjunction with the transfer, the Company satisfied all
outstanding mortgages on the premises upon its refinancing through GE Capital
Small Business Finance Corporation. In addition, approximately $430,000 of
Innovative's obligations to the Company were extinguished, which represented the
difference between net book value and amounts outstanding under existing
mortgages prior to the transfer.
On September 3, 1999, the Board of Directors of the Company unanimously
agreed that it would be in the best interest of the Company and its shareholders
to enter into an Agreement And Plan of Reorganization with Nutriceuticals.com
Corporation ("Nutriceuticals") to sell all of the shares of capital stock of
Becan Distributors, Inc., a wholly-owned subsidiary of the Company, to
Nutriceuticals, to further certain of its business objectives, including without
limitation, providing additional working capital to the Company.
On September 8, 1999, the Company entered into such agreement, whereby
the Company agreed to exchange all of the issued and outstanding shares of stock
of Becanto Nutriceuticals for $2,000,000 in cash and 4,000,000 shares of voting
common stock, $.001 par value, of Nutriceuticals. Additional consideration of
2,000,000 shares of common stock, $.001 par value, of Nutriceuticals, which
shares shall be placed in escrow pursuant to an escrow agreement, and which
shares would be issuable at a future date to the Company upon the attainment by
Becan of certain projected revenues and gross margins for the fiscal years
ending March 31, 2000 and 2001. The number of shares of Nutriceuticals common
stock shall be reduced by 50% after the effective time of a one-for-two reverse
split of the common stock of Nutriceuticals. The closing is subject to the
success of a secondary public offering of Nutriceuticals common stock. The
number of shares of Nutriceuticals common stock to be issued by Nutriceuticals
in consideration of the shares of Becan common stock was determined based upon
the relative estimated value of each of the companies. In addition, on October
4, 1999, the Company entered into a Third Party Pledge Agreement with First
Community Bank of America, which provides a security interest and collateral, in
the form of the Company's Certificate of Deposit with First Community Bank of
America, in the amount of $500,000, as collateral for a Line of Credit Agreement
executed by and for the benefit of Nutriceuticals.
YEAR 2000 STATEMENT
The Year 2000 issue encompasses the required recognition of computer
hardware and software systems and computer controlled devices, including
equipment, used in the Company's distribution and manufacturing operations to
properly acknowledge the change from Year 1999 to Year 2000. The failure of any
hardware and software systems or equipment to timely and accurately recognize
such change could result in partial or complete systems failure.
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<PAGE>
In the normal course of business, the Company relies on products and
services from critical vendors, customers and other third parties whose computer
systems must also be Year 2000 compliant in order for the Company to realize the
uninterrupted flow of its business operations. The Company is actively taking
steps to ensure that its systems and equipment will be Year 2000 compliant,
including assessing the scope of work, prioritizing, certifying compliance, and
testing compliance.
The Company has identified those systems and equipment in its
operations that are considered to be critical to the Company's day to day
operations. All of the Company's systems and equipment utilized in its
operations was tested for Year 2000 compliance during February and March 1999,
with approximately 95% of such systems and equipment being certified as Year
2000 compliant as of September 30, 1999. The Company is in the process of
obtaining written assurances from its third-party software providers that the
software used by the Company is Year 2000 compliant. In addition, the Company is
actively seeking assurances of Year 2000 compliance from each of its key
suppliers, customers and other third parties with whom the Company conducts
business. A lack of response or inadequate or inaccurate information from such
third parties could materially affect the Company's assessment for Year 2000
readiness. Until assessments are completed, the Company cannot predict whether
the failure of any such third party to be Year 2000 compliant will have a
material adverse effect on the Company's business.
To date, the costs incurred by the Company to address Year 2000 issues
have been immaterial, and the Company expects that the costs to complete Year
2000 compliance certification, testing and verifications will also be
immaterial. Where appropriate, the Company will develop contingency plans in
areas it determines that Year 2000 readiness is insufficient. However, no
assurances can be given that the Company's Year 2000 efforts are appropriate,
adequate, or complete. In addition, the Company is unable to fully determine the
effect of a failure of its own systems or those of any third party with whom it
conducts business, but any significant failures could have a material adverse
effect on the Company's financial condition, results of operations and cash
flows.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time the Company is subject to litigation incidental to
its business. Such claims, if successful, could exceed applicable insurance
coverage. The Company is not currently a party to any material legal
proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. - Not applicable.
ITEM 4. - Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
The following exhibits are filed with this report:
2.1 Agreement And Plan Of Reorganization by and between Nutriceuticals.com
Corporation and Dynamic Health Products, Inc. dated September 8, 1999.
(1)
3.1 Articles of Incorporation of Dynamic Life, Inc., filed May 6, 1999.
10.1 Note and Mortgage in favor of GE Capital Small Business Finance
Corporation from the Company, dated September 13, 1999.
10.2 Third Party Pledge Agreement in favor of First Community Bank of
America from the Company, dated October 4, 1999.
27.1 Financial Data Schedule (for SEC use only).
(1) Incorporated by reference to the Company's Current Report on
Form 8-K, dated September 14, 1999, file number 0-23031, filed in
Washington, D.C.
- 13 -
<PAGE>
(b) REPORTS ON FORM 8-K.
During the six months ended September 30, 1999, the Company filed two
reports on Form 8-K.
Form 8-K dated April 29, 1999, with respect to a change in the
Company's certifying accountants to Grant Thornton LLP, for the fiscal year
ended March 31, 1999.
Form 8-K dated September 14, 1999, with respect to the Company entering
into an Agreement and Plan of Reorganization on September 8, 1999, to sell all
of the shares of capital stock of Becan Distributors, Inc., a wholly-owned
subsidiary of the Company, to Nutriceuticals.com Corporation.
- 14 -
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DYNAMIC HEALTH PRODUCTS, INC.
Date: November 12, 1999 By: /s/ WILLIAM L. LAGAMBA
----------------------------
William L. LaGamba
Chief Executive Officer,
Secretary, and Director
Date: November 12, 1999 By: /s/ CAROL DORE-FALCONE
----------------------------
Carol Dore-Falcone
Chief Financial Officer and
Vice President
- 15 -
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
3.1 Articles of Incorporation of Dynamic Life, Inc., filed May 6, 1999.
10.1 Note and Mortgage in favor of GE Capital Small Business Finance
Corporation from the Company, dated September 13, 1999.
10.2 Third Party Pledge Agreement in favor of First Community Bank of
America from the Company, dated October 4, 1999.
27.1 Financial Data Schedule (for SEC use only).
EXHIBIT 3.1
[SEAL]
FLORIDA DEPARTMENT OF STATE
Katherine Harris
Secretary of State
May 8, 1999
DYNAMIC LIFE, INC.
6950 BRYAN DAIRY ROAD
LARGO, FL 33777
The Articles of Incorporation for DYNAMIC LIFE, INC. were filed on May __, 1999,
and assigned document number P99000041084. Please refer to this number whenever
corresponding with this office.
This document was electronically received and filed under FAX audit number
B99000010833.
A corporation annual report will be due this office between January 1 and May __
of the year following the calendar year of the file date. A Federal Employer
Identification (FEI) number will be required before this report can be filed.
Please apply NOW with the Internal Revenue Service by calling 1-800-829-3676 and
requesting form SS-4.
Please be aware if the corporate address changes, it is the responsibility of
the corporation to notify this office.
Should you have any questions regarding corporations, please contact this office
at the address given below.
Sincerely,
Becky McKnight
Document Specialist
New Filings Section
Division of Corporations Letter Number: 499A00024778
Division of Corporations - P.O. Box 6327 - Tallahassee, Florida 32314
<PAGE>
H99000010838 3
ARTICLES OF INCORPORATION
OF
DYNAMIC LIFE, INC.
ARTICLE I - NAME AND MAILING ADDRESS
The name of this corporation is Dynamic Life, Inc. and the mailing address
of this corporation is 6950 Bryan Dairy Road, Largo, FL 33777.
ARTICLE II - DURATION; EFFECTIVE DATE
This corporation shall have perpetual existence, commencing upon the filing
of these Articles of Incorporation.
ARTICLE III - CAPITAL STOCK
The maximum number of shares this corporation is authorized to issue is One
Thousand (1,000), each of which shall be $.001 par value per share common stock.
ARTICLE IV - INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of this corporation is
100 North Tampa Street, Suite 1800, Tampa, Florida 33602, and the name of the
initial registered agent of this corporation at that address is Philip M.
Shasteen.
ARTICLE V - INCORPORATOR
The name and address of the person signing these Articles of Incorporation
is Philip M. Shasteen, 100 North Tampa Street, Suite 1800, Tampa, Florida 33602.
Prepared by:
Philip M. Shasteen, Esq.
100 N. Tampa St., Ste. 1800
Tampa, FL 33602
813-225-2500
Florida Bar Number: 0194712
H99000010838 3
<PAGE>
H99000010838 3
ARTICLE VI - INDEMNIFICATION
The corporation shall indemnify any officer or director, or any former
officer or director, to the fullest extent permitted by law.
ARTICLE VII - AMENDMENT
This corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation, or any amendment thereto, and any
right conferred upon the shareholders is subject to this reservation.
IN WITNESS WHEREOF, the undersigned incorporator has executed these Articles of
Incorporation this __ day of May, 1999.
/s/ PHILIP M. SHASTEEN
--------------------------------------
Philip M. Shasteen
INCORPORATOR
2
H99000010838 3
<PAGE>
H99000010838 3
CERTIFICATE DESIGNATING REGISTERED AGENT
AND STREET ADDRESS FOR SERVICE OF PROCESS
WITHIN FLORIDA
Pursuant to Florida Statutes Section 48.091, Dynamic Life, Inc. desiring to
organize under the laws of the State of Florida, hereby designates Philip M.
Shasteen, 100 North Tampa Street, Suite 1800, Tampa, Florida 33602, as its
registered agent to accept service of process within the State of Florida.
ACCEPTANCE OF DESIGNATION
The undersigned hereby accepts the above designation as registered agent to
accept service of process for the above-named corporation, at the place
designated above, and agrees to comply with the provisions of Florida Statutes
Section 48.091(2) relative to maintaining an office for the service of process.
/s/ PHILIP M. SHASTEEN
--------------------------------------
Philip M. Shasteen
3
H99000010838 3
WHEN RECORDED MAIL TO:
GE Capital Small Business Finance Corporation
635 Maryville Centre Drive
Suite # 120
St. Louis, MO 63141
- --------------------------------------------------------------------------------
This Mortgage prepared by:
Name: Tammy Ziegelmeyer, Loan Doc. Specialist
Company: GE Capital Small Business Finance Corp.
Address: 635 Maryville Centre Drive, Ste. 120, St. Louis, MO 63141
- --------------------------------------------------------------------------------
MORTGAGE
THIS MORTGAGE IS DATED SEPTEMBER 13, 1999, BETWEEN DYNAMIC HEALTH PRODUCTS,
INC., A FLORIDA CORPORATION**, WHOSE ADDRESS IS 6950 BRYAN DAIRY ROAD, LARGO, FL
33777 (REFERRED TO BELOW AS "GRANTOR"); AND GE CAPITAL SMALL BUSINESS FINANCE
CORPORATION, WHOSE ADDRESS IS 635 MARYVILLE CENTRE DRIVE, SUITE # 120, ST.
LOUIS, MO 63141 (REFERRED TO BELOW AS "LENDER"). ** FORMERLY KNOWN AS ENERGY
FACTORS, INC.
GRANT OF MORTGAGE. For valuable consideration, Grantor mortgages to Lender all
of Grantor's right, title, and interest in and to the following described real
property, together with all existing or subsequently erected or affixed
buildings, improvements and fixtures; all easements, rights of way, and
appurtenances; all water, water rights, watercourses and ditch rights (including
stock in utilities with ditch or irrigation rights); and all other rights,
royalties, and profits relating to the real property, including without
limitation all minerals, oil, gas, geothermal and similar matters, LOCATED IN
PINELLAS COUNTY, STATE OF FLORIDA (THE "REAL PROPERTY"):
SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE.
THE REAL PROPERTY OR ITS ADDRESS IS COMMONLY KNOWN AS 6950 BRYAN DAIRY ROAD,
LARGO, FL 33777.
Grantor presently assigns to Lender all of Grantor's right, title, and interest
in and to all leases of the Property and all Rents from the Property. In
addition, Grantor grants to Lender a Uniform Commercial Code security interest
in the Personal Property and Rents.
DEFINITIONS. The following words shall have the following meanings when used in
this Mortgage. Terms not otherwise defined in this Mortgage shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
GRANTOR. The word "Grantor" means DYNAMIC HEALTH PRODUCTS, INC. The
Grantor is the mortgagor under this Mortgage.
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
IMPROVEMENTS. The word "Improvements" means and includes without limitation
all existing and future improvements, buildings, structures, mobile homes
affixed on the Real Property, facilities, additions, replacements and other
construction on the Real Property.
INDEBTEDNESS. The word "Indebtedness" means all principal and interest
payable under the Note and any amounts expended or advanced by Lender to
discharge obligations of Grantor or expenses incurred by Lender to enforce
obligations of Grantor under this Mortgage, together with interest on such
amounts as provided in this Mortgage. In addition to the Note, the word
"Indebtedness" includes all obligations, debts and liabilities, plus
interest thereon, of Grantor to Lender, or any one or more of them, as well
as all claims by Lender against Grantor, or any one or more of them,
whether now existing or hereafter arising, whether related or unrelated to
the purpose of the Note, whether voluntary or otherwise, whether due or not
due, absolute or contingent, liquidated or unliquidated and whether Grantor
may be liable individually or jointly with others, whether obligated as
guarantor or otherwise, and whether recovery upon such indebtedness may be
or hereafter may become barred by any statute of limitations, and whether
such Indebtedness may be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means GE Capital Small Business Finance
Corporation, its successors and assigns. The Lender is the mortgagee under
this Mortgage.
MORTGAGE. The word "Mortgage" means this Mortgage between Grantor and
Lender, and includes without limitation all assignments and security
interest provisions relating to the Personal Property and Rents.
NOTE. The word "Note" means the promissory note or credit agreement dated
September 13, 1999, IN THE ORIGINAL PRINCIPAL AMOUNT OF $880,000.00 from
Grantor to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement. The final maturity date of the Note is
October 1, 2024. NOTICE TO GRANTOR: THE NOTE CONTAINS A VARIABLE INTEREST
RATE.
PERSONAL PROPERTY. The words "Personal Property" mean all equipment,
fixtures, and other articles of personal property now or hereafter owned by
Grantor, and now or hereafter attached or affixed to the Real Property;
together with all accessions, parts, and additions to, all replacements of,
and all substitutions for, any of such property; and together with all
proceeds (including without limitation all insurance proceeds and refunds
of premiums) from any sale or other disposition of the Property.
PROPERTY. The word "Property" means collectively the Real Property and the
Personal Property.
<PAGE>
09-13-1999 MORTGAGE PAGE 2
LOAN NO 3109254008 (CONTINUED)
================================================================================
REAL PROPERTY. The words "Real Property" mean the property, interests and
rights described above in the "Grant of Mortgage" section.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
RENTS. The word "Rents" means all present and future rents, revenues,
income, issues, royalties, profits, and other benefits derived from the
Property.
THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN
THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (1) PAYMENT OF THE
INDEBTEDNESS AND (2) PERFORMANCE OF ALL OBLIGATIONS OF GRANTOR UNDER THIS
MORTGAGE AND THE RELATED DOCUMENTS. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE
FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Mortgage, Grantor
shall pay to Lender all amounts secured by this Mortgage as they become due, and
shall strictly perform all of Grantor's obligations under this Mortgage.
POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantor's
possession and use of the Property shall be governed by the following
provisions:
POSSESSION AND USE. Until Grantor's interest in any or all of the Property
is foreclosed, Grantor may remain in possession and control of and operate
and manage the Property and collect the Rents from the Property.
DUTY TO MAINTAIN. Grantor shall maintain the Property in tenantable
condition and promptly perform all repairs, replacements, and maintenance
necessary to preserve its value.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Mortgage,
shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. The terms "hazardous waste" and
"hazardous substance" shall also include, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos. Grantor
represents and warrants to Lender that: (a) During the period of Grantor's
ownership of the Property, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any
hazardous waste or substance by any person on, under, about or from the
Property; (b) Grantor has no knowledge of, or reason to believe that there
has been, except as previously disclosed to and acknowledged by Lender in
writing, (i) any use, generation, manufacture, storage, treatment,
disposal, release, or threatened release of any hazardous waste or
substance on, under, about or from the Property by any prior owners or
occupants of the Property or (ii) any actual or threatened litigation or
claims of any kind by any person relating to such matters; and (c) Except
as previously disclosed to and acknowledged by Lender in writing, (i)
neither Grantor nor any tenant, contractor, agent or other authorized user
of the Property shall use, generate, manufacture, store, treat, dispose of,
or release any hazardous waste or substance on, under, about or from the
Property and (ii) any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations and ordinances,
including without limitation those laws, regulations, and ordinances
described above. Grantor authorizes Lender and its agents to enter upon the
Property to make such inspections and tests, at Grantor's expense, as
Lender may deem appropriate to determine compliance of the Property with
this section of the Mortgage. Any inspections or tests made by Lender shall
be for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Grantor or to any
other person. The representations and warranties contained herein are based
on Grantor's due diligence in investigating the Property for hazardous
waste and hazardous substances. Grantor hereby (a) releases and waives any
future claims against Lender for indemnity or contribution in the event
Grantor becomes liable for cleanup or other costs under any such laws, and
(b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Mortgage or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the properties. The provisions of this
section of the Mortgage, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the satisfaction and
reconveyance of the lien of this Mortgage and shall not be affected by
Lenders acquisition of any interest in the Property, whether by foreclosure
or otherwise.
NUISANCE, WASTE. Grantor shall not cause, conduct or permit any nuisance
nor commit, permit, or suffer any stripping of or waste on or to the
Property or any portion of the Property. Without limiting the generality of
the foregoing, Grantor will not remove, or grant to any other party the
right to remove, any timber, minerals (including oil and gas), soil, gravel
or rock products without the prior written consent of Lender.
REMOVAL OF IMPROVEMENTS. Grantor shall not demolish or remove any
Improvements from the Real Property without the prior written consent of
Lender. As a condition to the removal of any Improvements, Lender may
require Grantor to make arrangements satisfactory to Lender to replace such
Improvements with Improvements of at least equal value.
SUBSEQUENT LIENS. Grantor shall not allow any subsequent liens or mortgages
on all or any portion of the Property without the prior written consent of
Lender.
LENDER'S RIGHT TO ENTER. Lender and its agents and representatives may
enter upon the Real Property at all reasonable times to attend to Lender's
interests and to inspect the Property for purposes at Grantor's compliance
with the terms and conditions of this Mortgage.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall promptly comply
with all laws, ordinances, and regulations, now or hereafter in effect, of
all governmental authorities applicable to the use or occupancy of the
Property, including without limitation, the Americans With Disabilities
Act. Grantor may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Grantor has notified Lender in writing
prior to doing so and so long as, in Lenders sole opinion, Lender's
interests in the Property are not jeopardized. Lender may require Grantor
to post adequate security or a surety bond, reasonably satisfactory to
Lender, to protect Lender's interest.
DUTY TO PROTECT. Grantor agrees neither to abandon nor leave unattended the
Property. Grantor shall do all other acts, in addition to those acts set
forth above in this section, which from the character and use of the
Property are reasonably necessary to protect and preserve the Property.
<PAGE>
09-13-1999 MORTGAGE PAGE 3
LOAN NO 3109254008 (CONTINUED)
================================================================================
DUE ON SALE - CONSENT BY LENDER. Lender may, at its option, declare immediately
due and payable all sums secured by this Mortgage upon the sale or transfer,
without the Lender's prior written consent, of all or any part of the Real
Property, or any interest in the Real Property. A "sale or transfer" means the
conveyance of Real Property or any right, title or interest therein; whether
legal, beneficial or equitable; whether voluntary or involuntary; whether by
outright sale, deed, installment sale contract, land contract, contract for
deed, leasehold interest with a term greater than three (3) years, lease-option
contract, or by sale, assignment, or transfer of any beneficial interest in or
to any land trust holding title to the Real Property, or by any other method of
conveyance of Real Property interest. If any Grantor is a corporation,
partnership or limited liability company, transfer also includes any change in
ownership of more than twenty-five percent (25%) of the voting stock,
partnership interests or limited liability company interests, as the case may
be, of Grantor. However, this option shall not be exercised by Lender if such
exercise is prohibited by federal law or by Florida law.
TAXES AND LIENS. The following provisions relating to the taxes and liens on the
Property are a part of this Mortgage.
PAYMENT. Grantor shall pay when due (and in all events prior to
delinquency) all taxes, payroll taxes, special taxes, assessments, water
charges and sewer service charges levied against or on account of the
Property, and shall pay when due all claims for work done on or for
services rendered or material furnished to the Property. Grantor shall
maintain the Property free of all liens having priority over or equal to
the interest of Lender under this Mortgage, except for the lien of taxes
and assessments not due, and except as otherwise provided in the following
paragraph.
RIGHT TO CONTEST. Grantor may withhold payment of any tax, assessment, or
claim in connection with a good faith dispute over the obligation to pay,
so long as Lender's interest in the Property is not jeopardized. If a lien
arises or is filed as a result of nonpayment, Grantor shall within fifteen
(15) days after the lien arises or, If a lien is filed, within fifteen (15)
days after Grantor has notice of the filing, secure the discharge of the
lien, or if requested by Lender, deposit with Lender cash or a sufficient
corporate surety bond or other security satisfactory to Lender in an amount
sufficient to discharge the lien plus any costs and reasonable attorneys'
fees or other charges that could accrue as a result of a foreclosure or
sale under the lien. In any contest, Grantor shall defend itself and Lender
and shall satisfy any adverse judgment before enforcement against the
Property. Grantor shall name Lender as an additional obligee under any
surety bond furnished in the contest proceedings.
EVIDENCE OF PAYMENT. Grantor shall upon demand furnish to Lender
satisfactory evidence of payment of the taxes or assessments and shall
authorize the appropriate governmental official to deliver to Lender at any
time a written statement of the taxes and assessments against the Property.
NOTICE OF CONSTRUCTION. Grantor shall notify Lender at least fifteen (15)
days before any work is commenced, any services are furnished, or any
materials are supplied to the Property, if any mechanic's lien,
materialmen's lien, or other lien could be asserted on account of the work,
services, or materials. Grantor will upon request of Lender furnish to
Lender advance assurances satisfactory to Lender that Grantor can and will
pay the cost of such improvements.
PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the
Property are a part of this Mortgage.
MAINTENANCE OF INSURANCE. Grantor shall procure and maintain policies of
fire insurance with standard extended coverage endorsements on a
replacement basis for the full insurable value covering all Improvements on
the Real Property in an amount sufficient to avoid application of any
coinsurance clause, and with a standard mortgagee clause in favor of
Lender. Grantor shall also procure and maintain comprehensive general
liability insurance in such coverage amounts as Lender may request with
Lender being named as additional insureds in such liability insurance
policies. Additionally, Grantor shall maintain such other insurance,
including but not limited to hazard, business interruption and boiler
insurance as Lender may require. Policies shall be written by such
insurance companies and in such form as may be reasonably acceptable to
Lender. Grantor shall deliver to Lender certificates of coverage from each
insurer containing a stipulation that coverage will not be cancelled or
diminished without a minimum of ten (10) days' prior written notice to
Lender and not containing any disclaimer of the insurer's liability for
failure to give such notice. Each insurance policy also shall include an
endorsement providing that coverage In favor of Lender will not be impaired
in any way by any act, omission or default of Grantor or any other person.
Should the Real Property at any time become located in an area designated
by the Director of the Federal Emergency Management Agency as a special
flood hazard area, Grantor agrees to obtain and maintain Federal Flood
Insurance for the full unpaid principal balance of the loan and any prior
liens on the property securing the loan, up to the maximum policy limits
set under the National Flood Insurance Program, or as otherwise required by
Lender, and to maintain such insurance for the term of the loan.
APPLICATION OF PROCEEDS. Grantor shall promptly notify Lender of any loss
or damage to the Property. Lender may make proof of loss if Grantor fails
to do so within fifteen (15) days of the casualty. Whether or not Lender's
security is impaired, Lender may, at its election, apply the proceeds to
the reduction of the Indebtedness, payment of any lien affecting the
Property, or the restoration and repair of the Property. If Lender elects
to apply the proceeds to restoration and repair, Grantor shall repair or
replace the damaged or destroyed Improvements in a manner satisfactory to
Lender. Lender shall, upon satisfactory proof of such expenditure, pay or
reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration if Grantor is not in default under this Mortgage. Any proceeds
which have not been disbursed within 180 days after their receipt and which
Lender has not committed to the repair or restoration of the Property shall
be used first to pay any amount owing to Lender under this Mortgage, then
to pay accrued interest, and the remainder, if any, shall be applied to the
principal balance of the Indebtedness. If Lender holds any proceeds after
payment in full of the Indebtedness, such proceeds shall be paid to
Grantor.
UNEXPIRED INSURANCE AT SALE. Any unexpired insurance shall inure to the
benefit of, and pass to, the purchaser of the Property covered by this
Mortgage at any trustee's sale or other sale held under the provisions of
this Mortgage, or at any foreclosure sale of such Property.
GRANTOR'S REPORT ON INSURANCE. Upon request of Lender, however not more
than once a year, Grantor shall furnish to Lender a report on each existing
policy of insurance showing: (a) the name of the insurer; (b) the risks
Insured; (c) the amount of the policy; (d) the property insured, the then
current replacement value of such property, and the manner of determining
that value; and (e) the expiration date of the policy. Grantor shall, upon
request of Lender, have an independent appraiser satisfactory to Lender
determine the cash value replacement cost of the Property.
EXPENDITURES BY LENDER. If Grantor fails to comply with any provision of this
Mortgage, or if any action or proceeding is commenced that would materially
affect Lender's interests in the Property, Lender on Grantor's behalf may, but
shall not be required to, take any action that Lender deems appropriate. Any
amount that Lender expends in so doing will bear interest at the rate provided
for in the Note from the date incurred or paid by Lender to the date of
repayment by Grantor. All such expenses, at Lender's option, will (a) be payable
on demand, (b) be added to the balance of the Note and be apportioned among and
be payable with any installment payments to become due during either (i) the
term of any applicable insurance policy or (ii) the remaining term of the Note,
or (c) be treated as a balloon payment which will be due and payable at the
Note's maturity. This Mortgage also will secure payment of these amounts. The
rights provided for in this paragraph shall be in addition to any other rights
or any remedies to which Lender may be entitled on account of the default. Any
such action by Lender shall not be construed as curing the default so as to bar
Lender
<PAGE>
09-13-1999 MORTGAGE PAGE 4
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================================================================================
from any remedy that It otherwise would have had.
WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of
the Property are a part of this Mortgage.
TITLE. Grantor warrants that: (a) Grantor holds good and marketable title
of record to the Property in fee simple, free and clear of all liens and
encumbrances other than those set forth in the Real Property description or
in any title insurance policy, title report, or final title opinion issued
in favor of, and accepted by, Lender in connection with this Mortgage, and
(b) Grantor has the full right, power, and authority to execute and deliver
this Mortgage to Lender.
DEFENSE OF TITLE. Subject to the exception in the paragraph above, Grantor
warrants and will forever defend the title to the Property against the
lawful claims of all persons. In the event any action or proceeding is
commenced that questions Grantor's title or the interest of Lender under
this Mortgage, Grantor shall defend the action at Grantor's expense.
Grantor may be the nominal party in such proceeding, but Lender shall be
entitled to participate in the proceeding and to be represented in the
proceeding by counsel of Lender's own choice, and Grantor will deliver, or
cause to be delivered, to Lender such instruments as Lender may request
from time to time to permit such participation.
COMPLIANCE WITH LAWS. Grantor warrants that the Property and Grantor's use
of the Property complies with all existing applicable laws, ordinances, and
regulations of governmental authorities, including without limitation all
applicable environmental laws, ordinances, and regulations, unless
otherwise specifically excepted in the environmental agreement executed by
Grantor and Lender relating to the Property.
CONDEMNATION, The following provisions relating to condemnation of the Property
are a part of this Mortgage.
APPLICATION OF NET PROCEEDS. If all or any part of the Property is
condemned by eminent domain proceedings or by any proceeding or purchase in
lieu of condemnation, Lender may at its election require that all or any
portion of the net proceeds of the award be applied to the Indebtedness or
the repair or restoration of the Property. The net proceeds of the award
shall mean the award after payment of all reasonable costs, expenses, and
attorneys' fees incurred by Lender in connection with the condemnation.
PROCEEDINGS. If any proceeding in condemnation is filed, Grantor shall
promptly notify Lender in writing, and Grantor shall promptly take such
steps as may be necessary to defend the action and obtain the award.
Grantor may be the nominal party in such proceeding, but Lender shall be
entitled to participate in the proceeding and to be represented in the
proceeding by counsel of its own choice, and Grantor will deliver or cause
to be delivered to Lender such instruments as may be requested by it from
time to time to permit such participation.
IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following
provisions relating to governmental taxes, fees and charges are a part of this
Mortgage:
CURRENT TAXES, FEES AND CHARGES. Upon request by Lender, Grantor shall
execute such documents in addition to this Mortgage and take whatever other
action is requested by Lender to perfect and continue Lender's lien on the
Real Property. Grantor shall reimburse Lender for all taxes, as described
below, together with all expenses incurred in recording, perfecting or
continuing this Mortgage, including without limitation all intangible
personal property taxes, documentary stamp taxes, fees, and other charges
for recording or registering this Mortgage.
TAXES. The following shall constitute taxes to which this section applies:
(a) a specific tax, including without limitation an intangible personal
property tax, upon this type of Mortgage or upon all or any part of the
Indebtedness secured by this Mortgage; (b) a specific tax on Grantor which
Grantor is authorized or required to deduct from payments on the
Indebtedness secured by this type of Mortgage; (c) a tax on this type of
Mortgage chargeable against the Lender or the holder of the Note; and (d) a
specific tax on all or any portion of the Indebtedness or on payments of
principal and interest made by Grantor.
SUBSEQUENT TAXES. If any tax to which this section applies is enacted
subsequent to the date of this Mortgage, this event shall have the same
effect as an Event of Default (as defined below), and Lender may exercise
any or all of its available remedies for an Event of Default as provided
below unless Grantor either (a) pays the tax before it becomes delinquent,
or (b) contests the tax as provided above in the Taxes and Liens section
and deposits with Lender cash or a sufficient corporate surety bond or
other security satisfactory to Lender.
SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to
this Mortgage as a security agreement are a part of this Mortgage.
SECURITY AGREEMENT. This instrument shall constitute a security agreement
to the extent any of the Property constitutes fixtures or other personal
property, and Lender shall have all of the rights of a secured party under
the Uniform Commercial Code as amended from time to time.
SECURITY INTEREST. Upon request by Lender, Grantor shall execute financing
statements and take whatever other action is requested by Lender to perfect
and continue Lender's security interest in the Rents and Personal Property.
In addition to recording this Mortgage in the real property records, Lender
may, at any time and without further authorization from Grantor, file
executed counterparts, copies or reproductions of this Mortgage as a
financing statement. Grantor shall reimburse Lender for all expenses
incurred in perfecting or continuing this security interest. Upon default,
Grantor shall assemble the Personal Property in a manner and at a place
reasonably convenient to Grantor and Lender and make it available to Lender
within three (3) days after receipt of written demand from Lender.
ADDRESSES. The mailing addresses of Grantor (debtor) and Lender (secured
party), from which information concerning the security interest granted by
this Mortgage may be obtained (each as required by the Uniform Commercial
Code), are as stated on the first page of this Mortgage.
FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to
further assurances and attorney-in-fact are a part of this Mortgage.
FURTHER ASSURANCES. At any time, and from time to time, upon request of
Lender, Grantor will make, execute and deliver, or will cause to be made,
executed or delivered, to Lender or to Lenders designee, and when requested
by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case
may be, at such times and in such offices and places as Lender may deem
appropriate, any and all such mortgages, deeds of trust, security deeds,
security agreements, financing statements, continuation statements,
instruments of further assurance, certificates, and other documents as may,
in the sole opinion of Lender, be necessary or desirable in order to
effectuate, complete, perfect, continue, or preserve (a) the obligations of
Grantor under the Note, this Mortgage, and the Related Documents, and (b)
the liens and security interests created by this Mortgage as first and
prior liens on the Property, whether now owned or hereafter acquired by
Grantor. Unless prohibited by law or agreed to the contrary by Lender in
writing, Grantor shall reimburse Lender for all costs and expenses incurred
in connection with the matters referred to in this paragraph.
<PAGE>
09-13-1999 MORTGAGE PAGE 5
LOAN NO 3109254008 (CONTINUED)
================================================================================
ATTORNEY-IN-FACT. If Grantor fails to do any of the things referred to in
the preceding paragraph, Lender may do so for and in the name of Grantor
and at Grantor's expense. For such purposes, Grantor hereby irrevocably
appoints Lender as Grantor's attorney-in-fact for the purpose of making,
executing, delivering, filing, recording, and doing all other things as may
be necessary or desirable, in Lenders sole opinion, to accomplish the
matters referred to in the preceding paragraph.
FULL PERFORMANCE. If Grantor pays, all the Indebtedness when due, and otherwise
performs all the obligations imposed upon Grantor under this Mortgage, Lender
shall execute and deliver to Grantor a suitable satisfaction of this Mortgage
and suitable statements of termination of any financing statement on fife
evidencing Lenders security interest in the Rents and the Personal Property.
Grantor will pay, if permitted by applicable law, any reasonable termination fee
as determined by Lender from time to time.
DEFAULT. Each of the following, at the option of Lender, shall constitute an
event of default ("Event of Default") under this Mortgage:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due on
the Indebtedness.
DEFAULT ON OTHER PAYMENTS. Failure of Grantor within the time required by
this Mortgage to make any payment for taxes or insurance, or any other
payment necessary to prevent filing of or to effect discharge of any lien.
ENVIRONMENTAL DEFAULT. Failure of any party to comply with or perform when
due any term, obligation, covenant or condition contained in any
environmental agreement executed in connection with the Property.
COMPLIANCE DEFAULT. Failure of Grantor to comply with any other term,
obligation, covenant or condition contained in this Mortgage, the Note or
in any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Mortgage, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Mortgage or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
FORECLOSURE, FORFEITURE, ETC. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency
against any of the Property. However, this subsection shall not apply in
the event of a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the foreclosure or
forefeiture proceeding, provided that Grantor gives Lender written notice
of such claim and furnishes reserves or a surety bond for the claim
satisfactory to Lender.
BREACH OF OTHER AGREEMENT. Any breach by Grantor under the terms of any
other agreement between Grantor and Lender that is not remedied within any
grace period provided therein, including without limitation any agreement
concerning any indebtedness or other obligation of Grantor to Lender,
whether existing now or later.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness.
ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default and
at any time thereafter, Lender, at its option, may exercise any one or more of
the following rights and remedies, in addition to any other rights or remedies
provided by law:
ACCELERATE INDEBTEDNESS. Lender shall have the right at its option without
notice to Grantor to declare the entire Indebtedness immediately due and
payable, including any prepayment penalty which Grantor would be required
to pay.
UCC REMEDIES. With respect to all or any part of the Personal Property,
Lender shall have all the rights and remedies of a secured party under the
Uniform Commercial Code.
JUDICIAL FORECLOSURE. Lender may obtain a judicial decree foreclosing
Grantor's interest in all or any part of the Property.
DEFICIENCY JUDGMENT. If permitted by applicable law, Lender may obtain a
judgment for any deficiency remaining in the Indebtedness due to Lender
after application of all amounts received from the exercise of the rights
provided in this section.
TENANCY AT SUFFERANCE. If Grantor remains in possession of the Property
after the Property is sold as provided above or Lender otherwise becomes
entitled to possession of the Property upon default of Grantor, Grantor
shall become a tenant at sufferance of Lender or the purchaser of the
Property and shall, at Lenders option, either (a) pay a reasonable rental
for the use of the Property, or (b) vacate the Property immediately upon
the demand of Lender.
OTHER REMEDIES. Lender shall have all other rights and remedies provided in
this Mortgage or the Note or available at law or in equity.
SALE OF THE PROPERTY. To the extent permitted by applicable law, Grantor
hereby waives any and all right to have the property marshalled. In
exercising its rights and remedies, Lender shall be free to sell all or any
part of the Property together or separately, in one sale or by separate
sales. Lender shall be entitled to bid at any public sale on all or any
portion of the Property.
NOTICE OF SALE. Lender shall give Grantor reasonable notice of the time and
place of any public sale of the Personal Property or of the time after
which any private sale or other intended disposition of the Personal
Property is to be made. Reasonable notice shall mean notice given at least
ten (10) days before the time of the sale or disposition.
WAIVER; ELECTION OF REMEDIES. A waiver by any party of a breach of a
provision of this Mortgage shall not constitute a waiver of or prejudice
the party's rights otherwise to demand strict compliance with that
provision or any other provision. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or take action to perform an obligation of Grantor under this
Mortgage
<PAGE>
09-13-1999 MORTGAGE PAGE 6
LOAN NO 3109254008 (CONTINUED)
================================================================================
after failure of Grantor to perform shall not affect Lender's right to
declare a default and exercise its remedies under this Mortgage.
ATTORNEYS' FEES; EXPENSES. If Lender institutes any suit or action to
enforce any of the terms of this Mortgage, Lender shall be entitled to
recover such sum as the court may adjudge reasonable as reasonable
attorneys' fees at trial and on any appeal. Whether or not any court action
is involved, all reasonable expenses incurred by Lender that in Lender's
opinion are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the Indebtedness payable
on demand and shall bear interest from the date of expenditure until repaid
at the rate provided for in the Note. Expenses covered by this paragraph
include, without limitation, however subject to any limits under applicable
law, Lender's reasonable attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including reasonable attorneys' fees for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals and any anticipated post-judgment collection
services, the cost of searching records, obtaining title reports (including
foreclosure reports), surveyors' reports, and appraisal fees, and title
insurance, to the extent permitted by applicable law. Grantor also will pay
any court costs, in addition to all other sums provided by law.
NOTICES TO GRANTOR AND OTHER PARTIES. Any notice under this Mortgage, including
without limitation any notice of default and any notice of sale, may be given
manually or by mail or courier service. Notice given by registered or certified
mail is deemed given when deposited in the United States mail, properly directed
to the intended recipient's address shown near the beginning of this Mortgage
and with postage fully prepaid. Notice otherwise given is deemed given when
actually received by the recipient or when delivered to the address to which
properly sent. Any party may change its address for notices under this Mortgage
by giving written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. For notice purposes, Grantor agrees
to keep Lender informed at all times of Grantor's current address. If more than
one person constitutes Grantor, notice given to either or any of them is deemed
given to both or all of them.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Mortgage:
AMENDMENTS. This Mortgage, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Mortgage. No alteration of or amendment to this Mortgage
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
ANNUAL REPORTS. If the Property is used for purposes other than Grantor's
residence, Grantor shall furnish to Lender, upon request, a certified
statement of net operating income received from the Property during
Grantor's previous fiscal year in such form and detail as Lender shall
require. "Net operating income" shall mean all cash receipts from the
Property less all cash expenditures made in connection with the operation
of the Property.
APPLICABLE LAW. THE LOAN SECURED BY THIS LIEN WAS MADE UNDER A UNITED
STATES SMALL BUSINESS ADMINISTRATION (SBA) NATIONWIDE PROGRAM WHICH USES
TAX DOLLARS TO ASSIST SMALL BUSINESS OWNERS. IF THE UNITED STATES IS
SEEKING TO ENFORCE THIS DOCUMENT, THEN UNDER SBA REGULATIONS: (A) WHEN SBA
IS THE HOLDER OF THE NOTE, THIS DOCUMENT AND ALL DOCUMENTS EVIDENCING OR
SECURING THIS LOAN WILL BE CONSTRUED IN ACCORDANCE WITH FEDERAL LAW. (B)
LENDER OR SBA MAY USE LOCAL OR STATE PROCEDURES FOR PURPOSES SUCH AS FILING
PAPERS, RECORDING DOCUMENTS, GIVING NOTICE, FORECLOSING LIENS, AND OTHER
PURPOSES. BY USING THESE PROCEDURES, SBA DOES NOT WAIVE ANY FEDERAL
IMMUNITY FROM LOCAL OR STATE CONTROL, PENALTY, TAX OR LIABILITY. NO
BORROWER OR GUARANTOR MAY CLAIM OR ASSERT AGAINST SBA ANY LOCAL OR STATE
LAW TO DENY ANY OBLIGATION OF BORROWER, OR DEFEAT ANY CLAIM OF SBA WITH
RESPECT TO THIS LOAN. ANY CLAUSE IN THIS DOCUMENT REQUIRING ARBITRATION IS
NOT ENFORCEABLE WHEN SBA IS THE HOLDER OF THE NOTE SECURED BY THIS
INSTRUMENT.
CAPTION HEADINGS. Caption headings in this Mortgage are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Mortgage.
MERGER. There shall be no merger of the interest or estate created by this
Mortgage with any other interest or estate in the Property at any time held
by or for the benefit of Lender in any capacity, without the written
consent of Lender.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under
this Mortgage shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Mortgage.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Mortgage to be invalid or unenforceable as to any person or
circumstance, such finding shall not, render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity: however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Mortgage in all other respects shall remain valid and enforceable.
SUCCESSORS AND ASSIGNS. Subject to the limitations stated in this Mortgage
on transfer of Grantor's interest, this Mortgage shall be binding upon and
inure to the benefit of the parties, their successors and assigns. If
ownership of the Property becomes vested in a person other than Grantor,
Lender, without notice to Grantor, may deal with Grantor's successors with
reference to this Mortgage and the Indebtedness by way of forbearance or
extension without releasing Grantor from the obligations of this Mortgage
or liability under the Indebtedness.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Mortgage.
WAIVERS AND CONSENTS. Lender shall not be deemed to have waived any rights
under this Mortgage (or under the Related Documents) unless such waiver is
in writing and signed by Lender. No delay or omission on the part of Lender
in exercising any right shall operate as a waiver of such right or any
other right. A waiver by any party of a provision of this Mortgage shall
not constitute a waiver of or prejudice the party's right otherwise to
demand strict compliance with that provision or any other provision. No
prior waiver by Lender, nor any course of dealing between Lender and
Grantor, shall constitute a waiver of any of Lender's rights or any of
Grantor's obligations as to any future transactions. Whenever consent by
Lender is required in this Mortgage, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent
instances where such consent is required.
<PAGE>
09-13-1999 MORTGAGE PAGE 7
LOAN NO 3109254008 (CONTINUED)
================================================================================
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND
GRANTOR AGREES TO ITS TERMS.
WITNESSES: GRANTOR:
X___________________________ Dynamic Health Products, Inc.
By:_______________________________ (SEAL)
X___________________________ Kotha S. Sekharam, President
By:_______________________________ (SEAL)
Attest: William L LaGamba, Secretary
ATTEST:
___________________________________ (CORPORATE SEAL)
Secretary or Assistant Secretary
CORPORATE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
STATE OF FLORIDA)
----------------
____________________)SS
COUNTY OF PINELLAS)
-------------------
The foregoing instrument was acknowledged before me this
____________________ day of ____________________ 19 ___________ by Kotha S.
Sekharam, President; and William L. LaGamba, Secretary of Dynamic Health
Products, Inc., a Florida corporation, on behalf of the corporation.
He/she is personally known to me or has produced ____________________ as
identification and did I did not take an oath.
________________________________________________
(Signature of Person Taking Acknowledgment)
________________________________________________
(Name of Acknowledger Typed, Printed or Stamped)
________________________________________________
(Title or Rank)
________________________________________________
(Serial Number, if any)
================================================================================
<PAGE>
EXHIBIT "A"
A TWELVE FOOT WIDE MEDIAN STRIP WITHIN THE RIGHT-OF-WAy OF ENDEAVOUR WAY BEING
SIX FEET CONTINUOUS ON EACH SIDE OF THE FOLLOWING DESCRIBED LINE: FROM THE
INTERSECTION OF THE CENTERLINE OF ENDEAVOR WAY AND THE EAST/WEST CENTERLINE OF
SECTION 18, TOWNSHIP 30 SOUTH, RANGE 16 EAST, PINELLAS COUNTY, FLORIDA, AS A
POINT OF REFERENCE: THENCE S. 00"02'38"W., ALONG THE CENTERLINE OF SAID
ENDEAVOUR WAY 58.00 FEET TO THE RADIUS POINT OF A SIX FOOT RADIUS CURVE, THE
POINT BEGINNING; THENCE CONTINUOUS 9.00"02'38"W., ALONG SAID CENTERLINE 54.00
FEET TO THE RADIUS POINT OF A SECOND SIX FOOT RADIUS CURVE, THE POINT OF
TERMINATION, LYING WITHIN SECTION 18, TOWNSHIP 30 SOUTH, RANGE 16 EAST, AS
RECORDED IN O.R. BOOK 5033, PAGE 1053 OF THE PUBLIC RECORDS OF PINELLAS COUNTY,
FLORIDA,
AND,
LOT 2, GATES' INDUSTRIAL PARK, ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT
BOOK 77, PAGES 100 AND 101, PUBLIC RECORDS OF PINELLAS COUNTY, FLORIDA. LESS AND
EXCEPT THE FOLLOWING DESCRIBED PARCELS:
A PORTION OF SECTION 18, TOWNSHIP 30 SOUTH, RANGE 16 EAST, PINELLAS COUNTY,
FLORIDA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE CENTER OF SAID SECTION 18; THENCE ALONG THE EAST/WEST 1/2
SECTION LINE OF SAID SECTION 18, AND THE CENTERLINE OF COUNTY ROAD NO. 135, SAID
ROAD BEING ALSO KNOWN AS BRYAN DAIRY ROAD, S. 88"16'33" E., 316.25 FEET; THENCE
6.01"43'27". W, 40.00 FEET TO A POINT ON THE SOUTHERLY RIGHT-OF-WAY LINE OF SAID
ROAD, AS RECORDED IN O.R. 227, PAGE 194, PUBLIC RECORDS OF PINELLAS COUNTY,
FLORIDA, SAID POINT BEING ALSO THE POINT OF BEGINNING; THENCE ALONG SAID
SOUTHERLY RIGHT-OF-WAY LINE, S.88' 16'33" E., 267.33 FEET; TO A POINT ON THE
WESTERLY RIGHT-OF-WAY LINE OF ENDEAVOUR WAY ACCORDING TO THE PLAT OF GATES'
INDUSTRIAL PARK, AS RECORDED IN PLAT BOOK 77, PAGES 100 AND 101, PUBLIC RECORDS
OF PINELLAS COUNTY, FLORIDA, THENCE ALONG SAID WESTERLY RIGHT-OF-WAY LINE
6.00" 06' 45" W., 10.00 FEET; THENCE ALONG A LINE PARALLEL WITH AND 50 FEET
SOUTH OF SAID 1/2 SECTION LINE N. 88" 16' 33" W., 267.23 FEET TO A POINT ON THE
WESTERLY BOUNDARY LINE OF SAID GATES, INDUSTRIAL PARK; THENCE N. 00" 07' 27" E.
ALONG SAID WESTERLY BOUNDARY LINE 10.00 FEET TO THE POINT OF BEGINNING.
AND LESS
PORT "A"
A portion of Lot 2, GATES' INDUSTRIAL PARK Subdivision, according to plat
thereof, as recorded in Plat Book 77, Pages 100-101, public records of Pinellas
County, Florida, in the Southeast 1/4 of Section 18, Township 30 South, Range 6
East, Pinellas County, being described as follows:
Commence at the Northwest corner of said Lot 2, run S 00'02'39" W along the
West line thereof, a distance of 10,000 feet to a point on the South line
of Bryan Dairy Road for a POINT OF BEGINNING:
(1) thence S. 88'21'27" E. along said South line, a distance of 267.23 feet
to the East line of said Lot 2; (2) thence S. 00'01'51" W. along said East
line, a distance of 20.78 feet: (3) thence N. 44'58'09" W., for a distance
of 13.30 feet; (4) thence N. 89'12'58" W. a distance of 257.74 feet to a
point on the West line of said Lot 2; (5) thence N. 00'02'39" E. along said
West line a distance 15.50 feet to the POINT OF BEGINNING.
Port "B"
That portion of that certain tract, as described in O.R. 8560, Page 283, public
records of Pinellas County, Florida, lying within 70 feet south of the East-West
Centerline of Section 18, Township 30 South, Range 16 East, being described as
follows:
Commence at Northwest corner of Lot 2. GATES' INDUSTRIAL PARK Subdivision,
according to plot thereof, as recorded in Plot Book 77, Pages 100-101,
public records of Pinellas County, Florida, run S.88'21'27"E. along the
North line of said Lot 2, a distance of 301.23 Ft.; thence S.00'01'51 W. a
distance of 18.01 ft. to the Northwest corner of said tract, as described
in O.R. 8560, Page 283, for a POINT OF BEGINNING:
(6) thence S.88'21'27"E. a distance of 12.01 feet to the Northeast Corner
of said tract: (7) thence S.00'01'51" W. along the East line of said tract,
a distance of 12.01 feet: (8) thence N.88'21'27" W. a distance of 12.01
Feet to a point on the West line of said tract: (9) thence N.00'01'51"E.
along said West line a distance of 12.01 feet to POINT OF BEGINNING.
Acreage Summary:
Port "A" Containing 3.649 Sq. Ft. M.O.L.
Port "B" Containing 144 Sq. Ft. M.O.L.
- --------------------------------------------------
Total Parcel 101 Containing: 3.793 Sq. Ft. M.O.L.
Basis of Bearings: Bearings Indicated are Based On the East-west Centerline of
Section 16, Township 30 South, Range 16 East, Pinellas
County, Florida, Being S.88'21'27" E.
--------------
INITIAL______________ PAGE 1 OF 1
<PAGE>
U.S. SMALL BUSINESS ADMINISTRATION
[LOGO]
U.S. Small Business Administration
NOTE
- --------------------------------------------------------------------------------
SBA Loan # PLP #310-925-4008
- --------------------------------------------------------------------------------
SBA Loan Name Dynamic Health Products, Inc.
- --------------------------------------------------------------------------------
Date September 13, 1999
- --------------------------------------------------------------------------------
Loan Amount $ 880,000.00
- --------------------------------------------------------------------------------
Interest Rate Variable
- --------------------------------------------------------------------------------
Borrower Dynamic Health Products, Inc.
- --------------------------------------------------------------------------------
Operating
Company
- --------------------------------------------------------------------------------
Lender GE Capital Small Business Finance Corporation
- --------------------------------------------------------------------------------
1. PROMISE TO PAY:
In return for the Loan, Borrower promises to pay to the order of Lender the
amount of Eight Hundred Eighty Thousand & 00/100 Dollars, interest on the
unpaid principal balance, and all other amounts required by this Note.
2. DEFINITIONS:
"Collateral" means any property taken as security for payment of this Note
or any guarantee of this Note.
"Guarantor" means each person or entity that signs a guarantee of payment of
this Note.
"Loan" means the loan evidenced by this Note.
"Loan Documents" means the documents related to this loan signed by
Borrower, any Guarantor, or anyone who pledges collateral.
"SBA" means the Small business Administration, an Agency of the United
states of America.
3. PAYMENT TERMS:
Borrower must make all payments at the place Lender designates. The payment
terms for this Note are:
One Interest Installment, payable monthly, commencing on October 1,1999
followed by installments, including principal and interest, each in the
amount of $8,153.00 commencing on November 1,1999 and continuing due and
payable monthly for Three hundred (300) months, when the full unpaid balance
of principal and interest shall become due and payable. Funds received from
the borrower will be applied first to interest to the date of receipt, then
to principal, then to the late fee.
The total fixed payment is to be adjusted accordingly to reflect rate
changes. Borrower agrees to pay a late charge equal to 5% of the payment
amount due if such payment is not received within ten days of the due date,
but not to exceed maximum charges allowable under then applicable law.
SBA Form 147 (10/22/98) Previous editions obsolete
<PAGE>
09-13-1999 PROMISSORY NOTE PAGE 2
LOAN NO 3109254008 (CONTINUED)
================================================================================
This is a variable interest rate note, with an initial interest rate of
10.25%. Interest shall accrue on the principal balance of the Note at a
fluctuation rate based on the "Prime Rate" plus 2.25%. The "Prime Rate"
shall be defined as the lowest prime lending rate as published in the Wall
Street Journal. The initial interest rate is based on the "Prime Rate" of
8.00%, the "Prime Rate" in effect on the date SBA received the loan
application. The rate shall increase or decrease monthly on the first day of
each month during the term of the Note.
The amount that the interest on this Note may vary is limited by a ceiling
and floor: (1) The maximum interest rate (ceiling) will not exceed 3% above
the initial interest rate. (2) the minimum interest rate (floor) will not be
less than 3% below the initial interest rate.
Holder shall give written notice to the Undersigned of each increase or
decrease in the interest rate within thirty (30) days after the effective
date of each rate adjustment; however, the fluctuation of the interest rate
is not contingent on whether the notice is given.
Notwithstanding the foregoing provision for changes in the rate of interest,
at no time shall the interest rate exceed the maximum rate permitted by
applicable law. Upon any changes in the interest rate, the above monthly
principal and interest payments shall be adjusted to amortize the remaining
loan balance in equal monthly payments at principal and interest over the
remaining term of the loan.
Interest on this note is computed on a 30/360 simple interest basis; that
is, with the exception of odd days in the first payment period, monthly
interest is calculated by applying the ratio of the annual interest rate
over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by a month of 30 days. Interest for the odd days is calculated on
the basis of the actual days to the next full month and a 360-day year.
It SBA purchases the guaranteed portion of the unpaid principal balance, the
interest rate becomes fixed at the rate in effect at the time of the
earliest uncured payment default. If there is no uncured payment default,
the rate becomes fixed at the rate in effect at the time of purchase.
4. RIGHT TO PREPAY:
Borrower may prepay this Note. Borrower may prepay 20 percent or less of the
unpaid principal balance at any time without notice. If Borrower prepays
more than 20 percent and the Loan has been sold on the secondary market,
Borrower must:
A. Give Lender written notice;
B. Pay all accrued interest; and
C. If the prepayment is received less than 21 days from the date Lender
receives the notice, pay an amount equal to 21 days' interest from the
date Lender receives the notice, less any interest accrued during the
21 days and paid under subparagraph B.
If Borrower does not prepay within 60 days from the date Lender receives the
notice, Borrower must give Lender a new notice.
5. DEFAULT:
Borrower is in default under this Note if Borrower does not make a payment
when due under this Note, or if Borrower or Operating Company:
A. Fails to do anything required by this Note and other Loan Documents;
B. Defaults on any other loan with Lender;
C. Does not preserve, or account to Lender's satisfaction for, any of the
Collateral or its proceeds;
D. Does not disclose, or anyone acting on their behalf does not disclose,
any material fact to Lender or SBA;
E. Makes, or anyone acting on their behalf makes, a materially false or
misleading representation to Lender or SBA;
F. Defaults on any loan or agreement with another creditor, if Lender
believes the default may materially affect Borrower's ability to pay
this Note:
G. Fails to pay any taxes when due;
H. Becomes the subject of a proceeding under any bankruptcy or insolvency
law;
I. Has a receiver or liquidator appointed for any part of their business
or property;
J. Makes an assignment for the benefit of creditors;
<PAGE>
09-13-1999 PROMISSORY NOTE PAGE 3
LOAN NO 3109254008 (CONTINUED)
================================================================================
K. Has any adverse change in financial condition or business operation
that Lender believes may materially affect Borrower's ability to pay
this Note;
L. Reorganizes, merges, consolidates, or otherwise changes ownership or
business structure without Lender's prior written consent; or
M. Becomes the subject of a civil or criminal action that Lender believes
may materially affect Borrower's ability to pay this Note.
6. LENDER'S RIGHTS IF THERE IS A DEFAULT:
Without notice or demand and without giving up any of its rights, Lender
may:
A. Require immediate payment of all amounts owing under this Note;
B. Collect all amounts owing from any Borrower or Guarantor;
C. File suit and obtain judgement;
D. Take possession of any Collateral; or
E. Sell, lease, or otherwise dispose of, any Collateral at public or
private sale, with or without advertisement.
7. LENDER'S GENERAL POWERS:
Without notice and without Borrower's consent, Lender may:
A. Bid on or buy the Collateral at its sale or the sale of another
lienholder, at any price it chooses;
B. Incur expenses to collect amounts due under this Note, enforce the
terms of this Note or any other Loan Document, and preserve or dispose
of the Collateral. Among other things, the expenses may include
payments for property taxes, prior liens, insurance, appraisals,
environmental remediation costs, and reasonable attorney's fees and
costs. If Lender incurs such expenses, it may demand immediate
repayment from Borrower or add the expenses to the principal balance;
C. Release anyone obligated to pay this Note;
D. Compromise, release, renew, extend or substitute any of the Collateral;
and
E. Take any action necessary to protect the Collateral or collect amounts
owing on this Note.
8. WHEN FEDERAL LAW APPLIES:
When SBA is the holder, this Note will be interpreted and enforced under
federal law, including SBA regulations. Lender or SBA may use state or local
procedures for filing papers, recording documents, giving notice,
foreclosing liens, and other purposes. By using such procedures, SBA does
not waive any federal immunity from state or local control, penalty, tax, or
liability. As to this Note, Borrower may not claim or assert against SBA any
local or state law to deny any obligation, defeat any claim of SBA, or
preempt federal law.
9. SUCCESSORS AND ASSIGNS:
Under this Note, Borrower and Operating Company include the successors of
each, and Lender includes its successors and assigns.
10. GENERAL PROVISIONS:
A. All individuals and entities signing this Note are jointly and
severally liable.
B. Borrower waives all suretyship defenses.
C. Borrower must sign all documents necessary at any time to comply with
the Loan Documents and to enable Lender to acquire, perfect, or
maintain Lender's liens on Collateral.
D. Lender may exercise any of its rights separately or together, as many
times and in any order it chooses. Lender may delay or forgo enforcing
any of its rights without giving up any of them.
E. Borrower may not use an oral statement of Lender or SBA to contradict
or alter the written terms of this Note.
F. If any part of this Note is unenforceable, all other parts remain in
effect.
G. To the extent allowed by law, Borrower waives all demands and notices
in connection with this Note, including presentment, demand, protest,
and notice of dishonor. Borrower also waives any defenses based upon
any claim
<PAGE>
09-13-1999 PROMISSORY NOTE PAGE 4
LOAN NO 3109254008 (CONTINUED)
================================================================================
that Lender did not obtain any guarantee; did not obtain, perfect, or
maintain a lien upon Collateral; impaired Collateral; or did not obtain
the fair market value of Collateral at a sale.
11. STATE-SPECIFIC PROVISIONS:
12. BORROWER'S NAME(S) AND SIGNATURE(S):
By signing below, each individual or entity becomes obligated under this
Note as Borrower.
BORROWER:
DYNAMIC HEALTH PRODUCTS, INC.
By: ____________________________(SEAL) By: ______________________________(SEAL)
Kotha S. Sekharam, President Attest: William L. LaGamba, Secretary
THIRD PARTY PLEDGE AGREEMENT
DATE OCTOBER 4, 1999
----------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PLEDGOR DYNAMIC HEALTH PRODUCTS, INC. SECURED
PARTY FIRST COMMUNITY BANK OF AMERICA
- -------------------------------------------------------------------------------------------
BUSINESS
OR 6950 BRYAN DAIRY RD. ADDRESS 6100 4TH STREET NORTH
RESIDENCE
ADDRESS
- -------------------------------------------------------------------------------------------
CITY, CITY,
STATE & LARGO, FL 33777 STATE & ST. PETERSBURG, FL 33703
ZIP CODE ZIP CODE
- -------------------------------------------------------------------------------------------
</TABLE>
1. SECURITY INTEREST AND COLLATERAL. To secure (check one):
[ ] the payment and performance of each and every debt, liability and
obligation of every type and description which___________________________
____________________________________________ ("Debtor") may now or at any
time hereafter owe Secured Party (whether such debt, liability or
obligation now exists or is hereafter created or incurred, and whether it
is or may be direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or joint,
several or joint and several; all such debts, liabilities and obligations
being herein collectively referred to as the "Obligations"),
[X] the debt, liability or obligation of NUTRICEUTICALS.COM CORPORATION
("Debtor") to Secured Party evidenced by or arising under the following:
NOTE OF EVEN DATE I/A/Q $100,000.00, and any extensions, renewals or
replacements thereof (herein referred to as the "Obligations").
Pledgor hereby grants Secured Party a security interest (herein called the
"Security Interest") in (check one):
[ ] all property of any kind now or at any time hereafter owned by Pledgor,
or in which Pledgor may now or hereafter have an interest, which may now
be or may at any time hereafter come into the possession or control of
Secured Party or into the possession or control of Secured Party's agents
or correspondents, whether such possession or control is given for
collateral purposes or for safekeeping, together with all proceeds of and
other rights in connection with such property (herein called the
"Collateral").
[X] the property owned by Pledgor and held by Secured Party that is described
as follows: FCB CD #30023878, together with all rights in connection with
that property (herein called the "Collateral").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor represents, warrants and
covenants that:
(a) Pledgor will duly endorse, in blank, each and every instrument
constituting Collateral by signing on said instrument or by signing a separate
document of assignment or transfer, if required by Secured Party.
(b) Pledgor is the owner of the Collateral free and clear of all liens,
encumbrances, security interests and restrictions, except the Security interest
and any restrictive legend appearing on any instrument constituting Collateral.
(c) Pledgor will keep the Collateral free and clear of all liens,
encumbrances and security interests, except the Security Interest.
(d) Pledgor will pay, when due, all taxes and other governmental charges
levied or assessed upon or against any Collateral.
(e) At any time, upon request by Secured Party, Pledgor will deliver to
Secured Party all notices, financial statements, reports or other communications
received by Pledgor as an owner or holder of the Collateral.
(f) Pledgor will upon receipt deliver to Secured Party in pledge as
additional Collateral all securities distributed on account of the Collateral
such as stock dividends and securities resulting from stock splits,
reoganizations and recapitalizations.
3. RIGHTS OF SECURED PARTY. Pledgor agrees that Secured Party may at any time,
whether before or after the occurrence of an Event of Default and without
notice or demand of any kind, (i) notify the obligor on or issuer of any
Collateral to make payment to Secured Party of any amounts due or
distributable thereon, (ii) in Pledgor's name or Secured Party's name enforce
collection of any Collateral by suit or otherwise, or surrender, release or
exchange all or any part of it, or compromise, extend or renew for any period
any obligation evidenced by the Collateral, (iii) receive all proceeds of the
Collateral, and (iv) hold any increase or profits received from the
Collateral as additional security for the Obligations, except that any money
received from the Collateral shall, at Secured Party's option, be applied in
reduction of the Obligations, in such order of application as Secured Party
may determine, or be remitted to Debtor.
THIS AGREEMENT CONTAINS ADDITIONAL PROVISIONS SET FORTH ON PAGE 2 HEREOF.
ALL OF WHICH ARE MADE A PART HEREOF.
DYNAMIC HEALTH PRODUCTS, INC.
-----------------------------
Pledgor's Name
By: /s/ KOTHA SEKHARAM
----------------------
Kotha Sekharam
Title: PRESIDENT
-------------------
By:_______________________
Title:____________________
(page 1 of 2)
<PAGE>
ADDITIONAL PROVISIONS
4. EVENTS OF DEFAULT. Each of the following occurrences shall constitute an
event of default under this Agreement (herein called "Event of Default"): (i)
Debtor shall fail to pay any or all of the Obligations when due or (if payable
on demand) on demand; (ii) Pledgor shall fail to observe or perform any covenant
or agreement herein binding on Pledgor; (iii) any representation or warranty by
Pledgor set forth in this Agreement or made to Secured Party in any financial
statement or report submitted to Secured Party by or on behalf of debtor shall
prove materially false or misleading; (iv) Debtor shall voluntarily file or have
involuntarily filed against it a petition under the United States Bankruptcy
Code.
5. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of Default
and at any time thereafter, Secured Party may exercise any one or more of the
following rights or remedies: (i) declare all unmatured Obligations to be
immediately due and payable, and the same shall thereupon be immediately due and
payable, without presentment or other notice or demand; (ii) exercise all voting
and other rights as a holder of the Collateral; (iii) exercise and enforce any
or all rights and remedies available upon default to a secured party under the
Uniform Commercial Code, including the right to offer and sell the Collateral
available upon default to a secured party under the Uniform Commercial Code,
including the right to offer and sell the Collateral privately to purchasers who
will agree to take the Collateral for investment and not with a view to
distribution and who will agree to the imposition of restrictive legends on the
certificates representing the Collateral, and the right to arrange for a sale
which would otherwise qualify as exempt from registration under the Securities
Act of 1933; and if notice to Pledgor of any intended disposition of the
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given at least
10 calendar days prior to the date of intended disposition or other action; (iv)
exercise or enforce any or all other rights or remedies available to Secured
Party by law or agreement against the Collateral, against Pledgor or against any
other person or property. Upon the occurrence of the Event of Default described
in Section 4; (iv) all Obligations shall be immediately due and payable without
demand or notice therof.
6. WAIVERS BY PLEDGOR. Pledgor waives notice of Secured Party's acceptance
hereof and notice of the creation, existence and payment or nonpayment of the
Obligations. None of the following acts or things (which Secured Party is
authorized to do or not to do with or without notice to Pledgor) shall in any
way affect or impair the Security Interest or Pledgor's liabilities and
obligations hereunder; (a) any extension or renewal (whether or not for longer
than the original period) of any or all of the Obligations; (b) any change in
the terms of payment or other terms of any or all of the Obligations or any
Collateral therefor, or any substitution or exchange of any evidence of any or
all of the Obligations or collateral therefor, or any release of any collateral
for any or all of the Obligations; (c) any waiver or forebearance granted to
Debtor or any other person liable with respect to any or all of the Obligations
or any release of, compromise with, or failure to assert rights against Debtor
or any such other person; (d) the procurement or failure to procure any other
collateral for or guarantors or sureties of any or all of the Obligations; (e)
the transfer to any person, at any time, of any interest in any of the
Obligations or any collateral therefor; (f) any arrangement, composition,
extension, moratoria or other relief granted to Debtor pursuant to any statute
now in force or hereafter enacted; (g) any interruption in business relations
between Secured Party and Debtor; (h) the failure or neglect to protect or
preserve any Obligation or any collateral therefor, or to exercise any right
which may be available to Secured Party by law or agreement prior to or after an
Event of Default or a default under any other agreement, or any delay in doing
any of the foregoing; (i) the failure or neglect to ascertain or assure that the
proceeds of any loan to Debtor are used in any particular manner; and (k) the
application or failure to apply in any particular manner any payments or credits
upon the Obligations.
7. OTHER COLLATERAL. Whether or not Pledgor requests or demands that Secured
Party do so, Secured Party shall not be required before exercising and enforcing
its rights under this Agreement first to resort for payment of the Obligations
to Debtor or to any quarantor or surety or other person obligated with respect
to any Obligation, or to their properties or estates, or to any security
interest or other collateral securing payment of any or all of the Obligations,
or to any other interest, properties, liens, rights or remedies whatsoever.
Pledgor agrees to defer exercising, and hereby waives, any and all rights which
Pledgor might otherwise have to obtain reimbursement or payment from Debtor or
other persons obligated with respect to any or all of the Obligations or out of
the property of Debtor or of such other persons (whether such rights to obtain
reimbursement or payment are rights of recourse, rights of subrogation, rights
of contribution, or otherwise) until all the Obligations shall have been fully
paid to Secured Party.
8. MISCELLANEOUS. Any disposition of the Collateral in the manner provided in
Section 5 shall be deemed commercially reasonable. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security Interest can be
released, only explicitly in a writing signed by Secured Party. A waiver signed
by Secured Party shall be effective only in the specific instance and for the
specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any Secured Party's rights or remedies. All rights
and remedies of Secured Party shall be cumulative and may be exercised
singularly or concurrently, at Secured Party's option, and the exercise or
enforcement of any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. All notices to be given to Pledgor
shall be deemed sufficiently given if delievered or mailed by registered or
certified mail, postage prepaid, to Pledgor at its address set forth above or at
the most recent address shown on Secured Party's records. Secured Party's duty
of care with respect to Collateral in its possession (as imposed by law) shall
be deemed fulfilled if Secured Party exercises reasonable care in physically
safekeeping such Collateral or, in the case of Collateral in the custody or
possession of a bailee or other third person exercises reasonable care in the
selection of the bailee or other third person, and Secured Party need not
otherwise preserve, protect, insure or care for any Collateral. Secured Party
shall not be obligated to preserve any rights Pledgor may have against prior
parties, to exercise at all or in any particular manner any voting rights which
may be available with respect to any Collateral, to realize on the Collateral at
all or in any particular manner or order, or to apply any cash proceeds of
Collateral in any particular order of application. Pledgor will reimburse
Secured Party for all expenses (including reasonable attorneys' fees and legal
expenses) incurred by Secured Party in the protection, defense or enforcement of
the Security Interest, including expenses incurred in any litigation or
bankruptcy or insolvency proceedings. This Agreement shall be binding upon and
inure to the benefit of Pledgor and Secured Party and their respective heirs,
representatives, successors and assigns and shall take effect when signed by
Pledgor and delivered to Secured Party. Except to the extent otherwise required
by law, this Agreement shall be governed by the laws of the state in which it is
executed and, unless the context otherwise requires, all terms used herein which
are defined in Articles 1 and 9 of the Uniform Commercial Code, as in effect in
said state, shall have the meanings therein stated. If any provision or
application of this Agreement is held unlawful or unenforceable in any respect,
such illegality or unenforceability shall not affect other provisions or
applications which can be given effect, and this Agreement shall be construed as
if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Obligations.
If this Agreement is signed by more than one person as Pledgor, the term
"Pledgor" shall refer to each of them separately and to both or all of them
jointly; all such person shall be bound both severally and jointly with the
other(s); and all property described in Section 1 shall be included as part of
the Collateral, whether it is owned jointly by both or all Pledgors or is owned
in whole or in part by one (or more) of them.
(page 2 of 2)
<PAGE>
DYNAMIC HEALTH PRODUCTS, INC.
6950 BRYAN DAIRY RD.
LARGO, FL 33777
Account holder's name and address: "I" means the account holder named above. If
there is more than one, "I" means all account holders jointly and each
account holder separately.
Date: OCTOBER 4, 1999
Assignment of deposit or share account: For value received, I assign and
transfer to you, and I give you a security interest in the following
account(s): FIRST COMMUNITY BANK
CERTIFICATE OF DEPOST #30023878 I/A/O
$500,000.00
and any renewals or substitutions. These account(s) will be referred to as
the collateral in the rest of this agreement. The collateral is held with:
FIRST COMMUNITY BANK OF AMERICA
6100 4TH ST. N.
ST. PETERSBURG, FLORIDA 33703
which will be referred to as the depository in the rest of this agreement.
The collateral includes all funds now in the accounts listed plus all
additions of any kind and from any source, made at any time before the
release of this agreement in writing.
Secured debt(s): This agreement is made to secure the payment of:
[ ] ALL PRESENT AND FUTURE DEBTS, of every kind and description which:
may now or hereafter owe to you, no matter how or when these debts
arise. (We intend this paragraph to be very broad. For example, "debts"
include loans or credit purchases, made by or transferred to you, as
well as debts arising from any other relationship such as check
overdrafts, forgeries, or returned deposits. These also include debts
arising from any capacity (maker, co-maker, endorser, surety,
guarantor).) If more than one person or entity is listed, then all
joint and separate debts of all those listed are secured.
[X] the following described debt(s), plus all extensions, renewals,
modifications and substitutions: NONE OF EVEN DATE
I/A/O $100,000.00
FIRST COMMUNITY BANK OF AMERICA
6100 4TH STREET NORTH
ST. PETERSBURG, FL 33703
Secured party's name and address: "You" means the secured party named above,
your successors and assigns.
Additional terms: The following terms are also part of this agreement:
(1) This agreement will last until you release it in writing, and you are not
required to release it until the secured debts are paid in full.
(2) While this agreement is in effect, neither I nor anyone else (except you,
the secured party) can withdraw all or any part of the collateral.
(3) No joint owner, beneficiary, surviving spouse or representative of my
estate gets any rights in the collateral in the even of my death or
incapacity until the secured debts are paid in full.
(4) You have the right to withdraw all or any part of the collateral and apply
the withdrawal toward the payment of the secured debt(s), even if the
withdrawal causes a penalty. If a secured debt is in default you can
exercise this right without any notice to me or my consent (unless such
notice or consent is required by law and cannot be waived). You have the
right to sign my name (or sign your name as my attorney in fact) to
exercise the rights given to you in this agreement.
(5) I represent and promise that no other person or entity has any rights in
the collateral that have priority over those I am giving you here and that
no part of the collateral is exempt or protected by law from this
agreement.
(6) The rights and remedies I am giving you here are in addition to any stated
in any other agreements. If there is more than one debt secured, more than
one type of collateral (including collateral outside of the agreement) or
more than one debtor liable, it is entirely in your discretion as to the
order and timing of remedies you select.
(7) I neither assume nor am excused from personal liability for any of the
secured debts merely by making this agreement; my personal liability will
be determined by referring to other documents. I do assume personal
liability for the warranties and representations made in this agreement.
(8) A debt secured by this agreement (whether specifically listed or not)
includes all sums that could possibly be due under the debt.
(9) I specifically request and direct the depository to honor and accept this
agreement and its terms.
SIGNATURE(S) OF ACCOUNT HOLDER(S): BY SIGNING HERE WE ACCEPT THE TERMS OF THIS
AGREEMENT AND ACKNOWLEDGE RECEIPT OF A COPY
BY:/s/ KOTHA SEKHARAM
- --------------------------
Kotha Sekharam PRESIDENT
<TABLE>
<CAPTION>
<S> <C> <C>
Notice to depository: Acknowledgement by the depository: Release by secured party:
Date: OCTOBER 4, 1999 Date: OCTOBER 4, 1999 Date:
To: FIRST COMMUNITY BANK To: To: FIRST COMMUNITY BANK
[ ] This confirms our oral
notice dated:
Please take notice of this agreement. We have received your notice of this This is to advise you that the assignment
Please confirm your receipt of this agreement. We agree that no account and security interest in the collateral
notice and your acceptance of its holder or any other person (other than described above has been released and
terms by completing the you, the secured party) has any right the original certificate, or passbook or
acknowlegement portion and to make any withdrawals from the other evidence of the collateral (if any)
returning a copy to the secured party. collateral until this agreement is has been returned to the account
released in writing by you. holder(s).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the financial
statements and is qualified in its entirety by reference to such
financialstatements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 558,645
<SECURITIES> 0
<RECEIVABLES> 3,296,481
<ALLOWANCES> (121,268)
<INVENTORY> 3,297,678
<CURRENT-ASSETS> 7,447,845
<PP&E> 2,950,536
<DEPRECIATION> (323,185)
<TOTAL-ASSETS> 11,907,053
<CURRENT-LIABILITIES> 7,637,809
<BONDS> 0
850,000
0
<COMMON> 35,352
<OTHER-SE> 1,839,520
<TOTAL-LIABILITY-AND-EQUITY> 11,907,053
<SALES> 15,946,015
<TOTAL-REVENUES> 15,946,015
<CGS> 14,994,573
<TOTAL-COSTS> 14,994,573
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 145,741
<INCOME-PRETAX> (301,656)
<INCOME-TAX> 0
<INCOME-CONTINUING> (301,656)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (301,656)
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
