As filed with the Securities and Exchange Commission on October 30, 2000
Registration Number 333-93671
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
eKomart, Inc.
(Exact name of Registrant as specified in its charter)
Florida _________________ 65-0731234
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Code Number)
eKOMART, Inc. Stan J.H. Lee, President and CEO
71 Stony Hill Road eKOMART, Inc.
Second Floor 71 Stony Hill Road, 2nd Floor
Bethel, CT 06801 Bethel, CT 06801
(203) 797-0349 (203) 797-0349
(Address, including zip code, (Address, including zip code,
and telephone number telephone number including area code,
and including area code, executive principal or agent for
of Registrants principal service)
place of business)
Approximate date of commencement of the proposed sale to the public:
The business day after the date on which this Registration Statement becomes
effective. If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box: |_|
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Maximum
Title of Each Class Amount Offering Aggregate Amount
of Securities to be to be Price Offering of Regis-
Registered Registered Per Unit Price tration Fee.
==============================================================================
Common Stock, with
par value of $0.001(1) 450,000 $6.00 $ 2,700,000 $ _______
Common Stock, with
par value of $0.001(2) 1,350,000 $6.00 $ 8,100,000 $ _______
Totals 1,800,000 $6.00 $ 10,800,000 $ _______
==============================================================================
(1) Represents the resale of stock issued to Cyber-Care Inc. on conversion
of Series "A" Convertible Preferred Shares (See-Selling Shareholders) and
exercise of warrants.
(2) Represents the resale of shares issued to Selling Shareholders,
exclusive of Cyber-Care Inc.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
will file a further amendment which specifically states that this Registration
Statement will thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933. or until the Registration Statement becomes
effective on such date as the Commission, acting pursuant to Section 8(a),
may determine.
This registration statement is comprised of 296 consecutively
numbered pages, including exhibits. The exhibit index called for by Item 601
of Regulation SB is located at page 60.
Pursuant to Item 601 of Regulation S-B showing location in the Prospectus
of information required by Items 101 through 510 of Regulation SB-2.
Registration Statement
Item Number and Caption Prospectus Caption
101. Description of Business THE COMPANY
102. Description of Property THE COMPANY - PROPERTY
103. Legal Proceedings LITIGATION
201. Market for Common Stock and CERTAIN MARKET INFORMATION
Related Stockholder Matters
202. Description of Securities to be
Registered DESCRIPTION OF SECURITIES
303. Management's Discussion and MANAGEMENTS DISCUSSION AND ANALYSIS
Analysis or Plan of Operation OF OPERATIONS
& CHANGES IN FINANCIAL CONDITION
304. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure. NOT APPLICABLE
310. Financial Statements FINANCIAL STATEMENTS
401. Directors, Executive MANAGEMENT;
Control Persons TRANSACTIONS;CONFLICTS OF INTEREST
402. Executive Compensation MANAGEMENT
403. Security Ownership of Certain PRINCIPAL STOCKHOLDERS; CERTAIN
Beneficial Owners TRANSACTIONS
and Management
404. Certain Relationships and CERTAIN TRANSACTIONS; CONFLICTS
Related Transactions OF INTEREST
405. Compliance with Section
16(a) of the Exchange Act MANAGEMENT
501. Forepart of the Registration COVER PAGE
Statement and Outside Front Cover
Page of Prospectus
502. Inside Front Cover and Outside COVER PAGE; INSIDE FRONT COVER AND
Back Cover Pages of OUTSIDE BACK COVER PAGES
Prospectus
503. Summary Information SUMMARY OF THE PROSPECTUS;
& Risk Factors RISK FACTORS
504. Use of Proceeds USE OF PROCEEDS
505. Determination of Offering Price COVER PAGE; DILUTION;
CERTAIN MARKET INFORMATION
506. Dilution DILUTION
507. Selling Securities Holders PLAN OF DISTRIBUTION
508. Plan of Distribution COVER PAGE; INSIDE FRONT COVER;
PLAN OF DISTRIBUTION
509. Interests of Named Experts CERTAIN TRANSACTIONS
and Counsel
510. Disclosure of Commission INDEMNIFICATION ARRANGEMENTS
Prospectus
eKomart, Inc.
(a Florida Corporation)
1,800,000 Shares of Common Stock, with a Par Value of $0.001
This offering involves the sale to the public of 450,000 Shares
issued to Cyber-care, Inc. and the registration of 1,350,000 shares issued to
investors in eKomart, Inc. (the "Company") since February 1997,
(collectively referred to as "the Selling Shareholders").
Presently, there is no market for these shares.
eKomart, Inc. (eKomart), our company, is involved in offering Asian
and natural organic foods through grocery center and shopping mall operations
in the Aurora section of Denver, Colorado. We also own and operate a Korean
fast food outlet Food Court in the mall. We currently have, under lease,
space in Aurora and Detroit, MI, for the development of SAAN Korean Food
Restaurants. We plan to open a chain of fast food style Sushi outlets, and
to offer an on-line shopping center selling our grocery items and, generally,
Asian products of interest to the American shopping public.
We anticipate that we will apply to the AMEX Stock Exchange
to trade on that forum as soon as practicable after the effective
date of the Registration Statement of which this prospectus forms a part.
However, there is currently no Market for these shares, and there is no
guarantee as to when, or if, we will be able to trade on that or any public
exchange in the near future, or ever. It is also entirely possible that there
will be no market for our shares in the future, or, if a market will exist,
it will be a very restricted one.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
===========================================================================
Number of Price Per Aggregate Price Expenses & Proceeds to
Shares Share to Public Commissions Company
===========================================================================
1,800,000 Unknown (1) Unknown (1) Unknown (2) None (3)
===========================================================================
(1) The price per Share to the public of the Selling Shareholders' Shares
will be based on the bid price for eKomart's Common Stock on the dates of
specific sales, unless shares are sold in private transactions. Consequently,
no determination can be made as to actual pricing matters.
(2) We anticipate that normal brokerage commissions will be charged
by firms that sell any of the Selling Stockholders' Shares for the account of
the Selling Stockholders, and that such commissions will be tied to a
percentage of the sales price. However, we cannot provide specific information
pertaining to these commissions, as the details are unknown. We do know,
however, that the total costs to us will be about $50,000. These costs will
be made up of legal, accounting, printing, and registration fees.
(3) From the 1,800,000 shares held by the Selling Stockholders, there
will be no direct proceeds to eKomart.
eKomart, Inc.
(a Florida Corporation)
eKomart, Inc.
71 Stony Hill Road, 2nd Floor
Bethel, CT 06801
(203) 797-0349
The date of this Prospectus is ___________, 2000.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 (adopted
under authority of the Securities Act of 1933, as amended) with respect to
the securities offered in this Prospectus, with the United States Securities
and Exchange Commission (S.E.C.). This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules attached to it. For further information, you are referred to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance we refer you to the copy of such contract filed as an
exhibit to the Registration Statement. You may inspect The Registration
Statement and all of its exhibits without charge at the Public Reference
Section of the Commission in its Washington, D.C. office. You may obtain
copies of all or any part of the Registration Statement from the Commission
at prescribed rates, and may view them at the S.E.C.'s Web Site, whose
address is http://www.sec.gov. We will provide you with Copies of the
Registration Statement and the attached Exhibits without charge
upon written or oral request addressed to Mr. Stan J.H. Lee; eKomart,
Inc., 71 Stony Hill Road, 2nd Floor, Bethel, CT 06801, or by calling (203)
797-0349.
We currently do not furnish our stockholders with annual
reports containing financial statements certified by our independent public
accountants and quarterly reports containing unaudited financial information
for the first three quarters of each fiscal year. Prior to the sale of the
Registered Securities, we were not subject to the informational
requirements of the Securities Exchange Act of 1934, since our securities
were not registered with the Commission pursuant to the requirements of
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
We have not authorized any dealer, salesman or any other person to give
any information or to make any representations other than those contained in
this Prospectus. You must not rely on any information or representation given
or made to you as having been authorized by us or by the Selling Stockholders.
You cannot rely on the delivery of this Prospectus, nor on any sale made
pursuant to this Prospectus as suggesting that there has been no change in
the affairs of eKomart since the date of this Prospectus. We are not making
you an offer or soliciting any offer to buy any securities offered in this
Prospectus in any jurisdiction or State where it is unlawful for us to make
such an offer or solicitation.
GLOSSARY OF TERMS
When used in this Prospectus, the following words have the indicated meanings:
Capital Stock. The generic term for eKomart's Common Stock.
Common Stock. The shares of eKomart's Common Stock, with a par
value of $0.001, of which 20,000,000 shares are authorized and 9,060,000 are
issued and outstanding (see "DESCRIPTION OF SECURITIES").
Commission. Securities and Exchange Commission of the United
States
eKOMART or
eKomart, or we or us. eKomart, Inc.
NASD. National Association of Securities Dealers, Inc. The
self-regulatory body registered under the Securities Exchange Act of 1934,
as amended, responsible for regulation of securities brokers and dealers, and
the operator of the NASDAQ inter-dealer automated quotation system's bulletin
board over which Company securities are traded.
Registered Securities. The generic and collective term for the 1,800,000
Shares held by the Selling Shareholders being offered for sale in this
Prospectus.
Selling Shareholders. Collectively, the shareholders whose stock is being
offered for sale in this Prospectus.
eKomart or eKomart, Inc., a Florida Corporation and the
The Corporation. issuer of the securities offered by this Prospectus.
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus. It is qualified in its entirety by the more detailed information
and financial statements (including notes) appearing elsewhere in the
Prospectus.
THE COMPANY
We are an emerging operating company specializing in the supply of
Asian foodstuffs and products. Currently, we operate a Supermarket in Aurora,
CO, of which we own 30%. We also own and operate a food court in the mall,
specializing in Korean and Japanese fast food. The Supermarket and food
court are located in a Shopping mall which we operate, and of which we own
15%. We have leased space for a restaurant, adjacent to the mall, which we
plan to open in December of 2000.
We plan to develop on-line shopping facilities that cater to the
American-Asian Community and members of the general public wishing to
purchase goods and services with a distinct Asian flavor, or foodstuffs
with a natural organic nature. This venture is planned for early 2001,
and is completely dependent on our raising $1,500,000 for its development.
In the event that we cannot raise the requisite funds, the venture will be
delayed in its development, or totally canceled.
We plan to open a series of malls nationwide, under the name KOMART.
We also plan to open a series of food courts and supermarkets using the name
Komart Korean and Japanese Supermarket, and a series of restaurants using
the name "SAAN" for the full service restaurants, and ATA SUSHI for fast
food Sushi outlets. All of these plans are based on our raising the funds
necessary for these projects. In the event that we cannot raise the requisite
funds, some or all of these expansion plans will have to be delayed, or
totally canceled.
Our current income is derived solely from the operation of the mall and
Supermarket, as well as the food court in the mall. There can be no assurance
that future income will derive from any other source.
To better reflect our current business, we changed our name from
iNetboard, Inc. to eKomart.com, Inc. on December 2, 1999, and then to
eKomart, Inc. on September 26,2000. We had previously changed our name
on April 16, 1999 to iNetboard from our original name, Diversified
Medical Holdings, Inc.
Our current mailing address is, 71 Stony Hill Road, 2nd
Floor, Bethel, CT 06801; and our phone number is (203) 797-0349.
SELECTED FINANCIAL INFORMATION
Set forth below is selected consolidated financial information of
eKomart. The provided information is derived from the more detailed
audited consolidated financial statements as of September 30, 2000, and
should be read in conjunction with the audited consolidated financial
statements included elsewhere in this Prospectus. The provided information
is qualified in its entirety by reference to this additional material (see
FINANCIAL STATEMENTS").
Cumulative Three Qtrs. Annual Annual
Ended Ended Ended
September 30, December 31, December 31,
2000 1999 1998
(US $) (US $) (US $)
Operating Results
Revenue $ 1,899,509 $ 957,937 $ -0-
Cost of Goods Sold 1,006,740 634,657 -0-
Gross Profit 892,769 323,080 -0-
Cost and Expenses 402,653 25,685 45,520
General and Administrative 344,438 244,059 4,677
Income (Loss) Before
Taxes 144,678 53,536 (50,197)
Provision for income taxes (68,469) (19,043) -0-
Tax benefits due to loss
carryforward 67,619 18,738 -0-
Net income (Loss) $144,828 $ 53,231 $ (50,197)
====== ====== ======
Earnings (Loss) per share -
common stock $ .0160 $ .0059 $ (0.033)
===== ===== ======
Three Quarters Annual Annual
Ended Ended Ended
June 30 December 31, December 31,
2000 1999 1998
(US $) (US $) (US $)
ASSETS:
Current Assets:
Cash $ 31,936 $ 40,556 $ 105
Other current assets 1,250,000 274,613 -0-
Total Current
Assets 1,988,930 315,169 105
Non-current
assets 3,360,585 3,455,458 -0-
Note receivable
Net of
Deferred Gain of
1,230,000 - 0- - 0 - 150,000
TOTAL ASSETS $ 5,349,515 $ 3,770,627 $ 105
======= ======== ======
LIABILITIES AND
STOCKHOLDERS'EQUITY
Current
Liabilities $ 124,950 $ 41,020 $ -0-
Long-term
Liabilities 957,922 857,492 42,953
TOTAL LIABILITIES 1,082,872 899,512 42,953
STOCKHOLDERS'
EQUITY
Preferred Stocks 1,250,000 -0- -
Common Stock, $0.001
par value-
authorized 40,000,000
shares; issued and
outstanding 9,060,000 9,060 9,060 1,500
Additional Paid-In-
Capital 3,053,372 3,053,372 199,200
Deficit (45,789) (190,617) (243,848)
4,266,643 2,871,815 (43,138)
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 5,349,515 $ 3,770,627 $ 105
======= ========= =======
SECURITIES OUTSTANDING
As of the date of this Prospectus, 9,060,000 shares of Common Stock
were issued and outstanding. (see "CAPITALIZATION", "PLAN OF DISTRIBUTION"
and "PRINCIPAL STOCKHOLDERS").
CURRENT STOCKHOLDERS
Approximately 13 individuals own shares of eKomart's Common Stock
(see "CERTAIN TRANSACTIONS" and "PRINCIPAL STOCKHOLDERS").
DEFINITION OF TERMS
Certain terms used in this Prospectus, usually identified by initial
capital letters, are defined in the section of this Prospectus captioned
"GLOSSARY OF TERMS."
RISK FACTORS
THE SECURITIES WE ARE OFFERING ARE SPECULATIVE IN NATURE AND INVOLVE A
DEGREE OF RISK. YOU SHOULD PURCHASE THEM ONLY IF YOU CAN AFFORD TO
LOSE YOUR ENTIRE INVESTMENT IN US WITHOUT A MATERIALLY ADVERSE IMPACT ON
YOUR STANDARD OF LIVING OR FINANCIAL SECURITY. THEREFORE, BEFORE ANY PURCHASE
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS ALL OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS.
RISKS OF THE OFFERING
You May Lose Your Entire Investment
You should be aware that if we are not successful in operating our
business, your entire investment in us could become worthless. Even if we
are successful in our programs there can be no assurances that you will
derive a profit from your investment.
Your Investment may be Diluted due to Potential Future Sales Pursuant
To Rule 144
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of eKomart for at least 90 days and who has satisfied
a one year holding period.
The one year holding period for all eKomart's currently
outstanding restricted shares required by Rule 144 will expire during
October of 2000, and after that, the holders may periodically sell their
Company securities, subject to applicable volume limitations, restrictions
on the manner of sale and applicable reporting requirements (see "CERTAIN
TRANSACTIONS").
There is no Trading Market for our Shares
At present, there is no market for our securities,
and there can be no assurance that an established trading market or any
public market will develop in the future. In the event a market is developed,
it may not be able to be sustained, and it is entirely possible that you
will not be able to sell our securities at any price. In any event, any
market we may develop will, in all likelihood, be a substantially limited
one.
You May Suffer Adverse Effects due to the Penny Stock Regulations
Securities, generally, with a price $5.00 per share or less are
referred to as penny stock. These securities are unsuitable for you if you
have a low fixed incomes and limited net worth. As well, they are not suitable
if you are risk aversive or have income as your sole investment objective.
Investment broker/dealers must satisfy special sales practice requirements,
including making written suitability determinations regarding any persons
wishing to invest in penny stock; written consent of the purchaser prior to
purchasing penny stock; delivery of a disclosure statement outlining the
risks associated with penny stock prior to any transaction; a written
current bid and ask quotation and commissions to be earned by the broker/
dealer in the transaction; and monthly statements stating the market value
of any penny stock held in a portfolio. These requirements, will likely limit
you in any attempts you may make to sell our stock.
Your Ability to Sell our Securities will be hampered by the Absence of any
Underwriter
The Selling Stockholders' Shares will be sold directly by the Selling
Stockholders. This means that no underwriter is expected to be involved
in the sale. The absence of an underwriter means that there will be less due
diligence in conjunction with this offering than would be performed in an
underwritten offering, and furthermore, that there are no brokers committed
to stabilizing the market for eKomart's securities. These things will tend to
make our stock volatile and may hamper any efforts you may make to sell any
of our stock.
Your ability to have any Material Impact on Decisions made by us will be
severely limited because of the Concentration of Share Ownership in a very
few related Parties.
Where approximately 77% (7,000,000 of 9,060,000 voting shares) of
the shares in eKomart are currently held by Miyung Lee and Daniel Lee,
wife and son of Stan J.H. Lee, the effective control of eKomart rests
with these parties. Stan J.H. Lee is the President, CEO, and sole director
of eKomart. Thus, Mr. Lee will be in a position to substantially control
the election of the Board of Directors of eKomart and the management and
policies of eKomart. (See "Principal Stockholders").
You may Lose All or Part of Your Investment If We do not Operate Profitably
and Cannot Raise Additional Capital if it is required.
If we do not operate successfully or cannot raise additional capital, our
business will likely fail and you will lose your entire investment.
We cannot give you any assurances we will operate profitably in the future.
eKomart has a history of operating losses, and lacking future profitable
operations, will need additional capital, which we have no assurance
whatsoever of being able to obtain. (See "Financial Statements",
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, CHANGES IN
FINANCIAL CONDITION AND RESULTS OF OPERATIONS").
BUSINESS RISKS
You May never Receive any Dividends from Us.
We have never paid dividends on our Common Stock. We
do not anticipate paying dividends in the foreseeable future and
intend to devote earnings, if any, to the development of our
business. The payment of dividends in the future rests within the
discretion of our Board of Directors and will depend on the existence of
substantial earnings, our financial requirements, and other factors.
Earnings for
the foreseeable future are expected to be retained to finance corporate
business expansion.
Material Reliance Upon Officers.
We are wholly dependent upon the personal efforts and abilities
of our officers and directors, especially Mr. Stan J.H. Lee. The
loss of or unavailability to us of the services of any of our
officers or directors would have a materially adverse effect on our
business prospects and potential earning capacity. We do not carry
any insurance to compensate for any such loss, nor do we intend to
obtain "key man" life insurance covering our officers or directors.
Your Investment will be at Risk if we Need Additional Capital And It May Not
Be Available On Acceptable Terms.
The development of our business may require additional capital in the future
to fund our operations, to finance the substantial investments in
equipment and corporate infrastructure needed for our planned expansion, to
enhance and expand the range of services we offer and to respond to
competitive pressures and perceived opportunities, such as investment,
acquisition and international expansion activities. Cash flow from operations
may be insufficient to cover expenses and capital needs. There can be no
assurance that additional financing will be available on terms favorable or
acceptable to us, or at all. If adequate funds are not available
on acceptable terms, we may be forced to curtail or cease some or
all of our operations.
We May Not Be Able To Compete Successfully In The Very Competitive Market.
eKomart may face competition from competitors with significantly greater
financial, sales and marketing resources, larger customer bases, longer
operating histories, greater name recognition and more established
relationships with advertisers, content and application providers and/or
other strategic partners than eKomart has. There can be no assurance
that we will be successful in achieving widespread acceptance of
its services before competitors offer services similar to our
planned current offerings, which might preclude or delay purchasing
decisions by potential customers. Widespread commercial acceptance of any
of competitors' products could significantly reduce the potential customer
base for our services, which could have a material adverse effect on our
business and financial results.
GOVERNMENT REGULATION
The restaurant and food sales and processing business is subject to extensive
federal, state and local laws and regulations relating to the development and
operation of restaurants, including those concerning alcoholic beverage sales,
preparation and sale of food, relationships with employees (including minimum
wage requirements, overtime and working conditions and citizenship
requirements), land use, zoning and building codes, as well as other health,
sanitation, safety and environmental matters. Compliance with such laws and
regulations can impede the operations of existing Company restaurants and
may delay or preclude construction and completion of new Company
restaurants. While certain of these approvals have been obtained, there can
be no assurance that all such approvals and licenses, or approvals and
licenses for new restaurants, will be obtained and, if obtained, will be
renewed or not revoked. The Company is subject in certain states to "dram-
shop" statutes, which generally provide a person injured by an intoxicated
person the right to recover damages from an establishment that wrongfully
served alcoholic beverages to the intoxicated person. The Company carries
liquor liability coverage as part of its existing comprehensive general
liability insurance. In addition, the Company may also in certain
jurisdictions be required to comply with regulations limiting smoking in
restaurants. See "Business--Government Regulations."
FOR ALL OF THE REASONS STATED ABOVE, AND OTHERS SET FORTH IN THIS
PROSPECTUS, OUR SECURITIES INVOLVE A HIGH DEGREE OF RISK. IF YOU ARE
CONSIDERING AN INVESTMENT IN THESE SECURITIES, YOU SHOULD BE AWARE OF THESE
AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS. YOU SHOULD ONLY PURCHASE
THESE SECURITIES IF YOU CAN AFFORD A TOTAL LOSS OF YOUR INVESTMENT.
USE OF PROCEEDS
The Securities being offered for sale to the public are owned by the Selling
Shareholders, and as a result, we will not receive any of the proceeds
from the sale of the securities.
SELLING SHAREHOLDERS
Cyber-care, Inc., previously known as Medical Industries of America,
Inc., a Florida public corporation, presently traded on the NASDAQ SmallCap
market, sold, in a stock-for-stock exchange to eKomart, the medical
clinics subsidiary, Outsource Medical Incorporated, which owned two
managed care clinics operating in South Florida. We are registering
450,000 shares resulting from that transaction, and owned since 1997 as an
investment holding by Cyber-care. Cyber-care is in the business of
providing ancillary medical care, including mobile catherization labs,
air ambulances, and Internet based health care monitoring business.
We are also registering 1,350,000 shares held by six shareholders
of eKomart (See "SELLING STOCKHOLDERS" at page 30 of this Prospectus).
None of the individuals are affiliated with each other, or with eKomart,
its management, affiliates, or shareholders. Strategica Group, Inc.,
is in the business of Corporate financial consulting services.
CERTAIN MARKET INFORMATION
MARKET FOR COMMON EQUITY
At present, there is no market, public or private, for the trading of
eKomart's Common Stock. We anticipate registering our shares on the AMEX
as soon as practicable, and have already filed our application to accomplish
the same.
SECURITY HOLDERS
As of September 30, 2000, the latest practicable date for which
information is available, eKomart had approximately 13 Common Stock
holders.
There are four shareholders holding 260,000 restricted common shares
each, and seven shareholders holding 1,800,000 shares of stock, which shares
are part of the securities to which this Prospectus refers (See "Certain
Transactions", Principal Stockholders", Selling Shareholders").
DIVIDENDS
We have neither paid or declared any cash dividends since the
inception of eKomart and no dividends are contemplated to be paid in the
foreseeable future. No dividends were paid by our subsidiaries,
prior to their acquisition by us. We anticipate that,
for the foreseeable future, our profits (if any) will be reinvested
in eKomart rather than distributed as dividends.
OFFERING PRICE
No offering price has been pre-established for the shares registered
by the Selling Shareholders. Rather, we anticipate that the Selling
Stockholders will sell them into the public market at such times the price
is deemed favorable, when considered in light of the recipients' capital
requirements. The recipients will be the sole determiners of appropriate
pricing, on a case by case basis.
CAPITALIZATION
The following table sets forth the capitalization of eKomart as
of September 30, 2000.
September
Title of Class 30, 2000
Stockholders' Equity $4,266,643
Debt
Total Liabilities $1,082,872
THE COMPANY
BUSINESS (GENERAL)
We manage and have an ownership interest in 2050 S.
Havana St. (DTSE) LLC. ("KOMART MALL"), Komart Korean & Japanese Supermarket,
LLC., ("KOMART SUPERMARKET"), and Korean Restaurant, SAAN, LLC. ("SAAN"),
all organized pursuant to the laws of Colorado in 1999. We also own and
operate the food court within the mall, and own the rights to the name
ATA Sushi, which we plan to utilize in developing a chain of fast food Sushi
outlets.
BUSINESS DEVELOPMENT
We plan to consolidate, nationally, our market sector by acquiring or
opening additional Asian grocery centers and shopping malls in primary
markets. To do this, approximately $1,500,000 will be required per site. We
do not have the funds at present, and if they cannot be raised through
private placements, it is unlikely that we will be able to open any
additional sites in the near future.
Background Information
We were incorporated in the State of Florida in February,
1997 as Diversified Medical Industries, Inc. We initially purchased
two medical clinics for resale from Cyber-care, Inc., a Florida public
Corporation, which we subsequently sold. Upon the sale, we became a
development stage company, whose only asset was the Note receivable due
pursuant to the above mentioned sale. The clinics subsequently failed, and it
is unlikely that the note receivable will ever be paid. (See- Financial
Statements and accompanying Notes).
On November 3, 1999, we purchased the assets of RTG-TPD
Holding Co., LLC. (RTG), a Colorado Limited Liability Corporation, in
exchange for 7,000,000 shares in our Common Stock, said shares being
paid to the former owners of RTG, Miyung Lee and Daniel Lee. This gave the
Lees an 77% interest in eKomart. We changed the name of the company on
September 26, 2000 to eKomart, Inc. to better reflect our business. In
November, 1999, we purchased the food court operation from the owners of Hans
Restaurant Management LLC., and ATA Sushi & Teriyaki in exchange for 260,000
shares in eKomart. The shares were distributed among the owners as follows:
Han Shin received 165,000 common shares, Erica KL & Co., LLC., 45,000
shares, Sonia KL & Co., LLC., 40,000 shares, and Jae Hee Woo received
10,000 shares.
We have never been a party to any material reclassification,
merger, consolidation, or purchase or sale of a significant amount of assets
not in the ordinary course of business, except as disclosed herein.
BUSINESS
SHOPPING MALL OPERATION IN DENVER COLORADO
Geographical and Demographic Considerations
The shopping mall, in which we have a 15% interest, and of which we are the
operating Manager, located at 2000-2080 S. Havana St., Aurora, Colorado, is
a 50,685 square foot strip shopping center with KOMART Supermarket as its
anchor tenant. The center was built in 1973 and is an all brick building
with good retail visibility from Havana St. The mall is zoned B-1 and has an
entire city block of frontage along Havana St., a heavily traveled and
congested road providing access to I-70 to the north and I-225.
The mall is located in the heart of the Korean shopping district, with a
substantial number of Koreans residing in the immediate area and within easy
driving distances. The area saw high growth from 1980 through to the
present, with a population increase of 60% within a one-mile radius, and
an increase in the number of households in the same area of nearly 75%
(Source: State Census Figures).
Operating Characteristics
The mall is 100% occupied with our 16,582 Square Foot (SF) Komart Korean-
Japanese Supermarket as the anchor tenant. Recent leases have been for
$14/SF. There is increasing demand for any spaces available in the
mall by the local Korean merchants, producing a long waiting list for space,
which should help greatly in a continued maximization of rental income from
the mall.
The building was conservatively appraised at $3,400,000 by Key Bank in
February 1999. We own a 15% interest in the mall.
Future Expansion Plan
We plan to develop five additional Korean Shopping Malls, with the same
marketing and operational concept as in Denver CO., in the following
cities; Dallas TX, Houston TX, Chicago IL, Detroit MI, San Jose, CA in 2001.
We believe that approximately $1,500,000 will be required for each mall.
The funds will be raised through the development of joint ventures, with
eKomart managing the mall. If the funds cannot be raised, the malls will not
be able to be opened, and the expansion plans will be indefinitely curtailed.
KOREAN-JAPANESE SUPERMARKET OPERATION IN DENVER COLORADO
Demographic and Market Information
There are approximately 35,000 Koreans in the Denver metropolitan area. The
Korean grocery market is served by four small Korean grocery stores. It is
estimated that the combined market share of these four stores is only 30% of
the potential market, leaving the majority of this market niche untapped. In
addition, we plan to aggressively market our products to the
general population of Denver through (combined) online and traditional
advertising.
Operations and Management
The Korean, Japanese and natural organic food supermarket, KOMART, of which
eKomart owns 30% and of which it is the operating manager, occupies 16,582
square feet of space within the KOMART shopping mall; of which 5,582 square
feet are occupied by five subtenants and four food court restaurants.
Future Expansion Plan
KOMART SUPERMARKET plans to open or acquire five additional Korean grocery
centers and shopping malls with the same marketing and operational concept as
KOMART in Denver CO. in the following cities: Dallas TX, Houston TX, Chicago
IL, Detroit MI, and San Jose CA.
As a core business, we will advertise and promote our products as all
naturally produced organic products with no chemical additives. We
believe this differentiates the Komart product from virtually all other
oriental supermarkets, and, indeed, from all major supermarkets, generally.
It is anticipated that about $1,000,000 will be required to open each
supermarket, and the funds will be raised by offering joint ventures
similar to that offered in Denver, with the management of the Supermarket
being left to eKomart. We also plan to use profits, if any, to
establish new supermarkets. If the funds cannot be raised, any
expansion plans will have to be curtailed.
FOOD COURT OPERATIONS
We own and operate the Korean-Japanese fast food outlet in the
Supermarket. We plan to establish other such outlets as well as ATA Sushi
outlets in our malls and Supermarkets. The ATA Sushi outlets will
offer Sushi and Sashimi (raw fish dishes) on a fast food basis. It will
cost about $250,000 per outlet, and we plan to sell these through
joint ventures. In the event that no joint venture partners are found, the
establishment of these outlets will have to be curtailed indefinitely.
KOREAN RESTAURANT OPERATION ("SAAN") - DENVER COLORADO
Demographic, Management and Marketing Information
Korean Restaurant, SAAN, is looking to penetrate the market for foreign,
exotic food by offering 11,000 SF of authentically decorated eating space,
with a full service catering operation on the premises. The cuisine will be
produced under the supervision of an executive chef with 35-years experience
in Hotel Shilla in Korea, as well as in many Korean restaurants in New York
City.
The entire operation is managed by a management group under the
stewardship of Mr. Han S. Shin, who has more than 25 years of restaurant
management experience.
The main client base is the more than 35,000 Koreans in the Denver metro
area. As well, aggressive marketing will be utilized to penetrate the non-
Korean population of Denver. We believe that the policy of serving only
natural organically produced food with no chemical additives will serve to
enhance the desirability of visiting the restaurant to both the ethnic Asian
and non-Asian population.
Operations
The restaurant will share the same kitchen facilities with the catering
business, producing, what management believes will be, an operation
maximizing both facility and staff utilization. Virtually all food
and materials will be purchased from KOMART SUPERMARKET. This produces a
situation where both entities will benefit from the economies of large bulk
purchases.
SAAN is also looking to tap into the lunch take-out and delivery business
without incurring significant incremental operating expenses, thereby
utilizing the existing facilities to the maximum. We believe that
SAAN will be able to do approximately 500 bento-style lunches as a take-out
and delivery business on a daily basis, even without much marketing and
promotional activity.
The $500,000 required to complete the Restaurant will be raised through a
joint venture with local businessmen. We will operate the facility.
Future Expansion Plan
Restaurants are planned to open in conjunction with the opening of all
KOMART malls and supermarkets, as well as in Las Vegas NV, Phoenix AZ, Salt
Lake City UT, and Orlando FL. The openings will be dependent upon raising
approximately $750,000 per restaurant, through joint ventures with local
businessmen. If we cannot raise the funds, the expansion plans will have
to be curtailed indefinitely.
THE eKOMART STRATEGY-MALLS, SUPERMARKETS AND RESTAURANTS
The mall was fully occupied from inception and is profitable. The
area is one of high growth and property appreciation within a stable, middle
to high-income area.
The Korean population in America is growing and tends to concentrate in
certain urban areas. This population is extremely faithful to its ethnic
roots, and tends to frequent Korean malls and restaurants. The mall is also
designed to attract the average American.
Our plans for growth and expansion have a firm basis in providing
predictable products and services. The malls will all be essentially identical,
providing the community with what management believes is a consistently high
level of service and product. As well, with respect to restaurants,
we believe the SAAN restaurant concept will attract as many non-Koreans
as Koreans. These plans, however, are based upon us raising the capital
needed for expansion, as explained in the preceding sections. If the
funds cannot be raised by private placement investment and by offering joint
ventures, then all plans for growth will have to be delayed or totally
curtailed.
We plan to standardize our menus in all restaurants and to
purchase all goods, supplies, sauces, and any necessary services for the
restaurants and supermarkets centrally, both decreasing the cost of the
products to the licensee, and increasing, on an ongoing basis, eKomart's
revenue.
Currently, properties are under contract in Troy MI for a SAAN restaurant
(20 year lease- 8,000 square feet at $5,000 per month, triple net) and
Supermarket (20 year lease of 18,325 square feet at $12,000 per month on a
triple net basis). Details of the leases are in the notes to the
accompanying financial statements, and appended as an exhibit to the Report
on form SB-2 of which this Prospectus forms a part.
FUTURE PLANS-ON-LINE BUSINESS-PRODUCT DEVELOPMENT
Our aim will be to provide a convenient shopping experience that
incorporates traditional department, grocery store, and mail-order features
into an enticing, interactive, and easy-to-use online environment. By owning
and operating Asian and natural food grocery centers and shopping malls in
both primary and secondary markets, we will control our own distribution
centers for our anticipated expansion of online operations.
As part of our marketing strategy, we plan to form strategic
alliances with selected Internet service providers (ISPs), portals, and
search engines, via marketing agreements. These agreements will, management
believes, provide for eKOMART.com to be prominently featured at given sites.
In addition, we plan to establish strategic alliances with other online
companies and begin a targeted advertising campaign to attract additional
customers to our online stores. We believe both online and
traditional media exposure are critical to maximizing brand recognition
and enticing traffic to its online stores.
It must be reiterated, however, that we require a capital infusion of
$2,000,000 to develop our on-line plans. Although we plan to raise
the funds through a private placement of shares, there is no assurance
we will raise all or any of the funds required for our planned on-line
operations. For this reason any investment in eKomart anticipating it to
commence on-line operations is highly speculative, and subject to total loss
of investment.
Future Product Development
Overall product development is managed and directed by Stan J.H. Lee,
President of eKomart. In addition, on a project-by-project basis, a
product development team is assembled from personnel within eKomart and
outside consultants, as and when required.
Manufacturing/Technology Licensing Agreements
NONE
Competitive Business Conditions and Competitive Position in the Industry and
Methods of Competition
In terms of the Komart malls, restaurants, and supermarkets, there
are no chain type competitors. There are numerous small restaurants and
supermarkets throughout the markets Komart is investigation, but we have
found no restaurants and supermarkets that specialize in natural
organically produced foods, and none on the scale of Komart.
Sources and Availability of Raw Materials and the Names of Principal
Suppliers
No supplier of eKomart accounts for more than 5% of our business.
Dependence on One or a Few Major Customers
No customer of eKomart accounts for more than 5% of our business.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
or Labor Contracts, Including Duration
Our ability to compete successfully depends, in part, on our
ability to develop name recognition both online and local markets. To this
end, eKOMART.com has been registered as eKomart's web site, and eKomart
and KOMART will be registered in the United States as trade and service
marks used by eKomart, said registration to be filed within 6 weeks of
the date of this prospectus.
Other Intellectual Rights
No other patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts are used by eKomart.
Need for Any Government Approval of Principal Products or Services
Each of our restaurants and supermarkets is subject to licensing and
regulation by a number of governmental authorities, which include health,
safety, fire and alcoholic beverage control agencies in the state or
municipality in which the facility is located. Difficulties or failures in
obtaining required licenses or approvals could delay or prevent the opening
of a new restaurant in a particular area. Alcoholic beverage control
regulations require each of our restaurants to apply to a state authority
and, in certain locations, county or municipal authorities for a license or
permit to sell alcoholic beverages on the premises and to provide service
for extended hours and on Sundays. Typically, licenses or permits must be
renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations relate to numerous aspects of
the daily operations of our facilities, including minimum age of patrons and
employees, hours of operation, advertising, wholesale purchasing, inventory
control and handling, storage, and dispensing of alcoholic beverages. We may
be subject, in certain states, to "dram-shop" statutes, which generally
provide a person injured by an intoxicated patron the right to recover
damages from an establishment that wrongfully served alcoholic beverages
to the intoxicated person.
We are also subject to various other federal, state and local laws
relating to the development and operation of restaurants, including those
concerning preparation and sale of food, relationships with employees
(including minimum wage requirements, overtime and working conditions and
citizenship requirements), land use, zoning and building codes, as well as
other health, sanitation, safety and environmental matters.
Costs and Effects of Compliance with Federal, State and Local Environmental
Laws
We are not aware of any material expenses directly attributable to
compliance with federal, state or local environment laws or regulations.
Number of Total Employees and Number of Full Time Employee
As of the date of this Prospectus we have 5 full-time employees. Our employees
are not represented by any collective bargaining organization. We have
never experienced a work stoppage and consider relations with our employees
to be good.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis relate to factors which have affected
our financial condition and results of operations for the fiscal years
ending, December 31, 1998, and December 31, 1999, and the three quarters
ended September 30, 2000.
We were incorporated in February, 1997, in Florida. We
are an operating company, having emerged from our development phase
in the third quarter of 1999. On November 3, 1999 we purchased the
assets of RTG-TPD Holding Co., LLC. ("RTG" or "eKomart"), a Colorado
Limited Liability Corporation (See-Material Events).
We manage and have an ownership interest in 2050 S. Havana St.
(DTSE) LLC. ("KOMART MALL") (15% ownership), Komart Korean & Japanese
Supermarket, LLC., ("KOMART SUPERMARKET") (30% ownership), and Korean
Restaurant, SAAN, LLC. ("SAAN") (wholly owned), all organized pursuant to
the laws of Colorado in 1999. We also own the food court in the Denver
mall.
To better reflect our current business, we changed our name
from iNetboard, Inc. to eKomart.com, Inc. on December 2, 1999, and
to eKomart, Inc. on September 26, 2000. We had previously changed our
name on April 16, 1999 to iNetboard from our original name, Diversified
Medical Holdings, Inc.
Discussion of Financial Information
We had emerged as an operating entity in September, 1999.
For the 12 month period ending December 31, 1999, revenues were
$957,937, as compared to the previous fiscal year, ending December
31, 1998, when there were no revenues. Cost of goods sold in 1999 were
$634,657, yielding a gross profit of $323,280. For the nine months ended
September 30, 2000, sales were $1,899,509, with a gross profit of $892,769,
and cost of goods sold being $1,016,740.
The profit for the Fiscal year ending December 31, 1999 was $53,231,
with losses during the fiscal year ended December 31, 1998, being $200,197.
The first nine months of 2000 yielded a net income of $144,828.
Expenses were $269,744 in fiscal 1999, as compared to $50,197 in 1998.
Expenses for the first three quarters of 2000 were $747,091.
The cash and investment certificate position of eKomart was $40,556 on
December 31, 1999, as compared to $105 on December 31, 1998, and $31,936 on
September 30, 2000. Current assets, as a whole, were $2,315,169 on
December 31, 1999, as compared to $105 on December 31, 1998, and $1,988,930
on September 30, 2000.
Material Events
On November 3, 1999, pursuant to the terms of Purchase and Sale Agreement
(the "Agreement") between eKomart and RTG-TPD Holding Co., LLC.
("RTG" or "eKomart"), a Colorado Limited Liability Corporation, we
purchased all the assets of RTG. Pursuant to the terms of the Agreement, the
owners of RTG received 7,000,000 shares (See "Principal Shareholders").
On November 30, 1999, pursuant to the terms of Purchase and Sale Agreement
(the "Agreement 2") between eKomart and Hans Restaurant Management, LLC., a
Colorado Limited Liability Corporation, we purchased all the assets of Hans
Restaurant Management LLC. Pursuant to the terms of the Agreement, the
owners of Hans received 260,000 shares, and Han Shin, principal and operating
manager of Hans was retained as manager of fast food and Restaurant operations.
At a meeting of Shareholders and Directors held on November 3, 1999, Douglas
Dimick, sole officer and Director of eKomart resigned, and Stan J.H.
Lee was elected, by unanimous vote, the sole director and officer of the
Company, pending the next meeting of Shareholders, at which a Board of
Directors and full slate of officers would be elected. At the meeting,
it was also decided that the name of the company be changed to eKomart.com,
Inc., to better reflect our business.
We changed our name from iNetboard, Inc. to eKomart.com, Inc. on
December 2, 1999, and then to eKomart, Inc. on September 26, 2000.
We had previously changed our name on April 16, 1999 to iNetboard from our
original name, Diversified Medical Holdings, Inc.
Description of Real Estate and Operating Data
We currently occupy rent-free space of 1,000 square feet at 71 Stony Hill
Road, Bethel, CT. Further, 1,000 square feet of space at the Komart mall
at 2000 S. Havana Street in Denver CO is also provided to eKomart, rent free.
It is anticipated that the current facilities will be sufficient to meet our
needs through the end of 2000. It is further anticipated that the rent free
status will continue until that time.
Property and Equipment
Presently, we own leasehold improvements, equipment equal to $1,639,699
net of accumulated depreciation. This is mainly food handling and storage
equipment, and leasehold improvements to the food court at the Komart mall.
Investment Policies
We have no investment policies with respect to investments
in real estate or interests in real estate or investments in real estate
mortgages.
Litigation.
eKomart is not a party to any material litigation.
Operating Subsidiaries of eKomart
We have a 15% ownership interest in 2050 S. Havana St.
(DTSE) LLC. ("KOMART MALL"), a 30% interest in Komart Korean & Japanese
Supermarket, LLC., ("KOMART SUPERMARKET"), and one wholly owned subsidiary,
Korean Restaurant, SAAN, LLC. ("SAAN"), all organized pursuant to the laws
of Colorado in 1999. We also own and operate the food court in the
shopping mall.
We anticipate that SAAN will commence operations in December,
2000. It is presently a development stage company whose only activity has
been the negotiation of a lease for its future restaurant operations. The
terms of the lease are $6,130.83 per month commencing in February, 2000,
and then escalating 3% per year for the 10 year term of the lease.
Liquidity
We believe that we have the cash funds and necessary liquidity to meet the
needs of the company over the next year. Our primary business is the
management of the Komart mall, supermarket, and food Court. These functions
are regularly paid for from rental and sales proceeds, and these proceeds
will cover our needs, with respect to cash and liquidity needs, over the
next 12 month period.
However, to fully maximize the potential presented by eKomart's
strategy of integrating the traditional operations with e-commerce
applications, we believe that approximately $10,000,000 will need
to be raised. The funds will be primarily used for acquisitions of grocery
centers and shopping malls in primary markets, to develop related online
stores, and expand both traditional and online marketing programs.
It is projected that these funds will be utilized during a one year period.
In the event only part of the funds are raised, then those funds will be
allocated to acquisitions and online retailing. The money will likely be
raised through private placements of shares or a secondary offering. In the
event the funds are not raised, we will continue with our sales activities
and, management believes, meet our liquidity demands. The funds, as noted
above, are for increased activity and sales, not for primary liquidity
demands.
Accounting Policies and Procedures
We follow generally accepted accounting principles (GAAP) in
preparing our financial statements, and has audited statements produced
annually, with our quarterly statements produced by our management and
accountants.
Revenue Recognition
Revenue is recognized using the accrual method of accounting.
Statements of Cash Flows
Statements of Cash Flow are prepared quarterly, on a consolidated
basis, using generally accepted accounting principles (GAAP) and guidelines.
Inventory
We keep no inventory at present.
Fixed Assets
Fixed assets are valued based on their depreciated value.
Depreciation is calculated using the straight line method. At this time,
eKomart has no fixed assets.
Principles of Consolidation
All Financial Statements are produced on a consolidated basis.
Statement Re: Computation of Earnings Per Share
We have a simple capital structure as defined by APB Opinion
Number 15. Accordingly, earnings per share is calculated by dividing net
income by the weighted average shares outstanding.
Provision for Income Taxes
Provisions for income tax are computed quarterly using the
guidelines as defined in the Federal and State Statutes.
eKomart's Immediate Capital Requirements
We require approximately $10,000,000 to continue the
growth and market penetration of our products and R&D (For discussion,
See "Liquidity").
CONFLICTS OF INTEREST
Stan J.H. Lee is the sole Executive Officer and Director of the
Company, and as such has a majority of the votes on all matters which the
Board will vote upon the next annual meeting of our Stockholders.
The members of his immediate family also hold or control a majority of the
Company's outstanding common stock. Because our sole officer
and director will be voting upon matters of personal interest to him (e.g.,
salaries, bonuses and other benefits), the outcome of such votes will not
be based on arm's length negotiations. While our current officer
intends to exercise fairness in determining their compensation and all other
matters, there can be no assurance that we would not have
negotiated more favorable arrangements had persons other than our
current officer been responsible for ultimate determinations.
There are no formal or informal agreements between either majority
shareholder and current management with respect to involvement in company
affairs. The shareholders take no part in management, nor has there been
any agreement, formal or informal, with respect to directing majority
shareholders' votes on any matter, present or future.
MANAGEMENT
Directors and Executive Officers
The following sets forth the names and ages of all the Directors and
Executive Officers of eKomart, positions held by such person, length
of service, when first elected or appointed and term of office.
First Elected
Name Age or Appointed/Term Position
Stan J.H. Lee 44 elected on November 3, 1999 President, Secretary,
Term is at the sole Director
pleasure of the
Board of Directors
Biographies of Directors, Officers and Director Nominees
Stan J.H. Lee, President and CEO
Mr. Lee's responsibilities include the long term strategy development and
implementation of the KOMART concept. He directly manages the development,
market research and business planning of eKomart, Inc. Mr. Lee's role
will also be to evaluate potential sites for company growth, and act as
overall project manager in bringing each site "on-line".
Mr. Lee is credited with developing eKomart's first shopping mall,
supermarket and Korean Restaurant, SAAN, project in Denver CO. He was
instrumental in obtaining $2,375,000 financing from Key Bank, Denver CO for
the project and raising another 2.5 million dollars in private equity
investment.
Mr. Lee currently heads, and has headed for the past 6 years, an established
and successful CPA and Consulting firm in the New York Metro area with six
offices and 15 associates. Mr. Lee also heads a nationwide group of
affiliated CPA's, providing clients nation-wide services, and providing
a good source of local expertise and investment capital for the development
of the Corporation. He holds a BS degree in Accounting and professionally
is both a CPA and CMA.
Biographies of Significant Employees
Han Sik Shin, Director of Operations, Restaurant Division
Mr. Shin's responsibilities include the overall management of the
Supermarket Division, including the development and set-up of new sites.
He will also be directly in charge of product selection and marketing of the
eKomart online sites, respecting food and food related items. Mr. Shin
has over twenty-five years of successful management experience in the Hotel
and Restaurant business. He has consistently demonstrated ability to contain
costs, increase profits and improve operational efficiency. For the last
seven years, he was the Vice-President and CEO of Korean Restaurant
KUMGANSAN, with two locations in New York, whose annual volume
of business is currently $13 million. In Korea, he rose to the Director of
Food & Beverage in the Royal Hotel, Koreana Hotel and
Lotte Hotel, where he was named the employee of the year for three years
amongst 1,500 employees. He holds a BS degree in the hospitality industry.
Mr. Sun Mok Hwang- Director of Operations, Supermarket Division
Mr. Hwang brings to eKomart over 8 years of managerial, marketing and
operational experience in all aspects of Korean grocery business including
import and purchase, which is considered to be the most critical part of the
operation. His last five years was spent as Marketing & Sales Manager
for C-Kenneth Import., a U.S. subsidiary of Hyundai Group in Korea and in
this capacity, he was responsible for all territories in the Eastern U.S.-
NY, NJ, PA, MD, and VA.
Mr. Hwang's responsibility will be the day to day management of all
Supermarket Operations, and acting as eKomart's chief product
procurement officer.
Ivie Yun- Executive Vice President of Korean Restaurant, SAAN, LLC.
Ms. Yun has worked for many years as general manager of KUMKANGSAN
restaurant, the largest and most successful restaurant enterprise in New
York. She will be relocated to Denver to manage the SAAN restaurant and
eventually become involved in the management training and ongoing support
of other SAAN restaurants as eKOMART expands to other cities in the U.S.
She holds an MBA degree in Hotel Management.
Family Relationships
Mr. Stan J.H. Lee, the President and sole director is the husband of Miyung
Lee, and the father of Daniel Lee.
Involvement in Certain Legal Proceedings
During the past five years no current director, person nominated to
become a director, executive officer, promoter or control person of the
Company has been a party to or the subject of: (1) Any bankruptcy
petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) Any conviction in a
criminal proceeding or has been subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(3) Any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoying, barring suspending or otherwise limiting
his involvement in any type of business, securities or banking activities;
and (4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
Compensation
Compensation of Directors
Standard Arrangements
All members of eKomart's board of directors are paid a per diem
fee for attendance at meetings of the board of directors and committees
thereof. In addition, if required, they are reimbursed for travel expenses
and lodging is arranged for them, at eKomart's expense. At such time
as adequate funds are available, all directors (and officers) of eKomart
will be covered by liability insurance. Directors are reimbursed for all
out of pocket expenses incurred in the performance of their roles, subject
to provision of receipts in form and substance adequate to satisfy Internal
Revenue Service audit requirements (e.g., long distance telephone, postage,
etc.).
Other Arrangements
Neither we, nor any of our subsidiaries, have any other
arrangements to compensate our directors.
Employment contracts, termination of employment & change-in-control
arrangements
We do not have any compensatory plan or arrangement,
including payments to be received from eKomart, with respect to a
named executive officer that results or will result from the resignation,
retirement or any other termination of such executive officer's employment
with eKomart and its Subsidiaries or from a change-in-control of the
Company or a change in the name executive officer's responsibilities
following a chance-in-control, which, including all periodic payments or
installments, exceeds $100,000.
SUMMARY, COMPENSATION TABLE
Annual Compensation Awards Payouts
Other Rest-
Annual ricted
Compen- Stock Aw- SU SA
Name and sation ards OP RS LTIP Other
Position Year* Salary($) Bonus ($) (#) ($) __ ($)($) ($)
Stan J.H.
Lee (1) 1999 50,000 0 0 (1) 0 0 0 0 0
Sun Hwang(2) 1999 50,000 0 0 (1) 0 0 0 0 0
Han Shin(3) 1999 50,000 0 0 (1) 0 0 0 0 0
Ivie Yun(4) 1999 40,000 0 0 (1) 0 0 0 0 0
_____________________
* All officers and key employees were hired as of November 1,
1999 by the company, and the salary is for the remainder of 1999, and the
calendar year, 2000.
(1) Mr. Lee is the President, Secretary and sole Director. His term is at
the pleasure of the Board.
(2) Mr. Hwang is Director of Operations, Supermarket Division.
(3) Mr. Shin is Director of Operations, Restaurant Division.
(4) Ms. Yun is Exec. V. P., Korean Restaurant, SAAN, LLC.
Resignations of Officers and Directors
In conjunction with the acquisition of RTG's assets, eKomart's then
serving officer and sole director resigned in favor of Mr. Stan J.H. Lee.
CERTAIN TRANSACTIONS
Parents of eKomart
The following table discloses all persons who are parent of the
Company (as such term is defined in Securities and Exchange Commission
Regulation C), showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its
immediate parent if any.
Basis Percentage of Other Basis
Name For Control Voting Securities owned For Control
Miyung Lee Share Ownership 38.5% None
Daniel Lee Share Ownership 38.5% None
NOTE: Miyung Lee is the wife of Stan J.H. Lee, eKomart's President
and sole Director, and Daniel Lee is their son. Daniel Lee is a minor,
aged 15, residing with and under the guardianship of his parents. Voting
rights are held independently, and not shared.
Transaction with Promoters, if Organized Within the Past Five Years
There have been no transactions with Promoters over the past five
years.
PRINCIPAL STOCKHOLDERS
The following sets forth the security ownership of Management of the
Company and any holders of eKomart's common stock known to own 5% or
more of eKomart's issued and outstanding common stock, as of August 30, 2000.
PRINCIPAL STOCKHOLDERS
As of the date of this Prospectus, the following persons (including
any "group" are, based on information available to eKomart, beneficial
owners of more than five percent of eKomart's Common Stock (its only
class of voting securities):
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
Common Shares Miyung Lee 3,500,000 shares, owned 38.5%
335 Continental Avenue personally
River Edge NJ 07661
Common Shares Daniel Lee 3,500,000 shares, owned 38.5%
335 Continental Avenue personally
River Edge NJ 07661
NOTE: Miyung Lee is the wife of Stan J. H. Lee, eKomart's President and
sole Director, and Daniel Lee is their son. Daniel Lee is a minor, aged 15,
residing with and under the guardianship of his parents. Voting and
investment rights are independently held, and not shared.
SECURITY OWNERSHIP OF MANAGEMENT
As of the date of this Prospectus, the following table discloses, as
to each class of equity securities of eKomart or any of its parents or
subsidiaries other than directors' qualifying shares, beneficially owned by
all directors and nominees, the names of each executive officer (as defined
in Item 402[a][2] of Securities and Exchange Commission regulation S-B), and
directors and executive officers of eKomart as a group, the total number
of shares beneficially owned and the percent of class so owned. Of the
number of shares shown, the associated footnotes indicate the amount of
shares with respect to which such persons have the right to acquire
beneficial ownership as specified in Securities and Exchange Commission
Rule 13(d)(1).
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common
Shares Miyung Lee(1) 3,500,000 shares, 38.5%
335 Continental Avenue owned personally
River Edge, NJ 07661
Common
Shares Daniel Lee(1) 3,500,000 shares, 38.5%
335 Continental Avenue owned personally
River Edge, NJ 07661
(1) NOTE: While Mr. Lee, the President and Sole Director owns no shares in
eKomart, he is the husband and father of the shareholders listed, and
thus may, by operation of law, at some point in the future have some
beneficial interest in the shares.
COMMON STOCK
eKomart is authorized to issue 60,000,000 shares in the capital
stock of eKomart, with a par value of $.001 per share, divided into
40,000,000 Common Shares and 20,000,000 Preferred Shares. Immediately prior
to this offering 9,060,000 shares of Common Stock were outstanding and held
of record by 13 persons as of October 15, 2000. The holders of Common Stock
have one vote per share on all matters (including election of directors)
without provision for cumulative voting. Thus, holders of more than fifty
percent (50%) of the shares voting for the election of directors can elect
all of the directors, if they choose to do so. The Common Stock currently
is not redeemable and has no conversion or pre-emptive rights. The Common
Stock currently outstanding is (and the Shares being issued pursuant to this
prospectus will be) validly issued, fully paid and non-assessable.
In the event of liquidation, holders of Common Stock will share
equally in any balance of eKomart's assets available for distribution to
them after satisfaction of creditors and the holders of eKomart's senior
securities. eKomart may pay dividends, in cash or in securities or other
property when and as declared by the board of directors from funds legally
available therefor, but has paid no cash dividends on its Common Stock.
TRANSFER AGENT
The transfer agent for eKomart's Capital Stock is Continental
Stock Transfer and Trust Company, 2 Broadway, New York, NY.
SHARES ELIGIBLE FOR FUTURE SALE
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a
person who has not been an affiliate of eKomart for at least 90 days and
who has satisfied a one year holding period.
There are 2 shareholders holding 7,000,000 shares, acquired on
November 3, 1999, whose stock may be eligible for sale pursuant to Rule 144
in December of 2001.
ADDITIONAL INFORMATION
The foregoing statement is a summary of the rights and privileges of
the holders of our Stock. It does not purport to be complete and
is subject to the provisions of the Florida General Corporation Act, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and, upon anticipated registration as a NASDAQ BB OTC issue,
the rules, regulations and bylaws of the National Association of Securities
Dealers, Inc. The foregoing statements are qualified in their entirely by
such references.
PLAN OF DISTRIBUTION
GENERAL
The Shares registered by the Registration Statement of which this
Prospectus is a part are being registered as a result of demand registration
rights granted by us to the Selling Stockholders, at the time that
Selling Stockholders subscribed for the subject securities. (For a complete
List of the Selling Shareholders, SEE: "SELLING STOCKHOLDERS" at page 30).
The Selling Shareholders will sell their stock from time to time in
the public forum, at the prices then prevailing. The Shares will be sold
through broker/dealers, at market prices with customary commissions being
charged. It is anticipated that the broker/dealers will sell the shares
based on a "bid" price for the said shares in the public forum, and the
broker/dealers will not act in an active manner soliciting parties to
purchase the shares, either in the public forum or privately. It is
anticipated that this will be the sole manner in which the shares will be
sold.
We undertake to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell
any shares of any Selling Stockholder, and to set forth the terms
of any underwriting agreement or arrangement. The said underwriter shall
also deliver a market making prospectus. As far as we are aware,
there exists no past, present, or future plans, proposals, or undertakings
with respect to any underwriter and any Selling Stockholder.
Although there is no current market for the shares, and they are
not currently traded in the public market, we anticipate that the shares
will be registered and sold on the AMEX Stock Exchange as soon as
practicable after the effective date of the Registration Statement of which
this Prospectus forms a part.
SELLING STOCKHOLDERS
The following is a Table of Selling Stockholders:
SHAREHOLDERS
NAME ADDRESS NO. OF SHARES CONSIDERATION
Douglas R. Dimick
2810 Polo Island Drive C-202 790,000 (1)
Wellington, FL. 33414
Corporate Services Group
71 Stony Hill Rd., 2nd Floor 400,000 (4)
Bethel, CT 06801
Thomas V. Simmons, Jr.
668 Fergusson Lane 50,000 (2)
West Palm Beach, FL. 33415
CYBER-CARE, Inc.
1903 S. Congress Blvd., Suite 400 450,000 (3)
Boyton Beach, FL. 33426
Alan H. Adelson
152 Bayberry Circle 50,000 (2)
Jupiter, FL. 33458
Lawrence Solomon
Linton Towers 50,000 (2)
100 E. Linton Blvd., 403B
Delray Beach, FL. 33483
Strategica Group, Inc.
1221 Brickle Ave. Suite 2600 10,000 (2)
Miami, FL. 33131
(1) Mr. Dimick was the founder of eKomart and obtained his shares in
1997 for services rendered eKomart. He has never drawn a salary or
received any recompense whatsoever from eKomart.
(2) Mr. Simmons, Mr. Adelson, Mr. Solomon, and Strategica Group each received
shares as compensation for efforts in putting together the Cyber-Care
transaction, being the purchase of two medical facilities for resale in
1997, and in the subsequent divestiture by eKomart of its clinics for
$1,230,000.
(3) Cyber-Care Inc., received its shares as compensation for two medical
clinics sold to eKomart in 1997 and received its shares in 1997 for services
rendered eKomart, in lieu of cash.
(4) Corporate Services Group received its shares in May of 1999 in return
for services in constructing two transactions that did not come to fruition.
As well Corporate Services Group acted as a consultant in the purchase of
RTG, preparing the closing paperwork and negotiating the final deal.
Corporate Services Group is a Business formed in 1998 in Connecticut, and
no members have any management or ownership interest in eKomart. Corporate
Services Group is a consulting company specializing in advising clients on
business combinations, management strategies, and matters concerning the
process of becoming a public entity. It has invested $30,000 as partial
consideration for the shares.
INDEMNIFICATION ARRANGEMENTS
eKomart's articles of incorporation and bylaws provide for
indemnification of eKomart's officers, directors and agents to the
fullest extent permitted by law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
or persons controlling eKomart pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the United States
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
LITIGATION
eKomart is not a party to any material pending legal proceedings.
LEGAL OPINIONS
Bernabe Diaz, Esquire, attorney at law, has rendered his opinion
that the shares of Common Stock as described herein, will, when issued, be
validly issued, fully paid and non-assessable, and that future purchasers
thereof will not be subject to personal liability as a result of their
ownership thereof.
EXPERTS
The audited financial statements of eKomart appearing in this
Prospectus and in the Registration Statement have been examined by
independent public accountants, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report and upon
the authority of such firm as expert in auditing and accounting.
FINANCIAL STATEMENTS
(See following pages)
Page
Consolidated Audited Statements for the Three Quarters
ended on September 30, 2000, and the Fiscal years
ended on December 31, 1999, and December 31, 1998 ........... 33
eKomart, inc. and its subsidiaries
Consolidated Financial Statements and
Independent Auditor's Report
for the three quarters ended September 30, 2000
and years ended December 31, l999 and 1998
eKomart, inc. and its subsidiaries
Consolidated Financial Statements
for the three quarters ended September 30, 2000
and years ended December 31, l999 and 1998
TABLE OF CONTENTS
___________________________________________________________________________
Consolidated Financial Statements:
Independent Auditor's Report ................................ 3
Consolidated Balance Sheets ................................ 4
Consolidated Statements of Operations and
Retained Earnings (Deficit) ................................. 5
Consolidated Statements of Stockholder's Equity ............. 6
Consolidated Statements of Cash Flows ....................... 7
Notes to Consolidated Financial Statements .................. 8
___________________________________________________________________________
M.H.Park & Co., CPAs
a member firm of DMHD Hamilton Clark & Co.
2182 Lemoine Avenue Direct) 201-681-7475
Suite 200 Fax) 815-846-7550
Fort Lee, NJ 07024 e-mail) sierra5533@aol.com
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Shareholders of eKomart, inc. and its subsidiaries
We have audited the accompanying consolidated balance sheets of eKomart,
inc. and its subsidiaries as of September 30, 2000, December 31, l999 and
1998, and the related consolidated statement of operations and retained
earnings (deficit), consolidated statement of stockholders' equity and
consolidated statement of cash flows for the three quarters ended September
30, 2000 and years ended December 31, 1999 and 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
eKomart, inc. and its subsidiaries at September 30, 2000, December 31,
1999 and 1998, and the results of its operations and its cash flow for the
three quarters ended September 30, 2000 and years ended December 31,
l999 and 1998 in conformity with generally accepted accounting principles.
/s/M.H. Park & Co. CPAs/s/
_______________________
M.H. Park & Co., CPAs
October 14, 2000
Fort Lee, NJ
eKomart, inc. and its Subsidiaries
Consolidated Balance Sheets
as of September 30, 2000
and December 31, 1999, 1998
as of as of as of
09/30/00 12/31/99 12/31/98
ASSETS:
Current Assets:
Cash $ 31,936 $ 40,556 $ 105
Notes receivable 1,250,000 - -
Receivable and
current assets 231,675 229,508 -
Inventories 475,319 45,105 -
1,988,930 315,169 105
Non-current
Assets:
Building, land,
equipment and
leasehold improvements 1,554,675 1,552,718 -
less) accumulated
depreciation (55,645) (5,678) -
Contract and security
deposit 127,450 16,668 -
Logo and Trademark-
purchased, net of
accumulated
amortization 641,667 700,000 -
Future development
rights-purchased, net
of amortization 817,438 891,750 -
Management contracts-
purchased, net of
amortization 275,000 300,000 -
3,360,585 3,455,458 -
TOTAL ASSETS $ 5,349,515 $ 3,770,627 $ 105
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 111,410 $ 17,697 $ -
Note Payable-Bank 12,000 12,000 -
Other Current Payable 1,540 11,323 -
124,950 41,020 -
The accompanying notes are an integral part of financial statements.
eKomart, inc. and its Subsidiaries
Consolidated Balance Sheets
as of September 30, 2000 and
December 31, 1999, 1998
as of as of as of
09/30/00 12/31/99 12/31/98
Long-Term Liabilities:
Accounts Payable 117,812 27,571 27,870
Other Payables and
liabilities 74,570 157,535 -
Notes and mortgage
payable 421,040 455,883 -
Notes Payable-
seller's financing 150,000 150,000 -
Loans from
Shareholders 194,500 66,503 15,383
957,922 857,492 43,253
Stockholders' Equity:
Convertible Preferred
Stocks, $0.001 Par-
Value authorized 20,000,000
shares- issued &
outstanding 1,250,000
as of Sept. 30, 2000 1,250,000 - -
Common Stocks, $0.001
Par Value, 40,000,000
shares authorized,
9,060,000 shares (as of
09/30/2000) 1,500,000
(as of 12/31/1998) 9,060 9,060 1,500
Additional Paid-In
Capital 3,053,372 3,053,372 199,200
Retained Earnings
(Deficit) (45,789) (190,617) (243,848)
4,266,643 2,871,815 (43,148)
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $ 5,349,515 $ 3,770,627 $ 105
The accompanying notes are an integral part of financial statements.
eKomart, inc. and its Subsidiaries
Consolidated Statement of Operations and
Retained Earnings (Deficit)
for the three quarters ended September 30, 2000
and for the years ended December 31, 1999 and 1998
three quarters
ended year ended year ended
09/30/00 12/31/99 12/31/98
SALES $ 1,899,509 $ 957,937 $ -
COST OF SALES 1,006,740 634,657 -
GROSS PROFIT 892,769 323,280 -
OPERATING EXPENSES:
Selling expenses 195,040 25,685 -
General and
administration
expenses 344,438 238,381 50,197
Bad debts written-off - - 150,000
Depreciation and
amortization expenses 207,613 5,678 -
747,091 269,744 200,197
INCOME (LOSS)
BEFORE INCOME TAXES 145,678 53,536 (200,197)
Income Tax Expenses:
Provision for income
taxes (68,469) (19,043) -
Tax Benefit due to
Loss carry-forward 67,619 18,738 -
NET INCOME (LOSS) 144,828 53,231 (200,197)
DEFICIT, at Beginning (190,617) (243,848) (43,651)
RETAINED EARNINGS
(DEFICIT), at End $ (45,789) $ (190,617) $ (243,848)
Earnings (Loss)
per Share (Note 13) $.0160 per share $.0059 per share $(.1335 per share)
The accompanying notes are an integral part of financial statements.
eKomart, inc. and its Subsidiaries
Consolidated Statement of Stockholders' Equity
for the three quarters ended September 30, 2000
and years ended December 31, 1999 and 1998
Shares Amount Shares Amount Additional
(000's) (000's)
Series A Paid-in Net income
Preferred Capital (Loss)
Stock Common Stock Total
BALANCE as of
01/01/1998 1,500 $1,500 199,200 (43,651) 157,049
Net income
(Loss) - - $(200,197) $(200,197)
BALANCE as of
12/31/98 - - 1,500 1,500 199,200 (243,848) (43,148)
Exercise of
warrant
outstanding 200 200 200
Conversion of
Preferred
Stocks 300 300
Reverse split-
2 for 1 (8,000) (8,000) (8,000)
Issuance of
Common Stock 15,060 15,060 2,854,172 2,869,232
Net Income
(Loss) 53,231 53,231
BALANCE as of
12/31/99 - - 9,060 $9,060 $3,053,372 $(190,617)$2,871,815
Issuance of
convertible
preferred
stocks 1,250 1,250,000 - - - - 1,250,000
Net Income
(Loss) 144,828 144,828
BALANCE as of
09/30/2000 1,250$1,250,000 9,060 $9,060 $3,053,372 $(45,789)$4,266,643
The accompanying notes are an integral part of financial statements.
eKomart, inc. and its Subsidiaries
Consolidated Statement and Cash Flow
for the three quarters ended September 30, 2000
and for the years ended December 31, 1999, 1998
for the three
quarters ended year ended year ended
12/31/99 12/31/98 12/31/97
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income (Loss) $ 144,828 $ 53,231 $ (200,197)
Noncash Items
Included in Net Income
(Loss) 207,613 5,678 -
Increase in receivable
and other current assets (2,167) (229,508) -
Decrease (Increase) in
inventory (430,214) (45,105) -
Increase (Decrease) in
Accounts Payable and
Other Payables 183,954 17,572 25,164
Increase (Decrease) in
Other Payables (93,748) 169,858 -
10,266 (28,274) (175,033)
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Expenditure for
Property and Equipment (1,957) (1,552,718) -
Expenditure for contract
and Security Deposits (110,782) (16,668) -
Acquisition of Logo
and Trademark - (700,000) -
Acquisition of future
development rights - (891,750) -
Payment for management
contract purchased - (300,000) -
(112,739) (3,461,136) -
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Bank Loans Obtained - 467,883 -
Payment of Bank Loans-
Principal (34,144) (174) -
The accompanying notes are an integral part of financial statements.
eKomart, inc. and its Subsidiaries
Consolidated Statement and Cash Flow
for the three quarters ended September 30, 2000
and for the years ended December 31, 1999, 1998
for the three
quarters ended year ended year ended
12/31/99 12/31/98 12/31/97
Seller's Financing
Obtained (Repaid) - 150,000 -
Loans from Shareholders
(Repaid) 127,997 51,120 23,783
Notes receivable
written-off - - 150,000
Issuance of Common
Stock - 2,860,732 -
Conversion of Preferred
Stock - 300 -
93,853 3,529,861 173,783
Net Increase (Decrease)
in Balance of Cash (8,620) 40,451 (1,250)
Cash at Beginning of
Period 40,556 105 1,355
Cash at End of
Period $ 31,936 $ 40,556 $ 105
Supplemental
Information-
Non Cash Activities
Expenditure for
purchase of property
and equipment - (1,558,250)
Notes receivable by
issuing convertible
preferred stocks $ (1,250,000) -
Expenditure for
acquisition of logo
and trademarks - (700,000)
Expenditure for
future developmental
rights - (891,750)
Expenditure for
management contract - (300,000)
Issuance of convertible
preferred stocks 1,250,000 -
Issuance of
Common Stocks - 3,450,000
$ -0- $ -0-
The accompanying notes are an integral part of financial statements.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
1. Summary of Significant Accounting Policies
a) Organization, Capitalization and Business Activity
The Company was incorporated in February 11, 1997, in the state of
Florida. On November 3, 1999 the company purchased all assets of the
RTG-TPD Holding Co., LLC., ("RTG-TPD") a Colorado Limited Liabilities
Company, incorporated on June 11, 1999, and became fully operational
thereafter. The acquisition of the ownership interests in RTG-TPD have
been accounted for under the purchase method of accounting for business
combination. Accordingly, the purchase price was allocated to the
proportional assets acquired and liabilities assumed based on their
relative fair market values.
The Company, in October 1997, acquired Outsource Medical Incorporated
(OMI) and its wholly owned-owned subsidiary, Essential Care Medical Center,
Inc. (Essential) and $ 50,000 in cash, in exchange for 300,000 shares of
Series A Convertible Preferred Stock of the Company, and 200,000 warrants
to acquire 200,000 shares of common stocks for the Company for $ .0001 per
share.
Additionally, the Company agreed to pay the seller 40 % of certain accounts
receivable of Essential as of July 1, 1997 as collected. During the year
1997, the Essential's operation has shut down and the investment in the
same and the said receivable has subsequently been written off.
The Company is involved in developing and operating five (5) operating
corporate divisions and they are 1) real estate development and leasing
of specialty shopping centers under the trade name of "KOMART Shopping
Center" 2) a chain of Korean and Japanese Supermarkets under the trade
name of "KOMART Supermarket" 3) a full service Korean Restaurants under
the trade name of "SAAN" 4) a chain of Japanese fast food outlets,
"ATA Sushi & Teriyaki" and 5) food court operation, "KOMART Food Court".
The Company is also engaged worldwide, as its equally important main
thrust of the overall corporate strategy, in developing e-commerce
application for goods and services offered by its KOMART Supermarket,
SAAN restaurants and ATA Sushi & Teriyaki under the trade name of
"eKomart.com", which will be developed and , management feels, fully
operational in late 2001.
The Company currently has ownership in and manages, KOMART Shopping
Center, Komart Korean & Japanese Supermarket and Korean Restaurant
SAAN, all in Aurora CO.
The Company leased two properties for the development of KOMART
Supermarkets and SAAN Restaurants in Troy, MI and is under contract to
purchase a retail outlet in Santa Clara, CA to be converted later into a
third KOMART supermarket operation.
During 1999, the Company purchased the business, including, all assets,
of Hans Restaurant Management, LLC, an entity operating a food court
facilities in Aurora CO, and "ATA Sushi and Teriyaki", a chain of
Japanese Fast Food outlets with plans of national expansion. The operation
of the predecessor entities which operated food court and sushi and
teriyaki operation have been presented in the accompanying consolidated
financial statements through the date of acquisitions at historical cost.
The allocation of the purchase prices resulted in
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
a) Organization, Capitalization and Business Activity - Continued
no material adjustment to the historical recorded basis in assets and
liabilities except for the portion of purchase prices allocated to logo and
trademark, future development rights and management contract. Therefore,
the effect to the statement of operation is primarily amortization
subsequent to the date of acquisition. The acquired businesses commenced
operations in 1999, and had no operations prior to 1999.
The Company will be required to seek significant amounts of additional
debt and/or equity capital in order to fund its planned development
activities. Although there is no assurance that the Company will be able
to obtain adequate financing for its future development, management
believes that such capital will be available to the Company.
In the event the Company is unsuccessful in obtaining additional funds
for development, management may need to continue to operate with the
available cash flow. This will mean the postponement of future development
of new facilities.
The Company changed its name to eKomart, inc. on September 26, 2000
to better reflect the current and future corporate business. The Company
had previously changed its name on April 16, 1999 to iNetboard from its
original name, Diversified Medical Holdings, Inc. and to then to
eKomart.com, inc. on December 2, 1999.
Currently all operations are run from the head office facility in
Bethel, CT.
b) Development Stage Enterprise
The Company has emerged from its development phase, and the quarter
beginning October 1, l999 was the first operating quarter.
c) Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of financial statements and the reported amounts of revenues and
expenses during the reported periods. Actual results could differ from
those amounts. The most significant estimates included allowance for
depreciation of building, property and equipment and allowance for
amortization of logo and trademark, future development rights and
management contracts and income taxes.
d) Fiscal Year
The Company's fiscal year ends December 31.
e) Revenue and Expense Recognition
The Company prepares its financial statements on the accrual accounting
basis. Consequently, certain revenue and related assets are recognized when
earned rather than when received, and certain expenses are recognized when
the obligation is incurred or the asset consumed, rather than when paid.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
1. Summary of Significant Accounting Policies - Continued
f) Accounting Method
The Company recognizes income and expenses on accrual basis.
g) Construction-In-Progress
The Company capitalize all direct costs in the construction of new
supermarkets and restaurants. Upon opening, these costs are depreciated
over their useful lives based upon the property classifications.
h) Income Taxes
The Company accounts for its income taxes using Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax liabilities and assets for expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method income taxes are provided for
the tax effects of transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes related primarily to
differences between the bases of certain assets and liabilities for
financial and tax reporting. The deferred taxes represent the future tax
return consequences of those differences, which will either be taxable
when the assets and liabilities are recovered or settled.
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes for operating losses that are available to offset future
taxable income.
i) Intangible Assets
Intangible assets, subject to amortization, including the amortization
period of each, are as follows;
Balance
as of as of
Amortizable Assets 12/31/1999 9/30/2000 Amortization Policy
Logos and trademarks
of Komart, $ 700,000 $ 641,667 Over the next 10
SAAN, ATA projects the Company
and eKomart, inc. plans to undertake
over the course of
years or 10 years
whichever is shorter
Future nationwide
and international $ 891,750 817,438 Over the next 10
development rights projects the
of Komart, SAAN, Company plans to
ATA and eKomart, inc. undertake over the
course of years or
10 years whichever
is shorter
Value of management
contracts $ 300,000 275,000 Over 10 years the
management
contract's duration
$ 1,891,750 $ 1,734,105
======= =======
The organization cost were expensed immediately as required by SOP 98-5.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
1. Summary of Significant Accounting Policies - Continued
j) Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current-year financial statements.
k) Property and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial
reporting purposes at rates based on the following estimated useful lives;
Building 31 years
Furniture, fixture and equipment 3-10 years
Leasehold improvements 31 years
For federal income tax purposes, depreciation is computed using the
modified accelerated cost recovery system. Expenditures for major renewals
and betterment that extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred.
l) Concentration of Credit Risks
Financial instruments that potentially subject the Company to significant
concentration of credit risk consist primarily of cash investments and
receivable. The Company maintains cash and cash equivalent on deposit with
financial institutions that are considered in the Company's investment
strategy. Concentration of credit risk with respect to receivable are
limited as the Company's receivable are primarily trade receivable from
the customers extended in the normal course of business.
m) Inventories
Inventories are stated at the lower of cost (determined on the first-in,
first-out basis) or market. Cost is determined by the last-in, first-out
("LIFO") method.
n) Advertising Costs
Advertising costs are expensed in the period incurred and production
costs are expensed when the first advertising is distributed.
o) Principle of Consolidation
The consolidated balance sheets for the periods ended September 30,
2000 and 1999 and December 31, l999 and 1998 include the accounts of
eKomart, inc. and its subsidiaries. The consolidated statement of
operation, stockholders' equity and cash flow are for the nine-month
periods ended September 30, 2000 and fiscal years ended December 31,
1999 and 1998. All significant inter company transactions have been
eliminated.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
1. Summary of Significant Accounting Policies - Continued
o) Principle of Consolidation - Continued
The investment in the subsidiaries in which the Company has 100 % equity
ownership interest is consolidated. Investments in partially owned
subsidiaries where the Company can exercise significant influence
is accounted for by the equity method, under which the Company recognize
their proportionate share of subsidiaries earnings and treat distributions
as a reduction in their investment.
p) Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 requires disclosures
concerning fair value for all financial statements whether or not
recognized, for financial statement purposes. Disclosure about fair
value of financial instruments is based on pertinent information available
to management at September 30, 2000 and December 31, 1999 and l998.
Considerable judgment is necessary to interpret market data and develop
estimated fair values. Accordingly, the estimates presented are not
necessarily indicative of the amount which could be realized on disposition
of the financial instruments. The use of different market assumptions
and/or estimation methods may have a material effect on the estimated
fair value amounts. Management believes that the fair value of cash
and cash equivalent approximates carrying value based on the high liquidity
of the instruments. Management estimates that fair value of notes
receivable approximates carrying value based on the borrowers effective
borrowing rate for issuance of notes receivable with similar terms and
remaining maturities: notes payable approximates carrying value based on
eKomart, inc.'s effective borrowing rate for issuance of debts with
similar terms and remaining maturities.
q) Net Operating Loss Carry-forward
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consists of taxes currently due plus
deferred taxes for operating losses that are available to offset future
taxable income.
r) Pro-Forma Combined Summary Financial Information
The pro-forma combined summary financial information is based
on the historical consolidated results of operations of eKomart, inc.,
RTG-TPD Holding Co. LLC, Hans Restaurant Management LLC and ATA Sushi
& Teriyaki, LLC, entities the Company acquired in 1999. This pro-forma
financial information is presented for information purposes only and may
not be indicative of what the actual consolidated results of operations
would have been if the acquisitions had been effective as of the beginning
of the year presented. Pro-forma adjustments were applied to the respective
historical financial statements to account for RTG-TPD Holding Co. LLC,
Hans Restaurant Management LLC and ATA Sushi & Teriyaki, LLC. All businesses
were started in 1999, and became operational on October 1999. As a result,
as eKomart had no income other than from the subsidiaries, except as presented
here, there was no need to present separate financials for the subsidiaries,
as they are identical to those of eKomart.(see also Note #6 - Business
Acquisitions).
2. Notes receivable and Convertible Preferred Stocks
During the quarter ended March 31, 2000, (2) two investors have entered into
agreements with the Company for investments in SAAN Restaurant in Aurora,
CO and three (3) ATA Sushi & Teriyaki fast food outlets in New York
Region in the amount of $ 750,000 to be funded on or around November, 2000
and $ 500,000 to be funded in early 2001, respectively. The Company has
in turn issued 1,250,000 shares of convertible preferred stocks and may
be converted into one (1) share of the Company's common share (500,000
common shares) for each five (5) share of the convertible preferred
shares at the conversion per share of $ 5.00 at any time.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
3. Notes and Mortgage Payable to Banks
On November 1999, Premier Bank in Aurora CO has extended business
installment term loan in the original amount of $ 120,000 to Hans
Restaurant Management LLC, a wholly owned subsidiary operating Komart
Food Court in Aurora, CO. The term of the loans are over thirty-six (36)
months and its monthly payment is $ 3,750 with the remaining principal
balance of $86,667, secured by bank filing of the financing
statements (UCC) against all assets of the subsidiary. The interest
is at the Bank's prevailing interest rate for the installment business
loans.
The Company is also obligated under mortgage loans from Key Bank, Denver
CO, transferred to Bank of America, California, for its proportionate
share of loans in the Komart Shopping Center in Aurora, CO. The loans
are non-recourse and secured only by the land and buildings. The original
term of the loan is ten (10) year at fixed interest of 8.99 % per annum
with pay-out amortization schedule on a twenty-five (25) years.
4. Notes payable - seller's financing
On November 1999, in conjunction with the acquisition of RTG-TPD
Holding Co. LLC, the Company incurred seller financing in the amount of
$ 150,000, payable to the Seller. The notes, unsecured, have a maturity
date of December 31, 2001 and carry nominal interest of 4% per annum.
5. Stockholder's Loans
The loans payable to a stockholder are unsecured, non-interest bearing
with non-set terms of repayment. They will be retired as the company has
surplus funds to repay these loans.
6. Business Acquisitions
Pursuant to Purchase and Sale Agreement in November 1999, eKomart, inc.
issued 7,000,000 common shares on a agreed-upon price to the members of
RTG-TPD Holding Co., LLC ("RTG-TPD") in exchange for the business,
including all assets and liabilities.
The RTG-TPD Holding Co. LLC. acquisition consisted of certain assets,
financial interest and management control in 2050 S. Havana St. (DTSE)
LLC, a specialty shopping center in Aurora CO, certain assets, financial
interest and management control in Komart Supermarket, LLC., in Aurora CO
and 100% of assets and liabilities in SAAN Korean Restaurant, LLC., also
in Aurora CO.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
6. Business Acquisitions-Continued
The purchase transactions were accounted for using the purchase method for
accounting where values of assets and liabilities are recorded at the fair
market in an arms-length transaction. Under purchase accounting, the
purchase price is allocated to acquired assets and liabilities based on
their estimated fair values at the date of acquisition, any excess is
allocated to good will. Such allocations are subject to final
determination based on real estate, leasehold and equipment valuation
studies, and review of the books, records and accounting policies of the
entities. Accordingly, the final allocation may be different from the
amount reflected herein, although management does not expect such
differences to be material.
The allocation of acquisition price is summarized as follows:
Assets and liabilities of RTG-TPD ("RTG-TPD") Holding Co. LLC exclusively
consisting of RTG-TPD's in the assets and liabilities of 2050 S.
Havana St. (DTSE) LLC., Komart Korean & Japanese Supermarket, LLC., and
SAAN Korean Restaurant, LLC, on November 3, l999 (collectively called
"Companies").
2050 DTSE Komart Super- SAAN
LLC market LLC LLC Total
Current assets $ 80,000 $ 520,000 $ 10,000 $ 610,000
Non-current assets 3,595,000 630,000 280,000 4,505,000
Current liabilities (70,000) (225,000) -0- (295,000)
Working capital
acquired and
net books value of
the Companies 3,605,000 925,000 290,000 4,820,000
eKomart,inc.'s
share of
purchase (in %) 15% 30% 100%
(in $) 540,750 277,500 290,000 1,108,250
Logo and trademark of Komart,
SAAN, ATA and eKomart, inc.
(amortizable over 10 year-period) 700,000
Future nationwide and international
development rights of eKomart projects
(amortizable over 10 year-period) 891,750
Value of management contracts
(amortizable over 10 year-period) 300,000
Working capital acquired and value of
eKomart, inc.'s shares in
the Companies 3,000,000
Assigned purchase value of the Companies 3,000,000
Goodwill $ Nil
=======
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
6) Business Combination - Continued
The valuation of the intangibles such as logo, trademark, future development
rights and management contracts are based on the estimation of future
value of economic benefits in excess of the reasonably expected profit to
be received from the development of the eKomart projects and were
negotiated at arm's length, which is consistent with the Company management
assessment of the recoverability of these intangible assets based upon
expected undiscounted cash flows resulting from the acquired interests.
On November and December 1999, the Company entered stock purchase agreements
with Hans Restaurant Management LLC which operates a food court facility
in Aurora CO and ATA Sushi & Teriyaki, LLC, an operating entity with the
proprietary concept and management for chain of Japanese Fast Food to
purchase a 100 % interest of each company, respectively.
The purchase prices were $ 300,000 and $ 150,000, respectively and paid
for by issuing common shares to the selling shareholders 50,000 shares
and 25,000 shares, respectively, at the agreed-upon price of $ 6.00 per
share.
Purchase transactions were treated using the purchase method for
accounting where values of assets and liabilities are recorded at
the fair market in an arms-length transaction.
The following Pro Forma Condensed Consolidated Balance Sheet has
been prepared based upon the historical condensed consolidated
balance sheet of eKomart, inc. as of November 30, 1999 and the balance
sheets of November 30, 1999 of the acquisitions and gives effect to the
acquisition of RTG-TPD, Hans Restaurant Management LLC and ATA Sushi &
Teriyaki, LLC as if each had occurred at a earlier date (all entities
acquired were formed in June 1999). The acquisition of ATA Sushi &
Teriyaki, LLC occurred in December 1999 and was excluded in the
presentation because the impact of such acquisition is, in the aggregate,
immaterial to such statements.
The Pro Forma Condensed Consolidated Statements of operation for
the eleven-month period ended November 30, 1999 give effect to each of
the above transactions.
The following Pro Forma Condensed Consolidated Statements of Operations
are not necessarily indicative of the actual results of operations that
would have been reported if the events described above had occurred as of
January 1, 1999 nor do they purport to indicate the results of the
Company's future operations. Furthermore, the pro forma results do not
give effects to all cost savings or incremental costs they may occur as a
result of the integration and consolidation of the recent acquisitions.
In the opinion of management, all adjustments necessary to present
fairly such pro forma financial statements have been made.
eKomart, inc. and its subsidiaries
Condensed Consolidated Balance Sheets
(Audited)
Pro Forma Condensed
eKomart, inc. Acquisitions Adjustments Consolidated
Balance Sheet
as of as of as of as of
11/30/99 11/30/99 11/30/99 11/30/99
(see Note-
Current assets below)
Cash $ 105 $ 39,360 -0- $ 39,465
Notes
receivable -0- -0- -0- -0-
Other current
assets -0- 233,421 -0- 233,421
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
6) Business Combination - Continued
eKomart, inc. and its subsidiaries
Condensed Consolidated Balance Sheets
(Audited)
Pro Forma
Pro Forma Condensed Consolidated
eKomart, inc. Acquisitions Adjustments Balance Sheet
as of as of as of as of
11/30/99 11/30/99 11/30/99 11/30/99
(see Note-
below)
Non-current
assets
Building,
property,
equipment and
Leasehold
improvements -0- 1,552,718 -0- 1,552,718
Logo and
trademark -0- 700,000 -0- 700,000
Future devel-
opment rights -0- 891,750 -0- 891,750
Management
contracts -0- 300,000 -0- 300,000
Other non-
current assets -0- 16,668 -0- 16,668
TOTAL ASSETS: $ 105 $ 3,733,917 $ -0- $ 3,734,022
==== ======= ==== =======
Current liabilities
Other current
liabilities $ 27,870 $ 11,881 $ -0- $ 39,751
Long-term
liabilities 15,383 791,866 -0- 807,249
TOTAL
LIABILITIES 43,253 803,747 -0- 847,000
STOCKHOLDERS'
EQUITY
Convertible
preferred stocks 1,500 7,560 -0- 9,060
Common stocks and
paid-in capital 199,200 2,880,523 -0- 3,079,723
Retained earnings
(Deficit) (243,848) 42,087 -0- (201,761)
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $ 105 $ 3,733,917 -0- $3,734,022
===== ======= === ========
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
6) Business Combination - Continued
eKomart, inc. and its subsidiaries
Condensed Consolidated Statements of Earnings
(Audited)
Pro Forma
Pro Forma Condensed Consolidated
eKomart, inc. Acquisitions Adjustments Statement of Earnings
eleven-month eleven-month eleven-month eleven-month
period ended period ended period ended period ended
11/30/99 11/30/99 11/30/99 11/30/99
(see Note-
B below)
Sales $ -0- $ 806,614 $ -0- $ 806,614
Cost of
sales -0- 528,881 -0- 528,881
Gross profit -0- 277,733 -0- 277,733
Selling,
general and
administrative -0- 235,341 -0- 235,341
Earnings before
income taxes -0- 42,392 -0- 42,392
Income taxes,
net of
Tax benefits -0- (305) -0- (305)
Net earnings $ -0- $ 42,087 $ -0- $ 42,087
===== ====== ===== ======
Note A - Basis of Presentation
The accompanying audited pro forma condensed consolidated balance
sheet and statement of earnings of eKomart, inc. and subsidiaries were
prepared in accordance with generally accepted accounting principles for
interim financial information. This report should be read in
conjunction with the Company's consolidated financial statements for the
three quarters period ended September 30, 2000 and years ended December
31, 1999 and l998.
The pro forma condensed consolidated balance sheet and statement of
earnings were audited by independent auditors. Preparation of the
financial statements requires management to make estimates that affect
the reported amounts of assets, liabilities, revenues and expenses for
the reporting periods. In the opinion of management, the statements
reflect all adjustments (consisting of normal recurring accruals)
considered necessary to present fairly, on a condensed basis, the
financial position, results of operations and cash flows for the
periods presented.
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
Note B - Basis of Presentation
Condensed Balance sheets
of RTG-TPD Holding Co. LLC (RTG-TPD) and Hans Restaurant
Management LLC (HANS) - entities acquired by eKomart, inc.
(Audited)
RTG-TPD HANS ACQUISITIONS
as of 11/30/99 as of 11/30/99 as of 11/30/99
Current assets
Cash $ 28,811 $ 10,654 $ 39,465
Other current
assets 189,716 43,705 233,421
Non-current assets
Building, property,
equipment and
Leasehold improvements 1,257,527 295,191 1,552,718
Logo and trademark 700,000 -0- 700,000
Future development rights 891,750 -0- 891,750
Management contracts 300,000 -0- 300,000
Other non-current assets 4,668 12,000 16,668
TOTAL ASSETS: $ 3,372,472 $ 361,550 $ 3,734,022
======= ======== =======
Current liabilities
Other current liabilities $ 29,632 $ 10,119 $ 39,751
Long-term liabilities 697,495 119,754 807,249
TOTAL LIABILITIES 727,127 129,873 847,000
STOCKHOLDERS' EQUITY
Convertible preferred
stocks 9,060 -0- 9,060
Common stocks and
paid-in capital 2,879,723 200,000 3,079,723
Retained earnings
(Deficit) (243,438) 31,677 (201,761)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,372,472 $ 361,550 $ 3,734,022
======== ======= ========
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
6) Business Combination - Continued
Note B - Basis of Presentation - Continued
Condensed Statement of Earnings
of RTG-TPD Holding Co. LLC (RTG-TPD) and Hans Restaurant
Management LLC (HANS) - entities acquired by eKomart, inc.
(Audited)
RTG-TPD HANS ACQUISITIONS
for the eleven month-period ended 11/30/1999
Sales $ 490,658 $ 315,956 $ 806,614
Cost of sales
(prime cost) 337,775 191,106 528,881
Gross profit 152,883 124,850 277,733
Selling, general
and administrative 142,168 93,173 235,341
Earnings before
income taxes 10,715 31,677 42,392
Income taxes, net of
Tax benefits (305) -0- (305)
Net earnings 10,410 31,677 $ 42,087
====== ===== ======
eKomart, inc. and its subsidiaries
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
for the three quarters ended September 30, 2000 and
years ended December 31, l999 and l998
7. Common and Preferred Stocks
The Company is authorized to issue 40,000,000 common shares at $ 0.001
par value share and 20,000,000 preferred shares with a par value of $0.001,
and, as of September 30, 2000, 9,060,000 voting common shares and 1,250,000
convertible preferred shares are issued and outstanding.
8. Stockholders Equity
Stockholders Equity has been restated to reflect the purchase of the
subsidiaries.
9. Description of Leasing Arrangements
The Company uses office space for which no rent is paid. This arrangement
will continue through December, 2000. Pursuant to SAB Topic 1:B.1, all
costs of doing business should be reflected, whether paid or to be
accrued as expenses with a corresponding contribution to capital, only
if material.
10. Earnings Per Shares
Earnings (Loss) per share are calculated using the weighted-average
number of common shares outstanding and common shares equivalents.
11. Net Operating Loss Carry-Forward
The Company has accumulated net operating loss in the amount of $ 45,789
as of September 30, 2000 which can be used to offset taxable income and
such carry forward tax benefits expire on year 2015.
12. Transactions with Related Party
There are no significant items of transactions with related party that
require disclosures.
Company officers are not compensated at this time or their automobile
expenses are reimbursed during the operational months of November and
December, l999 - prior to the period the Company was in development
stage and no material expenses were incurred in this respect.
Company officers are not compensated at this time through the end of year
2000 and even the officer compensations are paid by the company, the amount
is not material. Their automobile expenses are reimbursed as the amount
is again immaterial.
13. Commitment and contingency
The Company leases on a twenty-year (20) years term a free standing
10,000 SF space building on S. Havana St. in Aurora, CO for its restaurant
space and is currently under renovation.
The Company also leases a food court facility in Aurora CO on a ten-year
lease terms.
On March 2000, the Company has entered into a twenty (20) year lease
contract for a 18,000 SF supermarket space in Troy, MI and the minimal
monthly rental is $ 12,000. The space has been fully leased out to
the sub-tenants under the sublease agreements.
The total annual minimum rental for the next five years are as follows;
Year Minimum Annual Rental
2000 $ 229,848
2001 $ 342,002
2002 $ 346,322
2003 $ 355,322
2004 $ 360,160
TABLE OF CONTENTS
ITEM PAGE
Prospectus Summary 4
eKomart's Business 11
The Offering- Front Cover
Stockholders 7,11
Securities Outstanding 7 eKomart, Inc.
Definition of Terms 3,7
Selected Financial Information 5
Risk Factors 7 1,800,000 Shares of Common
Use of Proceeds 10 Stock
Certain Market Information 10
Capitalization 11
Management's Discussion & Analysis 17
Conflicts of Interest 21
Management 21
Directors and Executive
Officers 21
Biographies of eKomart's
Executive Officers and Directors 21
Certain Transactions 24
Principal Stockholders 24 =========================
Securities- Description(Common Stock) 25
Common Stock 25 PROSPECTUS
Dividend Policy 11
Transfer Agent 26 =========================
Shares Eligible for Future Sale 26
Additional Information 2,26
Plan of Distribution 26
Indemnification Arrangements 28
Litigation 28
Legal Opinions 29
Experts 29
Financial Statements 29
Selling Shareholders 10,27
eKomart, Inc.
71 Stony Hill Rd. 2nd Flr.
Bethel, CT 06801
(203) 797-0349
Part II, Page I
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF OFFICERS AND DIRECTORS
In accordance with the General Corporation Laws of the State of
Florida which were in effect at the time eKomart was incorporated,
eKomart's Board of Directors adopted by resolution, as further set
forth in eKomart's by laws, provisions relative to indemnification of
its Officers and Directors against expenses, judgments, fines, settlements,
and other amounts actually and reasonably incurred in connection with the
defense of any proceeding or threatened proceeding to which such person was
or is a party, or is threatened to be made a party by reason of the fact
that such person was or is an officer or director, provided that, (i) such
director or officers acted in good faith or in a manner reasonably believed
by him to be in the best interests of the corporation to procure a judgment
in its favor. In the latter case, the power to indemnify extends to
expenses actually or reasonably incurred in connection with the defense or
settlement of any proceeding if such person (i) acted in good faith, and
(ii) the manner such officer and director believed to be in the best
interest of the corporation and with such care, including reasonable
inquiry, as an ordinary prudent person would use under similar
circumstances. No indemnification will be made in respect of any claim,
issue or matter, as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that the court in which such
action or suit was brought shall determine upon an application of that,
despite the adjudication of liability, but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper. Otherwise, indemnification
for an officer and director meeting the applicable standards of conduct is
determined by a majority of the disinterested directors or shareholders or
upon application by the corporation, such officer or director or his
attorney, to the court in which such proceeding was pending.
The Securities & Exchange Commission is of the opinion that
indemnification of Company officers or directors for matters involving
violation of securities laws is against public policy and that agreements
therefor are consequently unenforceable.
ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with distribution of the securities of
eKomart being Registered hereby, other than commissions and non-
accountable expense allowances, will be borne directly by eKomart
rather than by the Selling Stockholder. Such expenses are estimated to be
$50,000.
Item Amount
United States Securities and Exchange Commission filing fee $ 300
Printing expenses 4,000
Fees and expenses of counsel for eKomart 22,000
Accounting fees and expenses 20,000
Transfer agent fees and expenses 3,000
Miscellaneous 700
TOTAL $50,000
PART II, Page 2
ITEM 26 RECENT SALES OF UNREGISTERED SECURITIES
Acquisition of assets of RTG-TPD Holding Co., LLC.
On November 3, 1999, pursuant to the terms of a Purchase and Sale Agreement
(the "Agreement") between eKomart and RTG-TPD Holding Co., LLC. ("RTG"),
a Colorado Limited Liability Corporation, eKomart purchased all the
outstanding assets of the Limited Liability Corporation.
Pursuant to the terms of the Agreement, the owners of RTG received
7,000,000 shares (See Prospectus-Principal Shareholders). The owners are
Miyung Lee and Daniel Lee, who each received 3,500,000 shares each. Mrs.
Lee is the wife of the President, Stan J.H. Lee, and Daniel Lee is their
15 year old son.
The shares received by Mr. and Mrs. Lee are subject to Rule 144 of the
Securities and Exchange Commission, and exempt from registration through
reliance on Section 4(2) of the Securities Act of 1933, in that both parties
are sophisticated purchasers.
On November 30, 1999, eKomart, Inc. purchased the assets of Hans
Restaurant Management, LLC. and ATA Sushi & Teriyaki, LLC., paying 260,000
common shares, subject to Rule 144 of the S. E. C., said shares exempt
from registration in reliance of Section 4(2) of the securities Act of
1933, in that the owners of the LLC. were sophisticated purchasers. Han
Shin received 165,000 common shares, Erica KL & Co., LLC., 45,000 shares,
Sonia KL & Co., LLC., 40,000 shares, and Jae Hee Woo received 10,000 shares.
ITEM 27: EXHIBITS
Exhibit
Number Description Page
1. Constituent Document:
.1 Original Article of Incorporation 65
.11 Amended and Restated Articles of Incorporation 71
.12 Second Amended and Restated Articles of Incorporation 87
.13 Third Amended and Restated Articles of Incorporation 290
.2 Bylaws 92
5.1 Opinion of Counsel 101
10. Material Contracts:
.1 Operating Agreement, Komart Korean & Japanese
Supermarket, LLC. 102
.2 Operating Agreement, 2050 S. Havana St. (DTSE), LLC. 121
.3 Operating Agreement RTG-TPD Holding Co., LLC. 140
.4 Golden Gate Lease 208
.5 Hans Restaurant Agreement 245
.6 ATA Sushi Purchase Agreement 261
22. Subsidiaries of eKomart 159
24.6 Consent of Auditors 162
27 Financial Data Schedule 295
99 Additional Exhibits
.1 Financial Statements - Diversified Medical Holdings
(unaudited) 1997-1999 163
.2 Registration of eKomart Domain 173
.3 iNetboard-RTG Agreement 186
.4 Employment Agreements 279
Part II, Page 3
ITEM 28: UNDERTAKINGS
A. Certificates
eKomart hereby undertakes to provide its transfer agent with
certificates in such denominations and registered in such names as required
to permit delivery thereof to each purchaser of the Selling Stockholders'
stock offered hereby, from time to time, as required, starting as of the
close of business on the day immediately following the date of this
Registration Statement.
B. Liabilities
Insofar as indemnification of liabilities arising under the
securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of eKomart pursuant to the foregoing provisions
or otherwise, eKomart has been advised that in the opinion of the
Securities and Exchange Commission such otherwise, eKomart has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by eKomart of expenses
incurred or paid by a director, officer or controlling person of eKomart
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, eKomart will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
C. Further Undertakings
eKomart undertakes to file a post effective amendment to the
Registration Statement identifying any underwriter who may agree to sell any
shares of any Selling Stockholder, and to set forth the terms of any
underwriting agreement or arrangement. The said underwriter shall also
deliver a market making prospectus. As far as we are aware, there
exists no past, present, or future plans, proposals, or undertakings with
respect to any underwriter and any Selling Stockholder.
eKomart further undertakes to:
1. File during any period in which it offers or sells securities, a
post effective amendment to this Registration Statement to:
a) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
b) Reflect in the prospectus any facts or events which,
individually or together represent a fundamental change in
the information in the registration statement; and,
c) Include any additional or changed material information on
the plan of distribution.
2. For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
3. File a post effective amendment to remove from registration any
securities that remain unsold at the end of the offering.
Part II, Page 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, eKomart has duly caused this Registration Statement to be
signed on its behalf by the undersigned in the City of Fort Lee, State of
New Jersey on October 27, 2000.
eKomart, INC.
By: /s/Stan J.H. Lee/s/
Stan J.H. Lee
President and Chairman of the Board
of Directors
Pursuant to the requirements of the Exchange Act of 1934, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Date: October 27, 2000
eKomart, INC.
By:/s/Stan J.H. Lee/s/
Stan J.H. Lee
President and Chairman of the Board
of Directors, sole Director
BLANK PAGE
Registration Number: 333-93671
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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= = = = = = = = = = = = = = = = = = = = = = = = = = = = = == = = = = = =
EXHIBITS VOLUME 1
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(SEAL)
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
February 12, 1997
DIVERSIFIED MEDICAL HOLDINGS, INC.
PO BOX 16546
WEST PALM BEACH, FL 33416
The Articles of Incorporation for DIVERSIFIED MEDICAL HOLDINGS, INC. were
filed on February 11, 1997, and assigned document number P97000013637 Please
refer to this number whenever corresponding with this office.
Enclosed is the certification requested. To be official, the certification
for a certified copy must be attached to the original document that was
electronically submitted and filed under FAX audit number H97000002477.
A corporation annual report will be due this office between January 1 and
May 1 of the year following the calendar year of the file date year. 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, of the corporation to
notify this office. it is the responsibility of the corporation to notify
this office.
Should you have questions regarding corporations, please contact this office
at the address given below.
Neysa Culligan
Document Specialist
New Filings Section
Division of Corporations Letter Number: 397A00007435
(SEAL)
State of Florida
Department of State
I certify from the records of this office that DIVERSIFIED MEDICAL
HOLDINGS, INC. is a corporation organized under the laws of the State of
Florida, filed on February 11, 1997.
The document number of this corporation is P97000013637.
I further certify that said corporation has paid all fees and penalties due
this office through December 31, 1997, and its status is active.
I further certify that said corporation has not filed Articles of Dissolution.
I further certify that this is an electronically transmitted certificate
authorized by section 15.16, Florida Statutes, and authenticated by the code,
397A00007435-021297-P97000013637-l/1, noted below.
Given under my hand and the Great Seal of the State of Florida, at
Tallahassee, the Capital, this the Twelfth day of February, 1997
Authentication Code: 397A00007435-021297-P97000013637-1/1
(SEAL) /s/Sandra B. Mortham/s/
Secretary of State
Articles of Incorporation
of
Diversified Medical Holdings, Inc.
Article I. Name
The name of this Florida corporation is:
Diversified Medical Holdings, Inc.
Article II. Address
The mailing address of the Corporation is:
Diversified Medical Holdings, Inc.
PO Box 16546
West Palm Beach FL 33416
Article III. Registered Agent
The name and address of the registered agent of the Corporation is:
Corporate Creations Enterprises, Inc.
4521 PGA Boulevard #211
Palm Beach Gardens FL 33418
Article IV. Board of Directors
The name of each member of the Corporation's Board of Directors is:
Thomas V. Simmons, Jr.
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws
of the Corporation. The election of directors shall be done in
accordance with the Bylaws. The directors shall be protected from personal
liability to the fullest extent permitted by applicable law.
H97000002477
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6629
(305) 672-0686
Article V. Capital Stock
The Corporation shall have the authority to issue 100 shares of common
stock, par value $.01 per share.
Article VI. Incorporator
The name and address of the incorporator is:
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6629
Article VII. Corporate Existence
The corporate existence of the Corporation shall begin effective
February 11, 1997
The undersigned incorporator executed these Articles of Incorporation on
February 11, 1997
Corporate Creations International Inc.
By: /s/Luis A. Uriarte/s/
Vice President
H97000002477
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6629
(305) 672-0686
CERTIFICATE OF DESIGNATION
REGISTERED AGENT AND REGISTERED OFFICE
CORPORATION:
Diversified Medical Holdings, Inc.
REGISTERED AGENT:
Corporate Creations Enterprises, Inc.
4521 PGA Boulevard #211
Palm Beach Gardens Ft 33418
I agree to act as registered agent to accept service of process for the
corporation named above at the place designated in this Certificate. I agree
to comply with the provisions of all statutes relating to the proper and
complete performance of the registered agent duties. I am familiar with and
accept the obligations of the registered agent position.
/s/Luis A. Uriarte/s/, Vice President
Corporate Creations Enterprises, Inc.
Date: February 11, 1997
H97000002477
Corporate Creations International Inc.,
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6e29
(305) 672-0686
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
October 1, 1997
DIVERSIFIED MEDICAL HOLDINGS, INC.
PO BOX 16546
WEST PALM BEACH, FL 33416
Re: Document Number P97000013637
The Amended and Restated Articles of Incorporation for DIVERSIFIED MEDICAL
HOLDINGS, INC., a Florida corporation, were filed on October 1, 1997.
The certification you requested is enclosed. To be official, the
Certificate for a certified copy must be attached to the original document
that was electronically submitted under FAX audit number H97000016317.
Should you have any questions concerning this matter, please telephone
(850) 487-6050, the Amendment Filing Section.
/s/Darlene Connell/s/
Corporate Specialist
Division of Corporations Letter Number: 797A00048395
State of Florida
Department of State
I certify the attached is a true and correct copy of the Amended and
Restated Articles of Incorporation, filed on October 1, 1997, for
DIVERSIFIED MEDICAL HOLDINGS, INC., a Florida corporation, as shown by
the records of this office.
I further certify the document was electronically received under FAX audit
number H97000016317. This certificate is issued in accordance with
section 15.16, Florida Statutes, and authenticated by the code noted
below.
The document number of this corporation is P97000013637.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
First day of October, 1997
Authentication Code: 797A00048395-100197-P97000013637-1/1
(SEAL)
/s/Sandra B. Mortham/s/
Secretary of State
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
DIVERSIFIED MEDICAL HOLDINGS, INC.
Pursuant to Section 607.1007 of the Florida Statutes, Diversified Medical
Holdings, Inc. (the "Corporation"), certifies that:
FIRST: The name of the Corporation is Diversified Medical Holdings, Inc.
The original Articles of Incorporation were filed with the Secretary of
State of the State of Florida on February 11, 1997.
SECOND: These Amended and Restated Articles of Incorporation contain
amendments requiring the approval of the holders of a majority of the
issued and outstanding shares of the common stock of the Corporation. The
holders of a majority of the issued and outstanding shares of the
Corporation's common stock approved such amendments and the Board of
Directors of the Corporation duly adopted these Amended and Restated
Articles of Incorporation by a Joint Unanimous Written Consent of Sole
Director and Sole Stockholder of the Corporation dated September 30, 1997.
The number of votes cast for the amendments was sufficient for approval
by the holders of common stock of the Corporation.
THIRD: The Articles of Incorporation of the Corporation are amended and
restated to read in their entirety as follows:
ARTICLE ONE
The name of the Corporation is: Diversified Medical Holdings, Inc.
ARTICLE TWO
The mailing address of the Corporation shall be: P.O. Box 16546, West
Palm Beach, FL 33416.
ARTICLE THREE
The street address of the registered office of the Corporation is: 4521 PGA
Boulevard #211, Palm Beach Gardens, FL 3341 S. The name of the registered
agent of the Corporation at that address is: Corporate Creations
Enterprises, Inc.
ARTICLE FOUR
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Business Corporation Act
of the State of Florida.
Phillip T. Ridolfo, Jr., Esq.
777 S. Flagler Drive, Suite 310-East
West Palm Beach, FL 33401
(561)650-7900
FL Bar #0963275
ARTICLE FIVE
Authorized Capital. The total number of shares of all classes of capital
stock which the Corporation has authority to issue is 8,000,000 shares
consisting of (i) 6,000,000 shares of Common Stock with a par value of
$.001 per share, (ii) 300,000 shares of Series A Preferred Stock with a
par value of $.001 per share, and (iii) 1,700,000 shares of "blank check
preferred stock."
A. Series A Preferred Stock.
1. Designation and Number. There is hereby designated a series of
Preferred Stock to be known as "Series A Preferred Stock." The number of
shares constituting the Series A Preferred Stock shall be 300,000.
2. Dividends. The Corporation shall not declare or pay any dividend
or make any other distribution to the holders of the Common Stock unless
the holders of the Series A Preferred Stock participate with the holders
of the Common Stock in any such dividend or distribution, and a dividend
or distribution is prior thereto or simultaneously therewith, declared or
paid, as the case may be, to the holders of the Series A Preferred Stock
as set forth in the immediately succeeding sentence. In the case of a
dividend or distribution to the holders of the Common Stock, the holder
of each share of Series A Preferred Stock shall receive the same dividend
or distribution that a holder of the number of shares of Common Stock equal
to the Conversion Ratio would be entitled to receive.
3. Conversion. A holder of shares of Series A Preferred Stock shall
have the right, at such holder's option, at any time or from time to time
to convert any shares of Series A Preferred Stock owned by such holder into
shares of Common Stock on a one-for-one basis (the "Conversion Ratio").
In addition, Each share of Series A Preferred Stock shall automatically be
converted into the number of shares of Common Stock issuable upon the
conversion thereof at the then effective Conversion Ratio upon the
Corporation's Common Stock being Publicly Traded. For purposes of this
designation, the term "Publicly Traded" shall mean from and after the time
the Corporation's Common Stock becomes registered pursuant to the Exchange
Act of 1934 Before any holder of Series A Preferred Stock shall be entitled
to convert such stock into full shares of Common Stock pursuant to this
section, such holder shall surrender the certificate or certificates there
for, duly endorsed, at the office of the Corporation or of any transfer agent
for the Series A Preferred Stock (or the holder shall notify the
Corporation or its transfer agent that such certificate has been lost,
stolen or destroyed and execute an agreement in form and substance
reasonably satisfactory to the Corporation to indemnify the Corporation
from any loss incurred by it in connection therewith), and shall give
written notice to the Corporation at such office that holder elects to
convert the same and shall state therein holder's name or the name or
names of holder's nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation, as
soon as practicable thereafter, shall issue and deliver at such office to
such holder of Series A Preferred Stock, or to such holder's nominee or
nominees a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled, together with cash in lieu
of any fractional shares. In case the number of shares of Series A
Preferred Stock represented by the certificate or certificates surrendered
exceeds the number of shares converted. the Corporation shall, upon such
conversation, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted. Such conversion shall be deemed
to have been made immediately prior to the close of business on the date of
such surrender of the shares of Series A Preferred Stock to be converted,
and the person or persons entitled to receive the shares of Common Stock
issuable upon conversion shall at that time cease to be a holder of the
shares of Series A Preferred Stock for any purpose whatsoever and shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
4. Anti-Dilution. The Conversion Ratio shall be subject to adjustment
from time to time upon the happening of certain events as provided in this
section as follows:
(a) In case the Corporation shall at any time or from time to time
after the date hereof (i) pay any dividend, or make any distribution, on
the outstanding shares of Common Stock (or Common Stock Equivalents) in
shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, (iii) combine the outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of the shares of Common
Stock any shares of capital stock of the Corporation, then and in each such
case, the Conversion Ration in effect immediately prior to such event or
the record date therefor, whichever is earlier, shall be adjusted so that
the holder shall be entitled to receive the number and type of shares of
Common Stock which such holder would have owned or have been entitled to
receive after the happening of any of the events described above, had such
holder's Series A Preferred Stock been converted into Common Stock
immediately prior to the happening of such event or the record date
therefor, whichever is earlier. An adjustment made pursuant to this Section
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive
such dividend or distribution, or (y) in the case of such subdivision,
reclassification or combination, at the close of business on the day upon
which such corporate action becomes effective.
(b) Except with respect to Excluded Securities (as defined below), in
case the Corporation shall issue any shares of Common Stock (or Common
Stock Equivalents) after the date hereof at a consideration per share (or
having a conversion price per share) less than $1.00 per share, then in
each such case, the Conversion Ratio shall be adjusted by multiplying (i)
the Conversion Ratio in effect on the day immediately prior to the date of
issuance of such shares (or Common Stock Equivalents) by (ii) a fraction,
the numerator of which shall be the sum of (x) the number of shares of
Common Stock outstanding on such date prior to such issuance and (y) the
number of shares of Common Stock convertible at the then current Conversion
Ratio with the aggregate consideration receivable by the Corporation for
the total number of shares of Common Stock so issued (or issuable upon
conversion, exchange or exercise of such Common Stock Equivalents), and the
denominator of which shall be the sum of (x) the number of shares of Common
Stock outstanding on such date prior to such issuance and (y) the number of
additional shares of
Common Stock issued (or issuable upon conversion, exchange or exercise of
such Common Stock Equivalents). An adjustment made pursuant to this
Section shall be made on the next Business Day following the date on which
any such issuance is made and shall be effective retroactively to the close
of business on the date of such issuance. For purposes of this Section, the
aggregate consideration receivable by the Corporation in connection with
the issuance of shares of Common Stock or of Common Stock Equivalents shall
be deemed to be equal to the sum of the aggregate offering price (the
aggregate consideration received by the Corporation in connection with the
issuance of all such Common Stock and/or Common Stock Equivalents before
deduction of underwriting discounts or commissions and expenses payable to
third parties, if any) of all such Common Stock and/or Common Stock
Equivalents plus the minimum aggregate amount, if any, payable upon
conversion, exchange or exercise of any such Common Stock Equivalents. The
issuance or reissuance of any shares of Common Stock (whether treasury
shares or newly issued shares) pursuant to a dividend or distribution on,
or subdivision, combination or reclassification of, the outstanding shares
of Common Stock requiring an adjustment in the Conversion Ratio pursuant
to Section (a) above shall not be deemed to constitute an issuance of
Common Stock or Common Stock Equivalents by the Corporation to which this
Section applies. Upon the expiration of any unconverted, unexchanged or
unexercised Common Stock Equivalents for which an adjustment has been made
pursuant to this Section, the adjustments shall forthwith be reversed to
effect such Conversion Ratio as would have been in effect if at the time of
such Common Stock Equivalents, to the extent outstanding immediately prior
to such expiration or termination, had never been issued. Excluded
Securities shall mean (i) all shares of Common Stock or Common Stock
Equivalents issued and outstanding upon the date on which shares of
Series A Preferred Stock are first issued, (ii) 500,000 shares of Common
Stock options and/or warrants issuable pursuant to a Stock Incentive Plan
to be adopted by the Board of Directors of the Corporation, and (iii)
warrants to purchase up to 200,000 shares of Common Stock exercisable at
$.30 per share.
(c) For purposes of Subsections (a) through (d) of this Section, the
number of shares of Common Stock at any time outstanding shall mean the
aggregate of all shares of Common Stock then outstanding (other than any
shares of Common Stock then owned or held by or for the account of the
Corporation) treating for purposes of this calculation all Common Stock
Equivalents as having been converted, exchanged or exercised.
(d) If the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution and shall thereafter, and before such dividend or distribution
is paid or delivered to stockholders entitled thereto, legally abandon its
plan to pay or deliver such dividend or distribution, then no adjustment
in the Conversion Ratio then in effect shall be made by reason of the
taking of such record, and any such adjustment previously made as a result
of the taking of such record shall be reversed.
(e) As used in this Section, the term "Common Stock" shall mean and
include the Corporation's authorized Common Stock, par value $0.00l per
share, as constituted on the date hereof, and shall also include any
capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage in respect of the
rights of the holders thereof to participate in dividends nor be entitled
to a preference, in the distribution of assets upon the voluntary or
involuntary liquidation dissolution or winding up of the Corporation.
(f) In the case of a Sale of the Corporation or a proposed
reorganization of the Corporation or a proposed reclassification of the
capital stock of the Corporation (except a transaction for which provision
for adjustment is otherwise made in this Section), the Warrant shall
thereafter be exercisable into the number of shares of stock or other
securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon exercise of such Warrant would
have been entitled upon such Sale of the Corporation, reorganization or
reclassification; and, in every such case, appropriate adjustment (as
determined by the Board of Directors) shall be made in the application of
the provisions herein set forth with respect to the rights and interest
thereafter of the holders of the Series A Preferred Stock, to the end that
the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the applicable Conversion Ratio) shall
thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon the
conversion of Series A Preferred Stock. The Corporation shall not effect any
such Sale of the Corporation unless prior to or simultaneously with the
consummation thereof the successor Corporation or purchaser, as the case
may be, shall assume by written instrument the obligation to deliver to the
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, each such holder is entitled to receive.
(g) Whenever the Conversion Ratio is adjusted as herein provided, the
Corporation shall prepare and deliver forthwith to the holder a certificate
signed by its President or a Vice President, or by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, setting
forth the adjusted Conversion after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which adjustment was made.
5. Liquidation, Dissolution or Winding Up.
(a) Upon the voluntary or involuntary dissolution, liquidation or
winding up (each, a "Liquidation") of the Corporation, the holders of the
shares of the Series A Preferred Stock shall be entitled to receive and to
be paid out of the assets of the Corporation available for distribution to
its stockholders the Preferred Distribution Preference Per Share (as defined
below) with respect to each outstanding share of Series A Preferred Stock.
(b) If upon any such Liquidation, whether voluntary or involuntary, the
assets to be distributed to the holders of the Series A Preferred Stock
shall be insufficient to permit payment of the full amount of the Preferred
Distribution Preference Per Share with respect to each share of Series A
Preferred Stock, then the entire assets of the Corporation to be distributed
among the holders of the Series A Preferred Stock shall be distributed
ratably among such holders.
(c) After the payment to the holders of shares of the Series A
Preferred Stock of the full amount of the liquidating distribution to which
they are entitled under this Section (collectively, the "Aggregate Preference
Amount"), an amount equal to the Aggregate Preference Amount shall be
distributed ratably to the holders of Common Stock out of the assets of the
Corporation. After the Payment to the holders of Common Stock of an amount
equal to the Aggregate Preference Amount, the remaining assets of the
Corporation available for distribution to the stock holders shall be
distributed ratably to the holders of Common Stock (treating for purposes
of this calculation all shares of Series A Preferred Stock as having been
converted into Common Stock).
(d) Neither the consolidation, merger or other business combination of
the Corporation with or into any other Person or Persons nor the sale of all
or substantially all the assets of the Corporation shall be deemed to be a
Liquidation for purposes of this Section.
(e) "Preferred Distribution Preference Per
Share" shall mean, with respect to each share of Series A Preferred Stock,
One and no/100 dollars ($1.00).
6. Voting Rights. In addition to any voting rights provided by law, the
holder of each share of Series A Preferred Stock shall be entitled to vote
on all matters and shall be entitled to the number of votes equal to the
number of votes a holder of the shares of Common Stock, whole or fractional,
into which such share of Series A Preferred Stock is convertible pursuant to
Section is entitled to, at the record date for the determination of the
shareholders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholder is solicited. In the event the Corporation is not (i) Publicly
Traded prior to December 31, 1999, and (ii) more that 150,000 shares of
Series A Preferred Stock remains outstanding subsequent to January 31, 2000,
then, for so long as at least 100,000 shares of Series A Preferred Stock
remains outstanding, the holders of a majority of Series A Preferred Stock
outstanding shall have the right to elect a majority of the Corporation's
Board of Directors. In such an election, each holder of shares of Series A
Preferred Stock shall be entitled to one vote for each share of Series A
Preferred Stock held and no holder of Series A Preferred Stock shall be
entitled to cumulate his votes by giving one candidate more than one vote
per share.
7. Redemption. In the event that the Corporation's Common Stock is not
Publicly Traded prior to December 31, 1999, the shares of Series A
Preferred Stock shall be subject to mandatory redemption at the election of
the holder of such shares. Upon a redemption election, the holder shall be
entitled to receive from the Corporation a cash amount per share equal to
the Preferred Distribution Preference per share plus accrued dividends if
any. Any redemption payment to be made hereunder shall hereinafter be
referred to as a "Preferred Redemption Payment." If less than all the shares
of the Series A Preferred Stock then outstanding are to be redeemed, the
redemption shall be on a pro rata basis with respect to such shares based
upon the number of outstanding shares of Series A Preferred Stock then owned
by each holder thereof. If, upon a redemption, the assets of the Corporation
available for redemption shall be insufficient to pay the holders of Series
A Preferred Stock the full amounts to which they shall be entitled, the
holders of shares of Series A Preferred
Stock shall share ratably in any such redemption according to the respective
amounts which would be payable in respect of shares held by them upon such
redemption if all amounts payable on or with respect to said shares were
paid in full, and the Corporation shall immediately thereafter commence with
a Liquidation. A holder of Series A Preferred Stock shall be entitled to
redemption of such stock pursuant to this section upon the surrender of the
certificate or certificates thereof, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series A Preferred Stock (or
the holder shall notify the Corporation or its transfer agent that such
certificate has been lost, stolen or destroyed, and execute an agreement in
form and substance reasonably satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection therewith), and
shall give written notice to the Corporation at such office that holder
elects to redeem the same. The Corporation, as soon as practicable
thereafter but in no event later than Fifteen (15) days, shall provide
such holder of Series A Preferred Stock with a Preferred Redemption Payment.
B. Blank Check Preferred Stock.
I. Issuance. The blank check preferred stock may be issued from time to
time in one or more series. Subject to the limitations set forth herein and
any limitations prescribed by law, the Board of Directors is expressly
authorized, prior to issuance of any series of blank check preferred stock,
to fix by resolution or resolutions providing for the issue of any series
the number of shares included in such series and the designations, relative
powers, preferences and rights, and the qualifications, limitations or
restrictions of such series. Pursuant to the foregoing general authority
vested in the Board of Directors, but not in limitation of the powers
conferred on the Board of Directors thereby and by the Florida Business
Corporation Act, the Board of Directors is expressly authorized to determine
with respect to each series of blank check preferred stock:
(a) the designation or designations of such series and the number of
shares (which number from time to time may be decreased by the Board of
Directors, but not below the number of such shares then outstanding, or may
be increased by the Board of Directors unless otherwise provided in creating
such series) constituting such series;
(b) the rate or amount and times at which, and the preferences and
conditions under which, dividends shall be payable on shares of such series,
the status of such dividends as cumulative or noncumulative, the date or
dates from which dividends, if cumulative, shall accumulate, and the status
of such shares as participating or nonparticipating after the payment of
dividends as to which such shares are entitled to any preference;
(c) the rights and preferences, if any, of the holders of shares of such
series upon the liquidation, dissolution or winding up of the affairs of,
or upon any distribution of the assets of' the corporation, which amount
may vary depending upon whether such liquidation, dissolution or winding up
is voluntary or involuntary and, if voluntary, may vary at different dates,
and the status of the shares of such series as participating or
nonparticipating after the satisfaction of any such rights and preferences,
(d) the full or limited voting rights, if any, to be provided for shares of
such series, in addition to the voting rights provided by law;
(e) the times, terms and conditions, if any, upon which shares of such
series shall be subject to redemption, including the amount the holders of
shares of such series shall be entitled to receive upon redemption (which
amount may vary under different conditions or at different redemption dates)
and the amount, terms, conditions and manner of operation of any purchase,
retirement or sinking fund to be provided for the shares of such series;
(f) the rights, if any, of holders of shares of such series to convert
such shares into, or to exchange such shares for, share of any other class
or classes or of any other series of the same class, the prices or rates of
conversion or exchange, and adjustments thereto, and any other terms and
conditions applicable to such conversion or exchange;
(g) the limitations, if any, applicable while such series is outstanding
on the payment of dividends or making of distributions on, or the
acquisition or redemption of Common Stock or any other class of shares
ranking junior, either as to dividends or upon liquidation, to the shares
of such series;
(h) the conditions or restrictions, if any, upon the issue of any
additional shares (including additional shares of such series or any other
series or of any other class) ranking on a parity with or prior to the
shares of such series either as to dividends or upon liquidation; and
(i) any other relative powers, preferences and participating, optional
or other special right, and the qualifications, limitations or restrictions
thereof' of shares of such series; in each case, so far as not inconsistent
with the provisions of these Amended and Restated Articles of Incorporation
or the Florida Business Corporation Act as then in effect.
ARTICLE SIX
The business and affairs of the Corporation shall be managed by the Board of
Directors consisting of no less than one director. The number of directors
may be increased or decreased from time to time in accordance with the
Bylaws of the Corporation. The election of directors shall be done in
accordance with the Bylaws.
ARTICLE SEVEN
The Corporation shall have perpetual existence.
ARTICLE EIGHT
The Corporation shall indemnify and advance expenses to, and may purchase
and maintain insurance on behalf of, its officers and directors or any
former officer or director, to the fullest extent permitted by law.
IN WITNESS WHEREOF, these Amended and Restated Articles of Incorporation
were signed by the Chairman of the Board of Directors of the Corporation
this 30th day of September, 1997.
/s/Douglas R. Dimick/s/,
Chairman of the Board
ACTION BY UNANIMOUS WRITTEN CONSENT OF
THE SOLE DIRECTOR OF
DIVERSIFIED MEDICAL HOLDINGS, INC.
IN LIEU OF A SPECIAL MEETING
The undersigned, being the sole Director of Diversified Medical Holdings,
Inc., a Florida corporation (the "Corporation"), hereby makes the following
written statements in lieu of holding a special meeting, pursuant to the
terms of Section 607.0821, Florida Statutes.
WHEREAS, the sole Director of the Corporation believes it to be in the best
interests of the Corporation to issue 300,000 shares of blank check preferred
stock which shall be referred to as "Series A Preferred Stock" (the "Series
A Preferred Stock") in accordance with the terms set forth herein.
NOW, THEREFORE, Be It:
RESOLVED, that the sole Director does hereby approve the issuance of 300,000
shares of Series A Preferred Stock, the terms of which are as follows:
(1) Designation and Number There is hereby designated a series
of Preferred Stock to be known as "Series A Preferred Stock". The number of
shares constituting the Series A Preferred Stock shall be 300,000.
(2) Dividends The Corporation shall not declare or pay any dividend
or make any other distribution to the holders of the Common Stock unless the
holders of the Series A Preferred Stock participate with the holders of the
Common Stock in any such dividend or distribution, and a dividend or
distribution is prior thereto or simultaneously therewith, declared or paid,
as the case may be, to the holders of the Series A Preferred Stock as set
forth in the immediately succeeding sentence. In the case of a dividend or
distribution to the holders of the Common Stock, the holder of each share of
Series A Preferred Stock shall receive the same dividend or distribution
that a holder of the number of shares of Common Stock equal to the
Conversion Ratio would be entitled to receive.
(3) Conversion A holder of shares of Series A Preferred Stock
shall have the right, at such holder's option, at any time or from time to
time to convert any shares of Series A Preferred Stock owned by such holder
into shares of Common Stock on a one-for-one basis (the "Conversion Ratio").
In addition, Each share of Series A Preferred Stock shall automatically be
converted into the number of shares of Common Stock issuable upon the
conversion thereof at the then effective Conversion Ratio upon the
Corporation's Common Stock being Publicly Traded. For purposes of this
designation, the term "Publicly Traded" shall mean from and after the time
the Corporation's Common Stock becomes registered pursuant to the Exchange
Act of 1934. Before any holder of Series A Preferred Stock shall be entitled
to convert such stock into full shares of Common Stock pursuant to this
section, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series A Preferred Stock (or the holder shall notify the
Corporation or its transfer agent that such certificate has been lost, stolen
or destroyed and execute an agreement in form and substance reasonably
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith), and shall give written notice to
the Corporation at such office that holder elects to convert the same and
shall state therein holder's name or the name or names of holder's nominees
in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation, as soon as practicable thereafter,
shall issue and deliver at such office to such holder of Series A Preferred
Stock, or to such holder's nominee or nominees a certificate or certificates
for the number of shares of Common Stock to which such holder shall be
entitled, together with cash in lieu of any fractional shares. In case the
number of shares of Series A Preferred Stock represented by the certificate
or certificates surrendered exceeds the number of shares converted, the
Corporation shall, upon such conversation, execute and deliver to the
holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series A Preferred Stock represented by the
certificate or certificates surrendered which are not to be converted. Such
conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of the shares of Series A
Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon conversion shall at that
time cease to be a holder of the shares of Series A Preferred Stock for any
purpose whatsoever and shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date.
(4) Anti-Dilution. The Conversion Ratio shall be subject to adjustment
from time to time upon the happening of certain events as provided in this
section as follows:
(a) In case the Corporation shall at any time or from time to time after
the date hereof (i) pay any dividend, or make any distribution, on the
outstanding shares of Common Stock (or Common Stock Equivalents) in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares or (iv) issue by reclassification of the shares of Common Stock any
shares of capital stock of the Corporation, then and in each such case, the
Conversion Ration in effect immediately prior to such event or the record
date therefor, whichever is earlier, shall be adjusted so that the holder
shall be entitled to receive the number and type of shares of Common Stock
which such holder would have owned or have been entitled to receive after
the happening of any of the events described above, had such holder's Series
A Preferred Stock been converted into Common Stock immediately prior to the
happening of such event or the record date therefor, whichever is earlier.
An adjustment made pursuant to this Section shall become effective (x) in
the case of any such dividend or distribution, immediately after the close of
business on the record date for the determination of holders of shares of
Common Stock entitled to receive such dividend or distribution, or (y) in
the case of such subdivision, reclassification or combination, at the close
of business on the day upon which such corporate action becomes effective.
(b) Except with respect to Excluded Securities (as defined below), in
case the Corporation shall issue any shares of Common Stock (or Common Stock
Equivalents) after the date hereof at a consideration per share (or having a
conversion price per share) less than $1.00 per share, then in each such
case, the Conversion Ratio shall be adjusted by multiplying (i) the
Conversion Ratio in effect on the day immediately prior to the date of
issuance of such shares (or Common Stock Equivalents) by (ii) a fraction,
the numerator of which shall be the sum of (x) the number of shares of
Common Stock outstanding on such date prior to such issuance and (y) the
number of shares of Common Stock convertible at the then current Conversion
Ratio with the aggregate consideration receivable by the Corporation for the
total number of shares of Common Stock so issued (or issuable upon conversion,
exchange or exercise of such Common Stock Equivalents), and the denominator
of which shall be the sum of (x) the number of shares of Common Stock
outstanding on such date prior to such issuance and (y) the number of
additional shares of Common Stock issued (or issuable upon conversion,
exchange or exercise of such Common Stock Equivalents.) An adjustment made
pursuant to this Section shall be made on the next Business Day following
the date on which any such issuance is made and shall be effective
retroactively to the close of business on the date of such issuance. For
purposes of this Section, the aggregate consideration receivable by the
Corporation in connection with the issuance of shares of Common Stock or of
Common Stock Equivalents shall be deemed to be equal to the sum of the
aggregate offering price (the aggregate consideration received by the
Corporation in connection with the issuance of all such Common Stock and/or
Common Stock Equivalents before deduction of underwriting discounts or
commissions and expenses payable to third parties, if any) of all such
Common Stock and/or Common Stock Equivalents plus the minimum aggregate
amount, if any, payable upon conversion, exchange or exercise of any such
Common Stock Equivalents. The issuance or reissuance of any shares of Common
Stock (whether treasury shares or newly issued shares) pursuant to a dividend
or distribution on, or subdivision, combination or reclassification of, the
outstanding shares of Common Stock requiring an adjustment in the Conversion
Ratio pursuant to Section (a) above shall not be deemed to constitute an
issuance of Common Stock or Common Stock Equivalents by the Corporation to
which this Section applies. Upon the expiration of any unconverted, unexchanged
or unexercised Common Stock Equivalents for which an adjustment has been made
pursuant to this Section, the adjustments shall forthwith be reversed to
effect such Conversion Ratio as would have been in effect if at the time of
such Common Stock Equivalents, to the extent outstanding immediately prior
to such expiration or termination, had never been issued. Excluded Securities
shall mean (i) all shares of Common Stock or Common Stock Equivalents issued
and outstanding upon the date on which shares of Series A Preferred Stock are
first issued, (ii) 500,000 shares of Common Stock options and/or warrants
issuable pursuant to a Stock Incentive Plan to be adopted by the Board of
Directors of the Corporation, and (iii) warrants to purchase up to 200,000
shares of Common Stock exercisable at $.30 per share.
(c) For purposes of Subsections (a) through (d) of this Section, the
number of shares of Common Stock at any time outstanding shall mean the
aggregate of all shares of Common Stock then outstanding (other than any
shares of Common Stock then owned or held by or for the account of the
Corporation) treating for purposes of this calculation all Common Stock
Equivalents as having been converted, exchanged or exercised.
(d) If the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution and shall thereafter, and before such dividend or distribution
is paid or delivered to stockholders entitled thereto, legally abandon
its plan to pay or deliver such dividend or distribution, then no
adjustment in the Conversion Ratio then in effect shall be made by reason of
the taking of such record, and any such adjustment previously made as a
result of the taking of such record shall be reversed.
(e) As used in this Section, the term "Common Stock" shall mean and
include the Corporation's authorized Common Stock, par value $.00l per share,
as constituted on the date hereof, and shall also include any capital stock
of any class of the Corporation thereafter authorized which shall neither be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends nor be entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
(f) In the case of a Sale of the Corporation or a proposed reorganization
of the Corporation or a proposed reclassification of the capital stock of
the Corporation (except a transaction for which provision for adjustment is
otherwise made in this Section), the Warrant shall thereafter be exercisable
into the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock of the Corporation
deliverable upon exercise of such Warrant would have been entitled upon such
Sale of the Corporation, reorganization or reclassification; and, in every
such case, appropriate adjustment (as determined by the Board of Directors)
shall be made in the application of the provisions herein set forth with
respect to the rights and interest thereafter of the holders of the Series
A Preferred Stock, to the end that the provisions set forth herein (including
provisions with respect to changes in and other adjustments of the applicable
Conversion Ratio) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of Series A Preferred Stock. The Corporation
shall not effect any such Sale of the Corporation unless prior to or
simultaneously with the consummation thereof the successor Corporation or
purchaser, as the case may be, shall assume by written instrument the
obligation to deliver to the holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, each such holder is
entitled to receive.
(g) Whenever the Conversion Ratio is adjusted as herein provided, the
Corporation shall prepare and deliver forthwith to the holder a certificate
signed by its President or a Vice President, or by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary,
setting forth the adjusted Conversion after such adjustment, setting forth
a brief statement of the facts requiring such adjustment and setting forth
the computation by which adjustment was made.
(5) Liquidation, Dissolution or Winding Up.
(a) Upon the voluntary or involuntary dissolution, liquidation or
winding up (each, a "Liquidation") of the Corporation, the holders of the
shares of the Series A Preferred Stock shall be entitled to receive and to
be paid out of the assets of the Corporation available for distribution
to its stockholders the Preferred Distribution Preference Per Share (as
defined below) with respect to each outstanding share of Series A Preferred
Stock.
(b) If upon any such Liquidation, whether voluntary or involuntary, the
assets to be distributed to the holders of the Series A Preferred Stock
shall be insufficient to permit payment of the full amount of the Preferred
Distribution Preference Per Share with respect to each share of Series A
Preferred Stock, then the entire assets of the Corporation to be distributed
among the holders of the Series A Preferred Stock shall be distributed
ratably among such holders.
(c) After the payment to the holders of shares of the Series A Preferred
Stock of the full amount of the liquidating distribution to which they are
entitled under this Section (collectively, the "Aggregate Preference Amount"),
an amount equal to the Aggregate Preference Amount shall be distributed
ratably to the holders of Common Stock out of the assets of the Corporation.
After the Payment to the holders of Common Stock of an amount equal to the
Aggregate Preference Amount, the remaining assets of the Corporation
available for distribution to the stock holders shall be distributed ratably
to the holders of Common Stock (treating for purposes of this calculation
all shares of Series A Preferred Stock as having been converted into
Common Stock).
(d) Neither the consolidation, merger or other business combination of
the Corporation with or into any other Person or Persons nor the sale of all
or substantially all the assets of the Corporation shall be deemed to be a
Liquidation for purposes of this Section.
(e) "Preferred Distribution Preference Per Share" shall mean, with
respect to each share of Series A Preferred Stock, One and no/100 dollars
($1.00).
(6) Voting Rights. In addition to any voting rights provided by law,
the holder of each share of Series A Preferred Stock shall be entitled to
vote on all matters and shall be entitled to the number of votes equal to
the number of votes a holder of the shares of Common Stock, whole or
fractional, into which such share of Series A Preferred Stock is convertible
pursuant to Section is entitled to, at the record date for the determination
of the shareholders entitled to vote on such matters or, if no such record
date is established, at the date such vote is taken or any written
consent of shareholder is solicited. In the event the Corporation is not (i)
Publicly Traded prior to December 31, 1999, and (ii) more that 150,000
shares of Series A Preferred Stock remains outstanding subsequent to January
31, 2000, then, for so long as at least 100,000 shares of Series
A Preferred Stock remains outstanding, the holders of a majority of Series
A Preferred Stock outstanding shall have the right to elect a majority of
the Corporation's Board of Directors. In such an election, each holder of
shares of Series A Preferred Stock shall be entitled to one vote for each
share of Series A Preferred Stock held and no holder of Series A Preferred
Stock shall be entitled to cumulate his votes by giving one candidate more
than one vote per share.
(7) Redemption. In the event that the Corporation's Common Stock is
not Publicly Traded prior to December 31, 1999, the shares of Series A
Preferred Stock shall be subject to mandatory redemption at the election of
the holder of such shares. Upon a redemption election, the holder shall be
entitled to receive from the Corporation a cash amount per share equal to
the Preferred Distribution Preference per share plus accrued dividends, if
any. Any redemption payment to be made hereunder shall hereinafter be
referred to as a "Preferred Redemption Payment." If less than all the shares
of the Series A Preferred Stock then outstanding are to be redeemed, the
redemption shall be on a pro rata basis with respect to such shares based
upon the number of outstanding shares of Series A Preferred Stock then owned
by each holder thereof. If; upon a redemption, the assets of the Corporation
available for redemption shall be insufficient to pay the holders of Series
A Preferred Stock the full amounts to which they shall be entitled, the
holders of shares of Series A Preferred Stock shall share ratably in any
such redemption according to the respective amounts which would be payable
in respect of shares held by them upon such redemption if all amounts
payable on or with respect to said shares were paid in full, and
the Corporation shall immediately thereafter commence with a Liquidation. A
holder of Series A Preferred Stock shall be entitled to redemption of such
stock pursuant to this section upon the surrender of the certificate or
certificates thereof; duly endorsed, at the office of the Corporation
or of any transfer agent for the Series A Preferred Stock (or the holder
shall notify the Corporation or its transfer agent that such certificate
has been lost, stolen or destroyed, and execute an agreement in form and
substance reasonably satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith), and
shall give written notice to the Corporation at such office that holder
elects to redeem the same. The Corporation, as soon as practicable
thereafter but in no event later than Fifteen (15) days, shall provide
such holder of Series A Preferred Stock with a Preferred Redemption Payment.
FINALLY RESOLVED, that the proper officers are hereby authorized to take
any actions and do any and all other things necessary or appropriate in
order to implement the foregoing Resolution.
Dated: September 30, 1997
/s/Douglas R. Dimick,/s/ Sole Director
CORPORATE CREATIONS
941 Fourth Street #200 Tel (305) 672-0686
Miami Beach, FL 33139 Fax (305)672-9110
Apri1 22, 1999
Thomas Simmons
P.O. Box 16546
West Palm Beach, Fl 33416
Please find enclosed the Amended and Restated Articles of Incorporation a
long with stock certificates for preferred and common stock.
Thank you very much for choosing our services.
Sincere1y,
/s/Todd Hardy/s/
Todd Hardy
Vice President
www.corpcreations.com
todd@corpcreations.com
FLORIDA DEPARTMENT OF STATE
Katherine Harris
Secretary of State
April 19, 1999
INETBOARD, INC.
PO BOX 16546
WEST PALM BEACH, FL 33416
Re: Document Number P97000013637
The Amended and Restated Articles of Incorporation for DIVERSIFIED
MEDICAL HOLDINGS, INC. which changed its name to INETBOARD, INC., a
Florida corporation, were filed on April 16, 1999.
This document was electronically received and filed under FAX audit number
H 99000008877.
Should you have any questions concerning this matter, please
telephone (650) 487-6050, the Amendment Filing Section.
/s/Darlene Connell/s/
Darlene Connell
Corporate Specialist
Division of Corporations Letter Number: 899A00020146
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
These Amended and Restated Articles of Incorporation were
adopted effective by the Corporation's Board of Directors and shareholders
pursuant to section 607.1007, Florida Statutes. Each amendment set forth in
these Amended and Restated Articles of Incorporation was approved by the
shareholders by a vote sufficient for approval of the amendment. These
Amended and Restated Articles of Incorporation supersede the original
Articles of Incorporation, as amended.
Article I Name
If no old name is listed below, the name of this Florida corporation has not
been changed. If the current/new name listed below differs from the old name,
the current/new name will become effective upon the filing of this document.
Current/New Name: iNetboard, Inc.
Old Name: Diversified Medical Holdings, Inc.
Article II. Address
The mailing address of the Corporation is:
iNetboard, Inc.
P.O. Box 16546
West Palm Beach FL 33416
Article III. Board of Directors
The name of each member of the Corporation's Board of Directors is:
Douglas R. Dimick
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the
fullest extent permitted by applicable law.
Corporate Creations International Inc.
941 Fourth Street #200
Miami Beach FL 33139
(305) 672-0686
Article IV Capital Stock
The Corporation shall have the authority to issue 20,000,000 shares of
common stock, par value $.001 per share. In addition, the Corporation shall
have the authority to issue 2,000,000 shares of preferred stock, par value
$.001 per share, which may be divided into series and with the preferences,
limitations and relative rights determined by the Board of Directors.
Article V. Registered Agent
The name and address of the registered agent of the Corporation is:
Thomas V. Simmons, Jr.
668 Fergusson Lane
West Palm Beach FL 33415
Article VI. Corporate Existence
The corporate existence of the Corporation will begin effective upon the
filing date of the original Articles of Incorporation.
The undersigned executed these Amended and Restated Articles of
Incorporation on the date shown below.
Diversified Medical Holdings, Inc. iNetboard, Inc.
By: /s/Douglas R. Dimick/s/
Name: Douglas R. Dimick
Title: President
Date: 15 April 99
Corporate Creations International Inc.
941 Fourth Street #200
Miami Beach FL 33139
(305) 672-0686
CERTIFICATE OF DESIGN
ON REGISTERED AGENT/OFFICE
CORPORATION
iNetboard, Inc.
REGISTERED AGENT/OFFICE:
Thomas V. Simmons, Jr.
668 Fergusson Lane
West Palm Beach FL 33415
I agree to act as registered agent to accept service of process for the
corporation named above at the place designated in this Certificate. I agree
to comply with the provisions of all statutes relating to the proper and
complete performance of the registered agent duties. I am familiar with
and accept the obligations of the registered agent position.
/s/Thomas V. Simmons, Jr./s/
Date: April 15, 1999
Corporate Creations International Inc.
941 Fourth Street #200
Miami Beach FL 33139
(305) 672-0886
Bylaws
of
Diversified Medical Holdings, Inc.
ARTICLE I. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or under
the authority of the Board of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
Directors must be natural persons who are at least 18 years of age but need
not be shareholders of the Corporation. Residents of any state may be
directors.
Section 2. Compensation. The shareholders shall have authority to fix
the compensation of directors. Unless specifically authorized by a
resolution of the shareholders, the directors shall serve in such capacity
without compensation.
Section 3. Presumption of Assent. A director who is present at a meeting
of the Board of Directors or a committee of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented
to the action taken unless he objects at the beginning of the meeting (or
promptly upon arriving) to the holding of the meeting or transacting the
specified business at the meeting, or if the director votes against the
action taken or abstains from voting because of an asserted conflict of
interest.
Section 4. Number. The Corporation shall have at least the minimum number
of directors required by law. The number of directors may be increased or
decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
shareholders shall elect directors to hold office until the next annual
meeting or until their earlier resignation, removal from office or death.
Directors shall be elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may
be filled by the shareholders or by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of Directors.
A director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders. If there are no remaining
directors, the vacancy shall be filled by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any
director or the entire Board of Directors may be removed, with or without
cause, provided the notice of the meeting states that one of the purposes of
the meeting is the removal of the director. A director may be removed only
if the number of votes cast to remove him exceeds the number of votes
cast against removal.
Section 8. Quorum and Voting. A majority of the number of directors fixed
by these Bylaws shall constitute a quorum for the transaction of business.
The act of a majority of directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may
designate from among its members one or more committees each of which must
have at least two members. Each committee shall have the authority set
forth in the resolution designating the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board
of Directors shall be held at the principal place of business of the
Corporation or at another place designated by the person or persons giving
notice or otherwise calling the meeting.
Section 11. Time. Notice and Call of Meetings. Regular meetings of the
Board of Directors shall be held without notice at the time and on the date
designated by resolution of the Board of Directors. Written notice of the
time, date and place of special meetings of the Board of Directors shall be
given to each director by mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a director
who signs a waiver of notice either before or after the meeting. Attendance
of a director at a meeting constitutes a waiver of notice of that meeting
and waiver of all objections to the place of the meeting, the time of the
meeting, and the manner in which it has been called or convened, unless a
director objects to the transaction of business (promptly upon arrival at
the meeting) because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors must be specified in
the notice or waiver of notice of the meeting.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place.
Notice of an adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to
the other directors. Meetings of the Board of Directors may be called by the
President or the Chairman of the Board of Directors. Members of the Board
of Directors and any committee of the Board may participate in a meeting by
telephone conference or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Participation by these means constitutes presence in person at a meeting.
Section 12. Action By Written Consent. Any action required or permitted
to be taken at a meeting of directors may be taken without a meeting if a
consent in writing setting forth the action to be taken and signed by all of
the directors is filed in the minutes of the proceedings of the Board. The
action taken shall be deemed effective when the last director signs the
consent, unless the consent specifies otherwise.
ARTICLE II. MEETING OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of the
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be
held when directed by the President or when requested in writing by
shareholders holding at least 10% of the Corporation's stock having the
right and entitled to vote at such meeting. A meeting requested by
shareholders shall be called by the President for a date not less than 10
nor more than 60 days after the request is made. Only business within the
purposes described in the meeting notice may be conducted at a special
shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the
principal place of business of the Corporation or at such other place as is
designated by the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall
be mailed to each shareholder having the right and entitled to vote at the
meeting at the address as it appears on the records of the Corporation. The
meeting notice shall be mailed not less than 10 nor more than 60 days before
the date set for the meeting. The record date for determining shareholders
entitled to vote at the meeting will be the close of business on the day
before the notice is sent. The notice shall state the time and place the
meeting is to be held. A notice of a special meeting shall also state the
purposes of the meeting. A notice of meeting shall be sufficient for that
meeting and any adjournment of it. If a shareholder transfers any shares
after the notice is sent, it shall not be necessary to notify the transferee.
All shareholders may waive notice of a meeting at any time.
Section 5. Shareholder Quorum A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative
vote of a majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders. Each
outstanding share shall be entitled to one vote on each matter submitted to
a vote at a meeting of shareholders. An alphabetical list of all
shareholders who are entitled to notice of a shareholders' meeting along
with their addresses and the number of shares held by each shall be produced
at a shareholders' meeting upon the request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy
executed in writing and signed by the shareholder or his attorney-in-fact.
The appointment of proxy will be effective when received by the Corporation's
officer or agent authorized to tabulate votes. No proxy shall be valid more
than 11 months after the date of its execution unless a longer term is
expressly stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the voting
stock entitled to vote at a meeting are present at the meeting, and sign a
written consent to the meeting on the record, the acts of the meeting shall
be valid, even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
shareholders may be taken without a meeting if written consents, setting
forth the action taken, are signed by at least a majority of shares entitled
to vote and are delivered to the officer or agent of the Corporation
having custody of the Corporation's records within 60 days after the date
that the earliest written consent was delivered. Within 10 days after
obtaining an authorization of an action by written consent, notice shall be
given to those shareholders who have not consented in writing or who
are not entitled to vote on the action. The notice shall fairly summarize
the material features of the authorized action. If the action creates
dissenters' rights, the notice shall contain a clear statement of the right
of dissenting shareholders to be paid the fair value of their shares upon
compliance with and as provided for by the state law governing corporations.
ARTICLE III. OFFICERS
Section 1. Officers; Election; Resignation; Vacancies. The Corporation
shall have the officers and assistant officers that the Board of Directors
appoint from time to time. Except as otherwise provided in an employment
agreement which the Corporation has with an officer, each officer
shall serve until a successor is chosen by the directors at a regular or
special meeting of the directors or until removed. Officers and agents
shall be chosen, serve for the terms, and have the duties determined by the
directors. A person may hold two or more offices.
Any officer may resign at any time upon written notice to the Corporation.
The resignation shall be effective upon receipt, unless the notice specifies
a later date. If the resignation is effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may
fill the pending vacancy before the effective date provided the successor
officer does not take office until the future effective date. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the
Board of Directors at any regular or special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as
may be prescribed by the Board of Directors and, to the extent not so
provided, as generally pertain to their respective offices, subject to the
control of the Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a
committee elected or appointed by the Board of Directors may be removed by
the Board with or without cause whenever in its judgment the best interests
of the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer, agent or member of a committee shall
not of itself create contract rights. Any officer, if appointed by another
officer, may be removed by that officer.
Section 4. Salaries. The Board of Directors may cause the Corporation to
enter into employment agreements with any officer of the Corporation. Unless
provided for in an employment agreement between the Corporation and an
officer, all officers of the Corporation serve in their capacities without
compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with
financial institutions as determined by the Board of Directors.
ARTICLE IV DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions to its
shareholders in cash property, or its own shares, unless the distribution
would cause (i) the Corporation to be unable to pay its debts as they become
due in the usual course of business, or (ii) the Corporation's assets to be
less than its liabilities plus the amount necessary, if the Corporation
were dissolved at the time of the distribution, to satisfy the preferential
rights of shareholders whose rights are superior to those receiving the
distribution. The shareholders and the Corporation may enter into
an agreement requiring the distribution of corporate profits, subject to the
provisions of law.
ARTICLE V CORPORATE RECORDS
Section 1. Corporate Records. The corporation shall maintain its records
in written form or in another form capable of conversion into written form
within a reasonable time. The Corporation shall keep as permanent records
minutes of all meetings of its shareholders and Board of Directors, a record
of all actions taken by the shareholders or Board of Directors without a
meeting, and a record of all actions taken by a committee of the Board of
Directors on behalf of the Corporation. The Corporation shall maintain
accurate accounting records and a record of its shareholders in a form that
permits preparation of a list of the names and addresses of all shareholders
in alphabetical order by class of shares showing the number and series of
shares held by each.
The Corporation shall keep a copy of its articles or restated articles of
incorporation and all amendments to them currently in effect; these Bylaws
or restated Bylaws and all amendments currently in effect; resolutions
adopted by the Board of Directors creating one or more classes or series of
shares and fixing their relative rights, preferences, and limitations, if
shares issued pursuant to those resolutions are outstanding; the minutes of
all shareholders' meetings and records of all actions taken by shareholders
without a meeting for the past three years; written communications to all
shareholders generally or all shareholders of a class of series within the
past three years, including the financial statements furnished for the last
three years; a list of names and business street addresses of its current
directors and officers; and its most recent annual report delivered to the
Department of State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to
inspect and copy, during regular business hours at a reasonable location
specified by the Corporation, any books and records of the Corporation. The
shareholder must give the Corporation written notice of this demand at least
five business days before the date on which he wishes to inspect and copy
the record(s). The demand must be made in good faith and for a proper
purpose. The shareholder must describe with reasonable particularity the
purpose and the records he desires to inspect, and the records must be
directly connected with this purpose. This Section does not affect the
right of a shareholder to inspect and copy the shareholders' list described
in this Article if the shareholder is in litigation with the Corporation.
In such a case, the shareholder shall have the same rights as any other
litigant to compel the production of corporate records for examination.
The Corporation may deny any demand for inspection if the demand was made
for an improper purpose, or if the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders
of the Corporation or of any other corporation, has aided or abetted any
person in procuring any list of shareholders for that purpose, or has
improperly used any information secured through any prior examination of the
records of this Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by
resolution of the shareholders within 120 days after the close of each
fiscal year, the Corporation shall furnish its shareholders with annual
financial statements which may be consolidated or combined statements of the
Corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income
statement for that year, and a statement of cash flows for that year. If
financial statements are prepared for the Corporation on the basis
of generally accepted accounting principles, the annual financial statements
must also be prepared on that basis.
If the annual financial statements are reported upon by a public accountant,
his report must accompany them. If not, the statements must be accompanied
by a statement of the President or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing
any respects in which the statements were not prepared on a basis of
accounting consistent with the statements prepared for the preceding year.
The Corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within
such additional time thereafter as is reasonably necessary to enable the
Corporation to prepare its financial statements. Thereafter, on written
request from a shareholder who was not mailed the statements, the Corporation
shall mail him the latest annual financial statements.
Section 4. Other Reports to Shareholders. If the Corporation indemnifies
or advances expenses to any director, officer, employee or agent otherwise
than by court order or action by the shareholders or by an insurance carrier
pursuant to insurance maintained by the Corporation, the Corporation shall
report the indemnification or advance in writing to the shareholders with
or before the notice of the next annual shareholders' meeting, or prior to
the meeting if the indemnification or advance occurs after the giving of
the notice but prior to the time the annual meeting is held. This report
shall include a statement specifying the persons paid, the amounts
paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
It the Corporation issues or authorizes the issuance of shares for promises
to render services in the future, the Corporation shall report in writing to
the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice
of the next shareholders' meeting.
ARTICLE VI STOCK CERTIFICATES
Section 1. Issuance. The Board of Directors may authorize the issuance of
some or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and
the Secretary (or the Treasurer). The rights and obligations of
shareholders are identical whether or not their shares are represented by
certificates.
Section 2. Registered Shareholders. No certificate shall be issued for
any share until the share is fully paid. The Corporation shall be entitled
to treat the holder of record of shares as the holder in fact and, except as
otherwise provided by law, shall not be bound to recognize any equitable or
other claim to or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be
transferred on its books only after the surrender to the Corporation of the
share certificates duly endorsed by the holder of record or attorney-in-fact.
If the surrendered certificates are canceled, new certificates shall be
issued to the person entitled to them, and the transaction recorded on the
books of the Corporation.
Section 4. Lost Stolen or Destroyed Certificates. If a shareholder
claims to have lost or destroyed a certificate of shares issued by the
Corporation, a new certificate shall be issued upon the delivery to the
Corporation of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed, and, at the discretion
of the Board of Directors, upon the deposit of a bond or other indemnity as
the Board reasonably requires.
ARTICLE VII INDEMNIFICATION
Section 1. Right to Indemnification. The Corporation hereby indemnifies
each person (including the heirs, executors, administrators, or estate of
such person) who is or was a director or officer of the Corporation to the
fullest extent permitted or authorized by current or future legislation or
judicial or administrative decision against all fines, liabilities, costs
and expenses, including attorneys fees, arising out of his or her status as
a director, officer, agent, employee or representative. The foregoing right
of indemnification shall not be exclusive of other rights to which those
seeking an indemnification may be entitled. The Corporation may maintain
insurance, at its expense, to protect itself and all officers and directors
against fines, liabilities, costs and expenses, whether or not the
Corporation would have the legal power to indemnify them directly against
such liability.
Section 2. Advances. Costs, charges, and expenses (including attorneys'
fees) incurred by a person referred to in Section 1 of this Article in
defending a civil or criminal proceeding shall be paid by the Corporation in
advance of the final disposition thereof upon receipt of an undertaking
to repay all amounts advanced if it is ultimately determined that the person
is not entitled to be indemnified by the Corporation as authorized by this
Article, and upon satisfaction of other conditions required by current or
future legislation.
Section 3. Savings Clause. If this Article or any portion of it is
invalidated on any ground by a court of competent jurisdiction, the
Corporation nevertheless indemnifies each person described in Section 1 of
this Article to the fullest extent permitted by all portions of this Article
that have not been invalidated and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws adopted,
by a majority vote of the directors or by a vote of the shareholders holding
a majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors of the
Corporation.
/s/ Thomas V. Simmons, Jr./s/
Secretary
Date: 11 FEB 97
EXHIBIT 5.1
Opinion of Selling Stockholders' Counsel
October 23, 2000
Securities and Exchange Commission
Washington, D.C. 20549
RE: eKomart, INC.
Registration Number: 333-93671
Gentlemen:
This opinion is given in connection with the filing of a Registration
Statement on Form SB-2/A by eKomart, Inc., registration number 333-93671
(the "Registration Statement"), filed with the United States Securities and
Exchange Commission, as it pertains to 1,800,000 currently outstanding
shares in the common stock of eKomart, Inc. (the "Company"), with par
value of $0.001 per share held by Selling Stockholders(as defined in the said
Registration Statement, as described in the Registration Statement.
Certain terms used in this opinion characterized by initial capital
letters have the meaning set forth in the Prospectus which constitutes a
portion of the Registration.
We have examined the originals and copies of corporate instruments,
certificates and other documents of the Company and interviewed represent-
atives of the Company to the extent we deemed it necessary, in order to
form the basis for the opinion hereinafter set forth.
In such examination we have assumed the genuineness of all signatures
and authenticity of all documents submitted to us as certified or photostatic
copies. As to all questions of fact material to this opinion which have
not been independently established, we have relied upon statements or
certificates of officers or representatives of the Company.
According to the records maintained by the Company, there were, as of
the date of this opinion, 20,000,000 shares of common stock authorized, with
a par value of $0.001 each, of which 9,060,000 shares of common stock were
issued.
Based upon the foregoing, we are of the opinion that:
The 9,060,000 shares of Common Stock of the Company heretofore issued
are fully paid and non- assessable and there is no personal liability to the
owners thereof.
This law firm hereby consents to the filing of this opinion as an
exhibit to the Registration Statement; however, this opinion is limited to
the facts set forth herein and is not to be interpreted as an opinion that
the Registration Statement has been properly prepared, or provides all
required disclosure.
Very truly yours,
/s/Bernabe Diaz/s/
Bernabe Diaz, Esq.
Corporate Counsel for the Company
71 Stony Hill Rd., 2nd Flr.
Bethel CT 06801
Operating Agreement
of
Komart Supermarket, LLC.
(The Corporation)
Dated: March 1, 1999.
Article I
Offices
Section 1. Principal Office: The principal office of the Corporation shall be
located at 2000 South Havana St., Aurora, Colorado 80014.
Section 2. Additional Offices: The Corporation may have such additional
offices at such other place within or without the State of Colorado as the
Members may from time to time determine or as the business of the Corporation
may require.
Article II
Meetings
Section 1. Annual Meeting: An annual meeting of Members shall be held within
five (5) months alter the close of the fiscal year of the Corporation on such
date and at the time and place as shall be fixed by the Members. At the
annual meeting the Members shall elect an Operating Manager and other
officers and transact such other business as may properly be brought before
the meeting.
Section 2. Special Meeting: A special meeting of Members may be called at
any time by the Operating Manager and shall be called by the Operating
Manager at the request in writing of a majority of the Members entitled to
vote at such meeting. Any such request shall state the purpose or purposes
of the proposed meeting. Business transacted at any special meeting of
Members shall be confined to the purposes set forth in the notice thereof.
Special meetings may be held by telephonic Conference Call, provided all
Members agree to the said Meeting by telephonic Conference Call in writing,
and attest to any resolutions passed at the said meeting in writing.
Section 3. Notice of Meetings: Written notice of the time, place and purpose
of every meeting of Members (and, if other than an annual meeting, the
person or persons at whose discretion the meeting is being called), shall be
given by the Operating Manager to each Member of record entitled to vote at
such meeting, not less than five nor more than fifty days prior to the date
set for the meeting. Notice shall be given either personally or by mailing
said notice by first class mail to each Member at his address appearing on
the record book of the Corporation or at such other address supplied by him
in writing to the Operating Manager of the Corporation for the purpose of
receiving notice.
A written waiver of notice setting forth the purposes of the meeting for
which notice is waived, signed by the person or persons entitled to such
notice, whether before or alter the time of the meeting stated therein,
shall be deemed equivalent to the giving of such notice. The attendance by a
Member at a meeting either in person or by proxy without protesting the lack
of notice thereof shall constitute a waiver of notice of such Member.
All notices given with respect to an original meeting shall extend to any
and all adjournments thereof and such business as might have been transacted
at the original meeting may be transacted at any adjournment thereof; no
notice of any adjourned meeting need be given if an announcement of the
time and place of the adjourned meeting is made at the original meeting.
Section 4. Quorum: The holders of at least 70% in interest of the Members
present in person or represented in proxy, shall be requisite and shall
constitute a quorum at all meetings, of members except as otherwise provided
by statute or the Articles of Organization. A Members Interest in the
Corporation shall be in proportion to his contribution to the capital of the
Corporation adjusted from time to time to reflect additions or withdrawals.
The phrase "at least 70% in interest" of the Members shall mean Members who,
in the aggregate, shall have Capital Contributions in excess of seventy
(70%) percent of the total Capital Contributions of all of the Members. If,
however, a quorum shall not be present or represented at any meeting of
Members, the Members entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified when a quorum is
once present to organize a meeting, such quorum is not deemed broken by the
subsequent withdrawal of any Members.
Section 5. Voting: Every Member entitled to vote at any meeting shall be
entitled to vote in accordance with his Interest in the Corporation held by
him of record on the date fixed as the record date for said meeting and may
so vote in person or by proxy. Any Corporation action shall be authorized by
a majority in interest of the votes cast by the Members entitled to vote
thereon except as may otherwise by provided by statute, the Articles of
Organization or this Operating Agreement.
Section 6. Proxies: Every proxy must be signed by the Members entitled to
vote or by his duly authorized attorney-in-fact and shall be valid only if
filed with the Operating Manager of the Corporation prior to the commencement
of voting on the matter in regard to which said proxy is to be voted. No
proxy shall be valid after the expiration of eleven months from the date of
its execution unless otherwise expressly provided in the proxy. Every proxy
shall be revocable at the pleasure of the person executing it except as
otherwise provided by statute. Unless the proxy by its terms provided for a
specific revocation date and except as otherwise provided by statute,
revocation of a proxy shall not be effective unless and until such revocation
is executed in writing by the Member who executed such proxy and the
revocation is filed with the Operating Manager of the Corporation prior to
the voting of the proxy.
Section 7. Minutes of Meetings: Minutes of the Corporation's last meeting,
and the resolutions passed thereat, shall be prepared for every meeting of
Members and shall be produced by the Operating Manager thereat. Annual
statements reflecting the financial status of the Corporation shall be
distributed to all members no later than 45 days after the end of every
fiscal year, and at least 30 days before any annual meeting. Minutes of any
Meeting shall be prepared by the Operating Manager and sent to the Members at
their last known address by ordinary mail not later than 30 days after any
meeting.
Section 8. Inspectors at Meetings: In advance of any Members meeting, the
Members may appoint one or more inspectors to act at the meeting or at any
adjournment thereof and if not so appointed the person presiding at any such
meeting may, and at the request of any Member entitled to vote thereat shall,
appoint one or more inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
Section 9. Conduct of Meeting: All meetings of Members shall he presided
over by the Operating Manager, or if he is not present, by a Member thereby
chosen by the Members at the meeting. The Operating Manager or the person
presiding at the meeting shall appoint any person present to act as
secretary of the meeting.
Article III
Officers
Section 1. Executive Officers: The officers of the Corporation shall be an
Operating Manager, a President, a Secretary and a Treasurer and such other
officers as the Members may determine. The same person may hold any two or
more offices. The initial Operating Manager shall be RTG-TPD Holding Co.,
LLC., and the initial President shall be Sun Mok Hwang. These Officers may
be removed or replaced with, and only with, the unanimous consent of the
Members.
Section 2. Election: Except as provided in Article 4(2), the Operating
Manager and the other officers shall be chosen by the Members and shall hold
office for the term for which elected and until their successors have been
elected and qualified. The Members may from time to time appoint all such
other officers as they determine and such officers shall hold office from
the time of their appointment and qualifications until the time at which
their successors are appointed and qualified. The Members may fill a vacancy
in any office arising from any cause for the unexpired portion of the term.
Section 3. Removal: Subject to Article 4(2), ante, the Members may remove
any officer from office at any time with or without cause.
Section 4. Delegation of Powers: The Members may, with the unanimous consent
of all Members, from time to time delegate the powers or duties of any
officer of the Corporation, in the event of his absence or failure to act
otherwise, to any other officer or Member of person whom they may select.
Section 5. Compensation: The compensation of each officer shall be such as
the Members may from time to time determine.
Section 6. Operating Manager: The Operating Manager shall be the chief
executive officer of the Corporation and shall have general charge of the
business and affairs of the Corporation, subject, however, to the right of
the Members to confer specified powers on officers and subject generally to
the direction of the Members. The president shall have those powers as may be
conferred upon him by the Operating Manager, provided, however, that such
powers shall not exceed the powers conferred upon the Operating Manager.
Unless otherwise ordered by the Members, the Operating Manager, or in the
event of his inability to act, the President, shall have full power and
authority on behalf of the Corporation to attend and to act and to vote at
any meeting of security holders of companies in which the Corporation may
hold securities, and at such meetings shall possess and may exercise any and
all rights and powers incident to the ownership of such securities, and
which, as the owner thereof, the Corporation might have possessed and
exercised, if present. The Members by unanimous resolution from time to time
may confer like powers upon any other person or persons.
Section 7. Secretary: The Secretary shall keep the minutes of all meetings
and record all votes of Members and committees in a book to be kept for that
purpose. He shall give or cause to be given any required notice of meetings
of Members or any committee, and shall be responsible for preparing or
obtaining from a transfer agent appointed by the Members, the list of Members
required by Article II, Section 7 hereof. He shall be the custodian of the
seal of the Corporation and shall affix or cause to be affixed the seal to
any instrument requiring it and attest the same and exercise the powers and
perform the duties incident to the office of Secretary subject to the
direction of the Members.
Section 8. Treasurer: Subject to the direction of the Members, the Treasurer
shall have charge of the general supervision of the funds and securities of
the Corporation and the books of account of the Corporation and shall
exercise the powers and perform the duties incident to the office of the
Treasurer. If required by the Members, he shall give the Corporation a bond
in such sum and with such sureties as may be satisfactory to the Members for
the faithful discharge of his duties.
Section 9. Other Officers: All other officers, if any, shall have such
authority and shall perform such duties as may be specified from time to
time by the Members.
Article IV
Committees
Section 1. Committees: The Members, by resolution of a majority in interest
of the Members, may designate from among themselves one or more committees,
each consisting of three or more Members, and each of which, to the extent
provided in such resolution, shall have all the authority of the Members
except that no such committee shall have the authority as to any of the
following matters:
(a) The filing of vacancies in any committee;
(b) The fixing of compensation of the Members for serving on any committee;
(c) The amendment of repeal of this Operating Agreement or the adoption of a
new Operating Agreement; and
(d) The amendment or repeal of any resolution of the Members which by its
terms shall not be so amenable or repealable.
The Members may designate one or more Members as alternate members of any
such committee who may replace any absent member or members at any such
meeting of such committee.
Each such committee shall serve at the pleasure of the Members. The Members
shall have the power at any time to fill vacancies in, to change the
membership of, or to discharge any such committee. Committees shall keep
minutes of their proceedings and shall report the same to the Members at
the meeting of the Members next succeeding, and any action by the committee
shall be subject to revision and alteration by the Members, provided that no
rights of a third party shall be affected in any such revision or alteration.
Article V
Resignations
Section 1. Resignations: Any officer of the Corporation or any members of
any committee of the Members may resign at any time by giving written notice
to the Members, the Operating Manager or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time is not
specified therein, upon the receipt thereof, irrespective of whether any
such resignations shall have been accepted.
Article VI
Certificates Representing Membership
Section 1. Form of Certificates: Each Member shall be entitled to a
Certificate or Certificates in such form as prescribed by the Members and by
any applicable statutes, which Certificate shall certify the interest of the
Member in the Corporation. The Certificates shall be numbered and registered
in the order in which they are issued and upon issuance the name in which
each Certificate has been issued together with the Interest in the
Corporation represented thereby and the date of issuance shall be entered in
the Membership book of the Corporation by the Secretary or by the transfer
agent of the Corporation. Each Certificate shall be signed by the Operating
Manager and countersigned by the Secretary and shall be sealed with the
Corporation Seal or facsimile thereof The signatures of the officers upon a
Certificate may also be facsimiles if the Certificate is countersigned by a
transfer agent or registered by a registrar other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or
whose facsimile signature has been placed upon a Certificate shall have
ceased to be such officer before the Certificate is issued, such Certificate
may be issued by the Corporation with the same effect as if the officer had
not ceased to be such at the time of its issue.
Section 2. Record Date for Members: For the purpose of determining the
Members entitled to notice of; or to vote at any meeting of Members or any
adjournment thereof or to express consent or dissent from any proposal
without a meeting, or for the purpose of determining the Members entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Members may fix, in advance, a date as the
record date for any such determination of Members. Such date shall not be
more than fifty (50) nor less than ten (10) days before the date of any
meeting nor more than fifty days prior to any action taken without a meeting,
the payment of any dividend or the allotment of any rights, or any other
action.
Article VII
General Restriction on Transfer of Interest
Section 1. General Restriction on Transfer of Interest: Except as hereinafter
provided in this Agreement, no Member shall transfer by sale, gift, bequest
or otherwise, or encumber by pledge, assignment, mortgage, charge or
otherwise, or otherwise dispose of or cease to be the holder of any of
the Interest in the Corporation of which it is at any time the registered or
beneficial owner, without the prior written consent of the other Members. In
the case of any permitted transfer, no Member shall sell any of its Interest
in the Corporation unless the purchaser is already or becomes a party to
this Agreement upon completion of the applicable sale.
Article VIII
Bankruptcy and Default
Section 1. Bankruptcy and Default Provisions:
8.01 Upon the happening of the earliest of:
(a) the bankruptcy of any one or more of the Members, or
in the event any one or more of the Members is at any time in breach of or
in default under any of the provisions of this Agreement, which breach or
default is not remedied within thirty (30) days of receipt or written notice
of same from the Corporation; or
(b) the bankruptcy of any one or more of the Members or
in the event any one or more of the Members is at any time in breach of or in
default under any of the provisions of this Agreement, which breach or
default is not remedied within thirty (30) days of receipt of written notice
of same from the Corporation;
then, upon the happening of such event, in the case of subparagraph
(a), The Member(s) shall, and in the case of subparagraph (b), the Member(s)
shall, for the purposes of this Article Eight, be deemed to be a "Retiring
Party".
8.02 Upon the happening of an event causing one of the Members to
become a Retiring Party;
(a) the other Members shall have the option to purchase
all but not less than all the Interest in the Corporation owned by the
Retiring Party on a pro rata basis equal to the Interest in the Corporation
then held by each Member, which option shall be exercised by giving written
notice to the Retiring Party or his Personal Representative and to the
Corporation within thirty (30) days of the said event; or
(b) in the event the other Members do not so elect, the
Corporation shall have the option to purchase all but not less than all of
the Interest in the Corporation owned by the Retiring Party or his personal
Representative within thirty (30) days of the expiry of the option period
specified in Article 7.02 (a) hereof, for a price and in the manner calculated
and set forth in Articles 8.03 through 8.06 hereof. If any Member does not
take up his option for his pro rate proportion of the Interest in the
Corporation of the Retiring Party, the unclaimed Interest in the Corporation
shall be used to satisfy any request made by any other Members who have
indicated that they desire to purchase the said Interest in the Corporation
in excess of their pro rata proportion.
8.03 The purchase price for any Interest in the Corporation to be
purchased pursuant to the provisions of this Article Eight shall be equal to
the fair market value of such Interest in the Corporation at the date that
written notice is given by the purchasing Members or the Corporation, as the
case may be, (hereinafter referred to as the "Purchaser"), of its intention
to purchase the Interest in the Corporation of the Retiring Party. If the
Purchaser and the Retiring Party, or his Personal Representative, are unable
to agree as to the fair market value of the Interest in the Corporation to
be purchased, such determination shall be made by the Corporation's
Accountant.
8.04 If the parties do not agree with the valuation made by the
Corporation's Accountant, then the Purchaser shall nominate a representative
and the Retiring Party or his Personal Representative shall nominate a
representative, the two representatives so nominated shall nominate a third
representative and a majority of the three representatives shall select a
qualified appraiser to make the necessary fair market value determination.
The Purchaser and the Retiring Party shall pay for the cost of their own
representatives and the costs of the third representative and the qualified
appraiser shall be borne equally by the Purchaser and by the Retiring Party.
8.05 In arriving at the valuation, the qualified appraiser shall:
(a) determine the fair market value of the Interest in
the Corporation as of the appropriate date without premium for control or
discount for minority;
(b) refer to and use as a guideline the valuation, if
any, last determined pursuant to the provisions of this Article Eight; and
(c) consider any written representations which either
the Purchaser or Retiring Party may make.
The valuation determined by the appraiser in accordance with
this Article Eight shall be binding upon all of the parties hereto.
8.06 Unless other terms of sale are agreed to by the Members, the
terms of any sale under this Article Eight shall be as follows:
(a) a minimum of twenty (20%) percent of the total
purchase price shall be paid at the time of closing by certified check
against delivery of the relevant Certificates duly endorsed in blank
with signatures guaranteed. The unpaid balance of the total purchase price,
if any, from time to time of the purchase shall bear interest from the time
of closing at a rate per annum equal to the prime lending rate charged by
the Corporation's bank at the time of closing plus two (2%) percent, and
such principal and interest shall be paid in twelve (12) equal monthly
consecutive installments commencing one (1) calendar month from the time of
closing. The Purchaser shall execute and deliver to the Retiring Party a
promissory note in the amount equal to the unpaid balance of the purchase
price at the time of closing and bearing interest as recited above. Default
of any payment of principal or interest shall, at the option of the holder of
the promissory note, cause the entire balance thereof to mature, provided that
the Purchaser may prepay the same in whole or in part, in reverse order of
maturity, without notice or bonus payments;
(b) the closing shall be at 10:00 o'clock a.m. at the
registered office of the Corporation on the sixtieth (60th) day following the
event causing one of the Members to become a Retiring Party;
(c) if the Retiring Party refuses or neglects to complete
the sale for any reason, the Purchaser shall have the right, upon payment of
the purchase price to the credit of the Retiring Party in any chartered bank
in the State of Colorado for and on behalf of and in the name of the
Retiring Party or his nominee or nominees, to execute and deliver such
transfers, resignations and other documents as may be necessary or desirable
in order to complete the transaction.
Article IX
Buy-Sell Provisions
Section 1. Buy-Sell Provisions:
9.01 Except in cases where Article Eight, which supersedes the
provisions hereof, would apply, any Member (hereinafter referred to as the
"Offering Party") may, at any time during the term of the Agreement, send a
offer in writing to the other Members, (hereinafter referred to individually
as a "Notified Party" and collectively as the "Notified Parties"), which
shall be signed by the Offering Party and shall be an offer to sell to the
Notified Parties, on a pro rata basis equal to the Interest in the
Corporation held by each Notified Party, all of the Interest in the
Corporation owned by the Offering Party at an arbitrary price and on terms
stipulated in the offer. Each Notified Party shall have a period of sixty
(60) days following the delivery of the offer to accept by notice in writing
the offer in accordance with its terms.
9.02 If one or more of the Notified Parties is prepared to
purchase his pro rata portion of the Interest in the Corporation, (the
"Accepting Party" or "Accepting Parties", as the case may be), but the other
Notified Party or Notified Parties are not so prepared, then the Accepting
Party or Accepting Parties shall have the first right and option to purchase
all of the Interest in the Corporation owned by the Offering Party on a pro
rata basis equal to the Interest in the Corporation held by the Accepting
Parties at the specified price. The Accepting Party or Accepting Parties
shall have a period of thirty (30) days within which to exercise the said
option. If the Accepting Party or Accepting Parties elect to exercise the
said option within the time stipulated the Accepting Party or Accepting
Parties shall then purchase and pay for all of the Interest in the
Corporation owned by the Offering Party at the specified price.
9.03 The terms of sale under this Article Nine shall be as follows:
(a) the purchase price shall be paid as set out in the
offer made pursuant to Article 9.01 hereof;
(b) the closing shall be at 10:00 o'clock a.m. at the
registered office of the Corporation on the sixtieth (60th) day following the
date of delivery of the offer under Article 9.01;
(c) if the selling Member(s) refuses or neglects to
complete the sale for any reason, the purchasing Member(s) shall have the
right, upon payment of the purchase price to the credit of the selling
Member(s) at any chartered bank in the State of Colorado for and on behalf
of and in the name of the selling Member(s) or his nominee(s), to execute and
deliver such transfers, resignations and other documents as may be necessary
or desirable in order to complete the transaction.
9.04 The rights granted by this Article Nine are in lieu of any
rights, statutory or otherwise, which a dissenting Member may now or
hereafter have to require a party hereto to purchase any of his Interest in
the Corporation in the capital stock of the Corporation.
9.05 The provisions of Article 9.01 shall, in any event, be
subject to the compliance by the selling Member(s) with applicable law and
the obtaining of requisite approvals for transfer thereunder. The closing
date referred to in Article 9.03 is hereby deemed to be extended by the
amount of time of any delay or delays occasioned by a regulatory or
governmental agency which is required to give approval to a transfer hereunder.
Article X
Right of First Refusal
Section 1. Right of First Refusal:
10.01 Except in cases where Article Eight or Article Nine, which
shall supersede the provisions hereof, would apply, no Member shall entertain
offers for the purchase of his Interest in the Corporation nor make
agreements for the sale, transfer or assignment of his Interest in the
Corporation except upon compliance with this Article Ten, (and where
applicable, compliance with Article Eleven), and subject to the terms and
conditions hereinafter set forth:
(a) no sale, transfer or assignment of Interest in the
Corporation shall be considered by a Member unless he shall have first
received a bona fide offer in writing form from a third party dealing at
arm's length, who is a responsible purchaser of good business reputation and
who has agreed to enter into an agreement with the remaining Members of the
Corporation identical to this Agreement, (except changes in the Agreement
required because it has ceased to apply to a party hereto), to purchase all
of his Interest in the Corporation, which offer shall provide that the
purchase price shall be payable in cash;
(b) a party to the Agreement receiving an offer as
contemplated by subsection (a) of this Article 10.01, (herein referred to as
the "Selling Party"), which the Selling Party is prepared to accept shall,
within ten (10) days of the receipt of such offer, deliver a copy of such
offer, together with his own offer to sell all of the Interest in the
Corporation so proposed to be sold, to the other Members upon the same terms
and conditions as the third party shall have offered;
(c) the Members receiving the offer of the Selling Party
shall have the first right and option to purchase on a pro rata basis the
Interest in the Corporation to be sold by the Selling Party for a period of
thirty (30) days from the date of receipt of the offer of the Selling Party,
such right and option to be exercised before the expiration of such thirty
(30) days by notice in writing;
(d) if the other Members accept the offer of the Selling
Party within the time stipulated, they shall purchase on a pro rata basis all
of the Interest in the Corporation owned by the Selling Party upon the same
terms and conditions as the third party shall have offered;
(e) if one or more of the other Members is prepared to
purchase his pro rata portion of the Interest in the Corporation, (the
"Accepting Party" or "Accepting Parties", as the case may be), but the other
Member or Members are not so prepared, then the Accepting Party or Accepting
Parties shall have the first right and option to purchase all of the Interest
in the Corporation of the Selling Party on a pro rata basis equal to the
Interest in the Corporation held by the Accepting Parties, upon the same
terms and conditions as the third party shall have offered;
(f) if the other Members do not accept the offer of the
Selling Party within the time stipulated in Article 10.01(c) hereof or if the
Accepting Party or Accepting Parties elect not to exercise the right and
option set out in Article 10.01(e) hereof or do not exercise the said right
and option within the time stipulated, the Selling Party shall accept the
offer of the said third party, and complete the transaction with the said
third party in accordance with the offer of such third party and the parties
to this Agreement hereby agree to take all steps and proceedings requisite to
have such third party entered on the books of the Corporation as a Member of
the Corporation and to execute and deliver an Operating Agreement in
replacement of this Agreement. The Selling Party is hereby appointed the
agent and attorney of the other Members for the purpose of effecting
registration of the third party as a Member of the Corporation.
10.02 The provisions of Article 10.01 shall, in any event, be
subject to the compliance by the Selling Party and the third party with
applicable law and the obtaining of requisite approvals for transfer
thereunder.
Article XI
Piggyback Rights
Section 1. Piggy-back Rights. If the completion of any sale of Interest in
the Corporation to a third party in accordance with Article Ten would
result in the said third party acquiring more than a forty (40%)
percent Interest in the Corporation, each of the Members Receiving the
offer of the Selling Party, (hereinafter referred to the "Offerees"), shall
have the further right, to be exercised by notice in writing to the Selling
Party within the time limited for the acceptance of the Selling Party's
offer, to require the Selling Party to sell all but not less than all of the
Interest in the Corporation owned or controlled by each Offeree upon the
same terms and conditions as are contained in the third party's offer. If
any of the Offerees exercise such right, the Selling Party shall not
complete the sale of its Interest in the Corporation unless all of the
Interest in the Corporation of such Offerees who shall have so exercised such
right are also sold to the third party on the same terms and conditions as
are contained in the third party's offer.
Article XII
Security for Purchase of Interest in the Corporation
Section 1. Security for Purchase:
12.01 As security for the unpaid balance of the purchase price
with respect to a purchase and sale of Interest in the Corporation pursuant
to this Agreement, the purchasing Member shall pledge the said Interest in
the Corporation being the subject matter of such purchase and sale,
(hereinafter called the "Pledged Interest in the Corporation"), to and in
favor of the disposing Member, free and clear of any lien, charge or
encumbrance of whatsoever nature.
12.02 The Certificate(s) evidencing the Pledged Interest in the
Corporation shall be endorsed in blank by the purchasing Member with
signature guaranteed at the time of closing and be delivered to the attorneys
for the Corporation, or to such other persons as the parties hereto may
agree, (hereinafter called the "Trustee"), to be held in trust as provided
herein, together with a certified copy of a resolution of the Members of the
Corporation consenting to the transfer of the said Interest in the
Corporation to the disposing Member pursuant to the provisions of this
Article Twelve. Subject as herein provided, the Trustee shall hold the
Certificates evidencing the Pledged Interest in the Corporation until the
purchase price therefore has been paid in full, at which time and upon proof
thereof being furnished to the Trustee in the form of a receipt signed by
the disposing Member and an affirmative statement of payment signed by the
purchasing Member, the Trustee shall deliver the said Certificates to the
purchasing Member.
12.03 If at any time and from time to time during the period that
the purchase price remains outstanding:
(a) any of the said Interest in the Corporation are
subdivided, consolidated, changed or reclassified; or
(b) the Corporation is re-organized or amalgamated with
another Corporation or any other event occurs which results in the
substitution or exchange of any of the Interest in the Corporation
for, or the conversion of any of the said Interest in the Corporation into
other securities; the Corporation, forthwith after the occurrence of any
such event shall substitute for the Pledged Interest in the Corporation, a
Certificate reflecting the resulting Interest in the Corporation, or other
securities. In this connection, Certificates or other evidence of ownership
of such resulting Interest in the Corporation or other securities in
transferable form with signatures guaranteed shall be forthwith deposited
with the Trustee against receipt of the said Certificates.
12.04 Until such time as the security hereby constituted shall
become enforceable, the purchasing Member shall be entitled to and may
exercise all voting and other rights attached to the Pledged Interest in
the Corporation.
12.05 While any part of the purchase price of any Interest in the
Corporation sold pursuant to this Agreement by the disposing Member is
unpaid, the purchasing Member insofar as it is permitted by law to do so,
covenants and agrees hereby that it will not vote in favor of nor suffer the
Corporation to do any of the following, namely:
(a) to allot or issue stock, bonds or other corporate
securities;
(b) to incur any obligations or liabilities, (absolute
or contingent), except if incurred under contracts or agreements entered into
in the course of business of the Corporation;
(c) to purchase or redeem any Member's Interest in the
Corporation;
(d) to mortgage, pledge or subject to lien, charge or
any other encumbrance any assets, tangible or intangible, of the Corporation
except in the ordinary course of business;
(e) to sell or transfer any assets, cancel any debts or
claims or transact any business except in each case in the ordinary course of
the business of the Corporation;
(f) to knowingly permit any extraordinary losses or
waive any rights of substantial value to the Corporation;
(g) to enter into any agreement other than in the
ordinary course of business of the Corporation including, but not limited to,
agreements regarding increases in salaries, bonuses, payments, stock options
or deferred compensation, provided that increments may be paid to the
purchasing Member, by way of increased salary or compensation in an amount
which shall not exceed ten (10%) percent of its previous year's aggregate
consideration;
(h) to grant options, warrants or other rights to acquire
Interest in the Corporation;
(i) to re-organize the capital structure of the
Corporation; or
(j) to merge, consolidate, amalgamate or sell the
business assets or undertakings of the Corporation unless the disposing
Member is supplied with evidence satisfactory to it that any amount owing
to it under this Agreement will be paid in full at the time of closing upon
completion of the foregoing events.
12.06 In the event that the purchasing Member defaults in payment
of the purchase price or the interest thereon or upon the breach of any of
the covenants set forth in Article 12.05 hereof, the disposing Member may
give notice thereof to the Trustee who shall forthwith give notice to the
purchasing Member that if the cure for the default is not made or such
breach is not cured by the purchasing Member within forty-five (45) days of
receiving notice thereof from the Trustee, the balance of the moneys then
remaining unpaid on account of the purchase price shall immediately become
due and payable.
If the purchasing Member fails to pay the balance of the moneys remaining
unpaid within thirty (30) days following such balance becoming due and
payable as aforesaid, the disposing Member shall have the right to realize
upon the said Interest in the Corporation by way of a sale thereof and
herein provided or, if the purchasing Member has not paid at least seventy-
five (75%) percent of the purchase price therefore, the disposing Member
shall alternatively have the right to take delivery of the Certificates
evidencing the Pledged Interest in the Corporation from the Trustee as
herein provided and continue to hold and own the same as if such Interest in
the Corporation had never been sold by it and the provisions of this
Agreement shall continue to govern the rights of the Members with respect
to the disposition of their Interest in the Corporation.
If less than seventy-five (75%) percent of the purchase price for
the Pledged Interest in the Corporation has been paid by the purchasing
Member, the disposing Member shall notify the Trustee within thirty (30)
days of the expiry of the aforesaid forty-five (45) days notice period as to
whether it intends to realize upon the Pledged Interest in the Corporation
by way of a sale thereof or intends to hold same. In the event that the
disposing Member fails to give such notice, it shall be deemed to have
elected to hold and own the Pledged Interest in the Corporation. The
disposing Member shall take delivery of the Pledged Interest in the
Corporation for its own account, in full and complete satisfaction of any
claims that it may have against the purchasing Member with respect to the
unpaid balance of the purchase price for the Pledged Interest in the
Corporation and will not pursue any other remedies available according to
law. If however the disposing Member elects to sell the said Interest in
the Corporation as provided herein, such action shall not be deemed to
exclude any other remedy which may be available to it at law to recover the
moneys and interest thereon due to it under this Agreement.
12.07 If the disposing Member elects to realize upon the Pledged
Interest in the Corporation by way of a sale, the following provisions shall
apply:
(a) any such sale shall be on the best terms which,
after making reasonable effort, the disposing Member is able to obtain;
provided however that the purchasing Member shall be given the opportunity
to obtain an offer for the purchase of the Pledged Interest in the
Corporation and if a bona fide offer is obtained by the purchasing Member
which provides for better terms, including the payment of the purchase
moneys in full by cash or certified check, then the offer obtained by the
purchasing Member shall be used for such realization;
(b) the disposing Member may, at its option, purchase
the said Interest in the Corporation on the same terms and conditions as the
best offer obtained by either the purchasing or disposing Member as provided
above; and
(c) after deducting from the proceeds of any such sale
reasonable allowance for all costs, charges and expenses reasonably incurred
by the disposing Member in connection therewith, the residue of the moneys
arising from such sale shall be applied on account of or in payment of the
balance of the moneys and accrued interest thereon then remaining unpaid on
account of the purchase price and if any surplus remains the same shall be
paid forthwith to the purchasing Member.
Article XIII
Purchase of Interest in the Corporation by the Corporation
Section 1. Purchase of Interest in the Corporation by the Corporation:
13.01 Except in cases where Article Eight, Nine or Ten, which
shall supersede the provisions hereof, would apply, any Member, (in this
Article Thirteen referred to as the "Selling Party"), may, at any time after
ninety days, during the term of this Agreement, send a notice in writing to
the Corporation and to the other Members which shall be signed by the Selling
Party and shall be notice of the Selling Party's intention to sell all or a
portion of the Interest in the Corporation owned by the Selling Party.
13.02 Upon receipt of any notice pursuant to Article 13.01 hereof,
the Corporation shall be obligated to purchase the Interest in the
Corporation specified in the said notice upon the terms and conditions
recited in Articles 13.03 through 13.07 hereof.
13.03 The purchase price for the Interest in the Corporation to be
purchased pursuant to the provisions of this Article Thirteen shall be
determined in accordance with Article 13.04 through 13.06.
13.04 All Members shall meet within ten (10) days following
receipt of the said notice and at such meeting shall agree on a value for
the Interest in the Corporation which the Selling Party proposes to sell. If
the parties can not agree to a valuation, then the Selling party shall
nominate a representative and the Members shall nominate a representative,
the two representatives so nominated shall nominate a third representative
and a majority of the three representatives shall select a qualified
appraiser to make the necessary fair market 90 value determination. The
Members and the Selling Party shall pay for the cost of their own
representatives and the costs of the third representative and the qualified
appraiser shall be borne equally by the Members and the Selling Party.
13.05 In arriving at its valuation, the Valuator shall:
(a) determine the value of all property, assets and
undertaking of the Corporation, less any amount which may, according to such
valuation, be due for income or capital gain taxes if any such property,
assets or undertaking were sold;
(b) refer to and use as a guide the valuation, if any,
last determined pursuant to their Article Thirteen; and
(c) consider any written representations which any
Member may make.
13.06 As soon as is practicable but in all cases within sixty (60)
days of its appointment, the Valuator shall prepare and deliver a report to
(in this Article Thirteen referred to as the Accountant/Auditor of the
Corporation). Based upon the Valuator's report, the auditors shall
determine the value to be attributed to the Interest in the Corporation
which the Selling Party proposes to sell. The Valuator's report and the
Accountant/Auditor's determination based thereon shall both be binding upon
the Members.
13.07 Unless other terms of sale are agreed to by the Members, the
terms of sale under this Article Thirteen shall be as follows:
(a) the Interest in the Corporation which the Selling
Party proposed to sell shall have a redemption amount equal to the value
attributed as determined above, (hereinafter referred to as the "Redeemable
Interest in the Corporation");
(b) the Redeemable Interest in the Corporation shall
then be redeemed by the Corporation over a period not to exceed two (2)
years with a minimum annual redemption of fifty (50%) percent of the total
Redeemable Interest in the Corporation attributable to the Selling Party;
(c) if all of the Redeemable Interest in the Corporation
is immediately purchased by the Corporation, the Selling Party shall deliver
at closing a Certificate or Certificates representing the Redeemable Interest
in the Corporation to the Corporation duly endorsed by the Selling Party in
blank form transfer and/or cancellation;
(d) if on closing the Corporation does not redeem all of
the Redeemable Interest in the Corporation, the following provisions shall
apply:
(i) as stated above, the annual minimum
redemption will be fifty (50%) percent of the total Redeemable Interest in
the Corporation;
(ii) an annual dividend in the aggregate
to be equivalent to the interest that would accrue each year if the prime
lending rate charged by the Corporation's banker minus fifty (50%) percent
was applied to the aggregate redemption amount of all Redeemable Interest in
the Corporation not yet paid by the Corporation;
(iii) in the event any portion of the
Redeemable Interest in the Corporation is not paid by the Corporation within
two (2) years of the original closing date, thereafter the interest rate to
be used in determining the annual dividend payable on the outstanding
Redeemable Interest in the Corporation shall be varied to the prime lending
rate charged by the Corporation's banker, plus two (2%) percent;
(iv) the Selling Party shall deliver to
the Accountant/Auditor of the Corporation all Certificates representing the
Redeemable Interest in the Corporation duly endorsed in blank for transfer
and such Interest in the Corporation shall be held in escrow by the
Accountant/Auditor of the Corporation until the Accountant/Auditor receives,
on behalf of the Selling Party, the unpaid balance of the redemption amount
and dividends in full calculated as aforesaid;
(v) so long as the Corporation is not in
default in payment of any redemption amount or dividends thereon, the
Accountant/Auditor shall execute and deliver to the Corporation or its
nominee from time to time such instruments of proxy with respect to the
Redeemable Interest in the Corporation held in escrow as the Corporation may
request;
(vi) if the Corporation is in default in
respect of the payment of any redemption amount or dividends thereon, the
Accountant/Auditor shall give written notice to the Corporation, (with a
copy to the Selling Party), describing the nature of the default within
thirty (30) days from the occurrence of the default. If the default is not
corrected by the Corporation within the grace period, the Accountant/Auditor
of the Corporation will, at the request of the Selling Party, return all of
the Redeemable Interest in the Corporation to the Selling Party who shall be
entitled to re-transfer the said Interest in the Corporation into its own
name and thereafter require the Corporation to re-convert the Redeemable
Interest in the Corporation into the original Interest in the Corporation
held by the Selling Party. The Selling Party shall be entitled to retain
the portion of the redemption amount received by it and the Corporation
shall be discharged from liability for payment of the remaining unpaid
balance of the redemption amount; and
(vii) upon payment in full by the
Corporation of the redemption amount and dividends thereon, the Accountant/
Auditor shall deliver to the Corporation the Certificates representing the
Redeemable Interest in the Corporation duly endorsed in blank for transfer
and/or cancellation.
13.08 The rights granted by this Article Thirteen are in lieu of
any rights, statutory or otherwise, which a dissenting Member may now or
hereafter have to require a party hereto to purchase any of its Interest in
the Corporation.
13.09 The provisions of Article Thirteen shall, in any event, be
subject to the compliance of the selling Member(s) with applicable law and
the obtaining of requisite approvals for transfer thereunder. Any closing
date is hereby deemed to be extended by the amount of time of any delay or
delays occasioned by a regulatory or governmental agency which is required
to give approval to transfer hereunder.
Article XIV
Jurisdiction
Section 1. Jurisdiction: This Agreement shall be governed according to the
Laws of the state of Colorado, whose Courts shall have sole and exclusive
jurisdiction over any matter herein.
Article XV
General
Section 1. Miscellaneous Provisions:
15.01 Each of the parties severally agrees to indemnify each of
the other parties hereto against, and reimburse each of the other parties
for, any and all liabilities which such other party or parties may incur or
become subject to an amounts which such other party or parties may pay or
be required to pay which are in excess of the proportionate share of the
liabilities and obligations of the parties under the terms of this Agreement,
provided that nothing in this Article, 15.01 shall in any way be deemed to
or shall require any party to incur any liability or provide any funds other
than as may be expressly provided for in any other provisions of this
Agreement.
15.02 No consent or waiver, expressed implied, by any party hereto
of any breach or default by any other party hereto in the performance of his
obligations hereunder shall be deemed or construed to be a consent to or
waiver of any other breach or default in the performance by such other party
of the same or any other obligations of such party hereunder. Failure on
the part of any party to complain of any act or failure to act of any other
party or to declare the other party in default, irrespective of how long
such failure continues, shall not constitute a waiver by the first mentioned
party of his rights hereunder.
15.03 This Agreement shall continue to be effective notwithstanding
the sale of Interest in the Corporation by a Member howsoever, and this
Agreement shall be binding upon the remaining Members.
15.04 The invalidity of any provision of this Agreement or any
covenant herein contained on the part of any party shall not affect the
validity of any other provision or covenant hereof or herein contained which
shall remain in full force and effect.
15.05 The Members agree to sign all such documents and do all such
things as may be necessary or desirable to more completely and effectively
carry out the terms and intentions of this Agreement and to cause the
Corporation to act in the manner contemplated by this Agreement and, to
the extent permitted by law, cause the Board of Directors so to act.
15.06 Nothing in this Agreement shall be deemed in any way or for
any purposes to constitute any party a partner of, a member of a joint
venture or joint enterprise with any other party to this Agreement in the
conduct of any business or otherwise.
15.07 Time shall be of the essence of this Agreement.
15.08 This Agreement constitutes the entire agreement among the
parties and shall not be modified, amended or assigned except with the
consent in writing of the parties hereto. A consent to any assignment
required hereunder may be arbitrarily or unreasonably withheld until the
proposed assignee executes and delivers such documents as, in the opinion of
the legal counsel of the Corporation, are necessary to oblige himself or
itself hereunder.
15.9 If at the time of any sale of Interest in the Corporation as
contemplated in this Agreement:
(a) there are any loans outstanding from the Corporation
to the selling Member(s) or vise versa,; such loans shall be paid; and
(b) there are any securities or covenants lodged by the
selling Member(s) with any person or institution or any personal guarantees
given by the selling Member(s) or his nominee(s) to secure any indebtedness,
liability or obligation of the Corporation, the remaining parties to this
Agreement shall use their best efforts to have the selling Member(s) and
any nominee(s) released therefrom. If, notwithstanding such best efforts,
the releases as aforesaid are not obtained, the remaining parties shall
deliver to the selling Member(s) their indemnity in writing indemnifying the
selling Member(s) and his nominee(s) from any and all liabilities thereunder.
15.10 All notices contemplated or required to be given hereunder
shall be effective if sent by prepaid registered mail or delivered personally
to any of the parties at the address of that party as it appears on the
books of the Corporation from time to time, or at such other address as the
party to whom such notice is to be given otherwise directs in writing.
Any notice delivered aforesaid shall be effective on the date of delivery
and any notice mailed as aforesaid shall be effective two (2) business days
after the mailing thereof, provided that where interruption of mail services
is likely by reason of any strike or other labor dispute, notice shall be by
personal delivery only to the person or to the address as aforesaid.
15.11 In this Agreement, wherever the singular and masculine or
neuter are used, they shall be construed as is the plural or the feminine or
the neuter had been used, where the context or the party or parties so
requires, and the rest of the sentence shall construed as if the grammatical
and terminological changes thereby rendered necessary had been made.
15.12 This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their Personal Representatives, successors and
permitted assign and any reference to a right or a obligation of a party
hereto shall be deemed to include a reference to such Personal
Representatives, successors and permitted assigns to the extent that the
context requires.
15.13 This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and such
instrument shall be deemed made on the first day of March, 1999, irrespective
of the time or times when any counterpart may be made, executed and delivered.
15.14 Interest in the Corporation as used herein refers to a
Member's interest in the Capital of the Corporation.
15.15 In consideration of the sums paid on behalf of RTG-TPD
Holdings Co. Ltd. (RTG) for logo development, RTG hereby grants the company
non-exclusive use of the Trademarks, KOMART and KOMART KOREAN AND JAPANESE
SUPERMARKET, provided however such use is for and in connection with the mall
being developed at 2000 S. Havana St., Denver CO only.
In Witness Whereof the parties hereto have duly executed this Agreement as
of the date and year first above written.
Signed
and Delivered
in the presence of: ) /s/Sun Mok Hwang/s/
) Member
)
) __________________
) Member
)
) RTG-TPD Holdings Co. LLC.
s/Stan J. H. Lee/s/.
) Per: Stan Lee
)
) The Company
) /s/Stan J. H. Lee/s/.
) Per:
Operating Agreement
of
2050 S. Havana St. (DTSE), LLC.
(The Corporation)
Dated: March 1, 1999.
Article I
Offices
Section 1. Principal Office: The principal office of the Corporation shall
be located at 2000 South Havana St., Aurora, Colorado 80014.
Section 2. Additional Offices: The Corporation may have such additional
offices at such other place within or without the State of Colorado as the
Members may from time to time determine or as the business of the
Corporation may require.
Article II
Meetings
Section 1. Annual Meeting: An annual meeting of Members shall be held within
five (5) months after the close of the fiscal year of the Corporation on
such date and at the time and place as shall be fixed by the Members. At the
annual meeting the Members shall elect an Operating Manager and other
officers and transact such other business as may properly be brought before
the meeting.
Section 2. Special Meeting: A special meeting of Members may be called at
any time by the Operating Manager and shall be called by the Operating
Manager at the request in writing of a majority of the Members entitled to
vote at such meeting. Any such request shall state the purpose or purposes
of the proposed meeting. Business transacted at any special meeting of
Members shall be confined to the purposes set forth in the notice thereof.
Special meetings may be held by telephonic Conference Call, provided all
Members agree to the said Meeting by telephonic Conference Call in writing,
and attest to any resolutions passed at the said meeting in writing.
Section 3. Notice of Meetings: Written notice of the time, place and purpose
of every meeting of Members (and, if other than an annual meeting, the
person or persons at whose discretion the meeting is being called), shall be
given by the Operating Manager to each Member of record entitled to vote at
such meeting, not less than five nor more than fifty days prior to the date
set for the meeting. Notice shall be given either personally or by mailing
said notice by first class mail to each Member at his address appearing on
the record book of the Corporation or at such other address supplied by him
in writing to the Operating Manager of the Corporation for the purpose of
receiving notice.
A written waiver of notice setting forth the purposes of the meeting for
which notice is waived, signed by the person or persons entitled to such
notice, whether before or alter the time of the meeting stated therein,
shall be deemed equivalent to the giving of such notice. The attendance by a
Member at a meeting either in person or by proxy without protesting the lack
of notice thereof shall constitute a waiver of notice of such Member.
All notices given with respect to an original meeting shall extend to any
and all adjournments thereof and such business as might have been transacted
at the original meeting may be transacted at any adjournment thereof; no
notice of any adjourned meeting need be given if an announcement of the
time and place of the adjourned meeting is made at the original meeting.
Section 4. Quorum: The holders of at least 70% in interest of the Members
present in person or represented in proxy, shall be requisite and shall
constitute a quorum at all meetings, of members except as otherwise provided
by statute or the Articles of Organization. A Members Interest in the
Corporation shall be in proportion to his contribution to the capital of the
Corporation adjusted from time to time to reflect additions or withdrawals.
The phrase "at least 70% in interest" of the Members shall mean Members who,
in the aggregate, shall have Capital Contributions in excess of seventy
(70%) percent of the total Capital Contributions of all of the Members. If,
however, a quorum shall not be present or represented at any meeting of
Members, the Members entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which
a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally notified when
a quorum is once present to organize a meeting, such quorum is not deemed
broken by the subsequent withdrawal of any Members.
Section 5. Voting: Every Member entitled to vote at any meeting shall be
entitled to vote in accordance with his Interest in the Corporation held
by him of record on the date fixed as the record date for said meeting and
may so vote in person or by proxy. Any Corporation action shall be
authorized by a majority in interest of the votes cast by the Members
entitled to vote thereon except as may otherwise by provided by statute,
the Articles of Organization or this Operating Agreement.
Section 6. Proxies: Every proxy must be signed by the Members entitled to
vote or by his duly authorized attorney-in-fact and shall be valid only if
filed with the Operating Manager of the Corporation prior to the
commencement of voting on the matter in regard to which said proxy is to
be voted. No proxy shall be valid after the expiration of eleven months from
the date of its execution unless otherwise expressly provided in the proxy.
Every proxy shall be revocable at the pleasure of the person executing it
except as otherwise provided by statute. Unless the proxy by its terms
provided for a specific revocation date and except as otherwise provided
by statute, revocation of a proxy shall not be effective unless and
until such revocation is executed in writing by the Member who executed
such proxy and the revocation is filed with the Operating Manager of the
Corporation prior to the voting of the proxy.
Section 7. Minutes of Meetings: Minutes of the Corporation's last meeting,
and the resolutions passed thereat, shall be prepared for every meeting of
Members and shall be produced by the Operating Manager thereat. Annual
statements reflecting the financial status of the Corporation shall be
distributed to all members no later than 45 days after the end of every
fiscal year, and at least 30 days before any annual meeting. Minutes of
any Meeting shall be prepared by the Operating Manager and sent to
the Members at their last known address by ordinary mail not later than
30 days after any meeting.
Section 8. Inspectors at Meetings: In advance of any Members meeting, the
Members may appoint one or more inspectors to act at the meeting or at any
adjournment thereof and if not so appointed the person presiding at any such
meeting may, and at the request of any Member entitled to vote thereat
shall, appoint one or more inspectors. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality
and according to the best of his ability.
Section 9. Conduct of Meeting: All meetings of Members shall he presided
over by the Operating Manager, or if he is not present, by a Member thereby
chosen by the Members at the meeting. The Operating Manager or the person
presiding at the meeting shall appoint any person present to act as secretary
of the meeting.
Article III
Officers
Section 1. Executive Officers: The officers of the Corporation shall be an
Operating Manager, a President, a Secretary and a Treasurer and such other
officers as the Members may determine. The same person may hold any two or
more offices. The initial Operating Manager shall be RTG-TPD Holdings Co.,
LLC., and the initial President shall be Chang Moo Yi. These Officers may be
removed or replaced with, and only with, the unanimous consent of the Members.
Section 2. Election: Except as provided in Article 4(2), the Operating
Manager and the other officers shall be chosen by the Members and shall hold
office for the term for which elected and until their successors have been
elected and qualified. The Members may from time to time appoint all such
other officers as they determine and such officers shall hold office from
the time of their appointment and qualifications until the time at which
their successors are appointed and qualified. The Members may fill a vacancy
in any office arising from any cause for the unexpired portion of the term.
Section 3. Removal: Subject to Article 4(2), ante, the Members may remove
any officer from office at any time with or without cause.
Section 4. Delegation of Powers: The Members may, with the unanimous consent
of all Members, from time to time delegate the powers or duties of any
officer of the Corporation, in the event of his absence or failure to act
otherwise, to any other officer or Member of person whom they may select.
Section 5. Compensation: The compensation of each officer shall be such as
the Members may from time to time determine.
Section 6. Operating Manager: The Operating Manager shall be the chief
executive officer of the Corporation and shall have general charge of the
business and affairs of the Corporation, subject, however, to the right of
the Members to confer specified powers on officers and subject generally to
the direction of the Members. The president shall have those powers as may
be conferred upon him by the Operating Manager, provided, however, that such
powers shall not exceed the powers conferred upon the Operating Manager.
Unless otherwise ordered by the Members, the Operating Manager, or in the
event of his inability to act, the President, shall have full power and
authority on behalf of the Corporation to attend and to act and to vote at
any meeting of security holders of companies in which the Corporation may
hold securities, and at such meetings shall possess and may exercise any and
all rights and powers incident to the ownership of such securities, and
which, as the owner thereof, the Corporation might have possessed and
exercised, if present. The Members by unanimous resolution from time to
time may confer like powers upon any other person or persons.
Section 7. Secretary: The Secretary shall keep the minutes of all
meetings and record all votes of Members and committees in a book to be kept
for that purpose. He shall give or cause to be given any required notice of
meetings of Members or any committee, and shall be responsible for preparing
or obtaining from a transfer agent appointed by the Members, the list of
Members required by Article II, Section 7 hereof. He shall be the custodian
of the seal of the Corporation and shall affix or cause to be affixed the
seal to any instrument requiring it and attest the same and exercise the
powers and perform the duties incident to the office of Secretary subject to
the direction of the Members.
Section 8. Treasurer: Subject to the direction of the Members, the Treasurer
shall have charge of the general supervision of the funds and securities of
the Corporation and the books of account of the Corporation and shall
exercise the powers and perform the duties incident to the office of the
Treasurer. If required by the Members, he shall give the Corporation a bond
in such sum and with such sureties as may be satisfactory to the Members for
the faithful discharge of his duties.
Section 9. Other Officers: All other officers, if any, shall have such
authority and shall perform such duties as may be specified from time to
time by the Members.
Article IV
Committees
Section 1. Committees: The Members, by resolution of a majority in interest
of the Members, may designate from among themselves one or more committees,
each consisting of three or more Members, and each of which, to the extent
provided in such resolution, shall have all the authority of the Members
except that no such committee shall have the authority as to any of the
following matters:
(a) The filing of vacancies in any committee;
(b) The fixing of compensation of the Members for serving on any committee;
(c) The amendment of repeal of this Operating Agreement or the adoption of a
new Operating Agreement; and;
(d) The amendment or repeal of any resolution of the Members which by its
terms shall not be so amenable or repealable.
The Members may designate one or more Members as alternate members of any
such committee who may replace any absent member or members at any such
meeting of such committee.
Each such committee shall serve at the pleasure of the Members. The Members
shall have the power at any time to fill vacancies in, to change the
membership of, or to discharge any such committee. Committees shall keep
minutes of their proceedings and shall report the same to the Members at
the meeting of the Members next succeeding, and any action by the committee
shall be subject to revision and alteration by the Members, provided that no
rights of a third party shall be affected in any such revision or alteration.
Article V
Resignations
Section 1. Resignations: Any officer of the Corporation or any members of
any committee of the Members may resign at any time by giving written notice
to the Members, the Operating Manager or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time is not
specified therein, upon the receipt thereof, irrespective of whether any
such resignations shall have been accepted.
Article VI
Certificates Representing Membership
Section 1. Form of Certificates: Each Member shall be entitled to a
Certificate or Certificates in such form as prescribed by the Members and by
any applicable statutes, which Certificate shall certify the interest of the
Member in the Corporation. The Certificates shall be numbered and registered
in the order in which they are issued and upon issuance the name in which
each Certificate has been issued together with the Interest in the
Corporation represented thereby and the date of issuance shall be entered
in the Membership book of the Corporation by the Secretary or by the
transfer agent of the Corporation. Each Certificate shall be signed by the
Operating Manager and countersigned by the Secretary and shall be sealed
with the Corporation Seal or facsimile thereof. The signatures of the
officers upon a Certificate may also be facsimiles if the Certificate is
countersigned by a transfer agent or registered by a registrar other than
the Corporation itself or an employee of the Corporation. In case any
officer who has signed or whose facsimile signature has been placed upon a
Certificate shall have ceased to be such officer before the Certificate is
issued, such Certificate may be issued by the Corporation with the same
effect as if the officer had not ceased to be such at the time of its issue.
Section 2. Record Date for Members: For the purpose of determining the
Members entitled to notice of; or to vote at any meeting of Members or any
adjournment thereof or to express consent or dissent from any proposal
without a meeting, or for the purpose of determining the Members entitled
to receive payment of any dividend or the allotment of any rights, or for
the purpose of any other action, the Members may fix, in advance, a date as
the record date for any such determination of Members. Such date shall not
be more than fifty (50) nor less than ten (10) days before the date of any
meeting nor more than fifty days prior to any action taken without a
meeting, the payment of any dividend or the allotment of any rights, or any
other action.
Article VII
General Restriction on Transfer of Interest
Section 1. General Restriction on Transfer of Interest: Except as hereinafter
provided in this Agreement, no Member shall transfer by sale, gift, bequest
or otherwise, or encumber by pledge, assignment, mortgage, charge or
otherwise, or otherwise dispose of or cease to be the holder of any of
the interest in the Corporation of which it is at any time the registered
or beneficial owner, without the prior written consent of the other Members.
In the case of any permitted transfer, no Member shall sell any of its
Interest in the Corporation unless the purchaser is already or becomes a
party to this Agreement upon completion of the applicable sale.
Article VIII
Bankruptcy and Default
Section 1. Bankruptcy and Default Provisions:
8.01 Upon the happening of the earliest of:
(a) the bankruptcy of any one or more of the Members, or
in the event any one or more of the Members is at any time in breach of or
in default under any of the provisions of this Agreement, which breach or
default is not remedied within thirty (30) days of receipt or written notice
of same from the Corporation; or
(b) the bankruptcy of any one or more of the Members or
in the event any one or more of the Members is at any time in breach of or
in default under any of the provisions of this Agreement, which breach or
default is not remedied within thirty (30) days of receipt of written notice
of same from the Corporation;
then, upon the happening of such event, in the case of subparagraph
(a), The Member(s) shall, and in the case of subparagraph (b), the Member(s)
shall, for the purposes of this Article Eight, be deemed to be a "Retiring
Party".
8.02 Upon the happening of an event causing one of the Members to
become a Retiring Party;
(a) the other Members shall have the option to purchase
all but not less than all the Interest in the Corporation owned by the
Retiring Party on a pro rata basis equal to the Interest in the Corporation
then held by each Member, which option shall be exercised by giving written
notice to the Retiring Party or his Personal Representative and to the
Corporation within thirty (30) days of the said event; or
(b) in the event the other Members do not so elect, the
Corporation shall have the option to purchase all but not less than all of
the Interest in the Corporation owned by the Retiring Party or his personal
Representative within thirty (30) days of the expiry of the option period
specified in Article 7.02 (a) hereof,
for a price and in the manner calculated and set forth in Articles
8.03 through 8.06 hereof. If any Member does not take up his option for his
pro rate proportion of the Interest in the Corporation of the Retiring Party,
the unclaimed Interest in the Corporation shall be used to satisfy any
request made by any other Members who have indicated that they desire to
purchase the said Interest in the Corporation in excess of their pro rata
proportion.
8.03 The purchase price for any Interest in the Corporation to be
purchased pursuant to the provisions of this Article Eight shall be equal to
the fair market value of such Interest in the Corporation at the date that
written notice is given by the purchasing Members or the Corporation, as the
case may be, (hereinafter referred to as the "Purchaser"), of its intention
to purchase the Interest in the Corporation of the Retiring Party. If the
Purchaser and the Retiring Party, or his Personal Representative, are
unable to agree as to the fair market value of the Interest in the
Corporation to be purchased, such determination shall be made by the
Corporation's Accountant.
8.04 If the parties do not agree with the valuation made by the
Corporation's Accountant, then the Purchaser shall nominate a representative
and the Retiring Party or his Personal Representative shall nominate a
representative, the two representatives so nominated shall nominate a
third representative and a majority of the three representatives shall
select a qualified appraiser to make the necessary fair market value
determination. The Purchaser and the Retiring Party shall pay for the
cost of their own representatives and the costs of the third representative
and the qualified appraiser shall be borne equally by the Purchaser and by
the Retiring Party.
8.05 In arriving at the valuation, the qualified appraiser shall:
(a) determine the fair market value of the Interest in
the Corporation as of the appropriate date without premium for control or
discount for minority;
(b) refer to and use as a guideline the valuation, if
any, last determined pursuant to the provisions of this Article Eight; and
(c) consider any written representations which either
the Purchaser or Retiring Party may make.
The valuation determined by the appraiser in accordance with
this Article Eight shall be binding upon all of the parties hereto.
8.06 Unless other terms of sale are agreed to by the Members, the
terms of any sale under this Article Eight shall be as follows:
(a) a minimum of twenty (20%) percent of the total
purchase price shall be paid at the time of closing by certified check
against delivery of the relevant Certificates duly endorsed in blank
with signatures guaranteed. The unpaid balance of the total purchase price,
if any, from time to time of the purchase shall bear interest from the time
of closing at a rate per annum equal to the prime lending rate charged by
the Corporation's bank at the time of closing plus two (2%) percent, and
such principal and interest shall be paid in twelve (12) equal monthly
consecutive installments commencing one (1) calendar month from the time of
closing. The Purchaser shall execute and deliver to the Retiring Party a
promissory note in the amount equal to the unpaid balance of the purchase
price at the time of closing and bearing interest as recited above. Default
of any payment of principal or interest shall, at the option of the holder
of the promissory note, cause the entire balance thereof to mature, provided
that the Purchaser may prepay the same in whole or in part, in reverse order
of maturity, without notice or bonus payments;
(b) the closing shall be at 10:00 o'clock a.m. at the
registered office of the Corporation on the sixtieth (60th) day following
the event causing one of the Members to become a Retiring Party;
(c) if the Retiring Party refuses or neglects to
complete the sale for any reason, the Purchaser shall have the right, upon
payment of the purchase price to the credit of the Retiring Party in
any chartered bank in the State of Colorado for and on behalf of and in the
name of the Retiring Party or his nominee or nominees, to execute and
deliver such transfers, resignations and other documents as
may be necessary or desirable in order to complete the transaction.
Article IX
Buy-Sell Provisions
Section 1. Buy-Sell Provisions:
9.01 Except in cases where Article Eight, which supersedes the
provisions hereof, would apply, any Member (hereinafter referred to as the
"Offering Party") may, at any time during the term of the Agreement, send a
offer in writing to the other Members, (hereinafter referred to individually
as a "Notified Party" and collectively as the "Notified Parties"), which
shall be signed by the Offering Party and shall be an offer to sell to the
Notified Parties, on a pro rata basis equal to the Interest in the
Corporation held by each Notified Party, all of the Interest in the
Corporation owned by the Offering Party at an arbitrary price and on terms
stipulated in the offer. Each Notified Party shall have a period of
sixty (60) days following the delivery of the offer to accept by notice in
writing the offer in accordance with its terms.
9.02 If one or more of the Notified Parties is prepared to
purchase his pro rata portion of the Interest in the Corporation, (the
"Accepting Party" or "Accepting Parties", as the case may be), but the
other Notified Party or Notified Parties are not so prepared, then the
Accepting Party or Accepting Parties shall have the first right and option
to purchase all of the Interest in the Corporation owned by the Offering
Party on a pro rata basis equal to the Interest in the Corporation held by
the Accepting Parties at the specified price. The Accepting Party or
Accepting Parties shall have a period of thirty (30) days within which to
exercise the said option. If the Accepting Party or Accepting Parties elect
to exercise the said option within the time stipulated the Accepting Party
or Accepting Parties shall then purchase and pay for all of the Interest in
the Corporation owned by the Offering Party at the specified price.
9.03 The terms of sale under this Article Nine shall be as follows:
(a) the purchase price shall be paid as set out in the
offer made pursuant to Article 9.01 hereof;
(b) the closing shall be at 10:00 o'clock a.m. at the
registered office of the Corporation on the sixtieth (60th) day following
the date of delivery of the offer under Article 9.01;
(c) if the selling Member(s) refuses or neglects to
complete the sale for any reason, the purchasing Member(s) shall have the
right, upon payment of the purchase price to the credit of the selling Member
(s) at any chartered bank in the State of Colorado for and on behalf of and
in the name of the selling Member(s) or his nominee(s), to execute and
deliver such transfers, resignations and other documents as may be necessary
or desirable in order to complete the transaction.
9.04 The rights granted by this Article Nine are in lieu of any
rights, statutory or otherwise, which a dissenting Member may now or
hereafter have to require a party hereto to purchase any of his
Interest in the Corporation in the capital stock of the Corporation.
9.05 The provisions of Article 9.01 shall, in any event, be
subject to the compliance by the selling Member(s) with applicable law and
the obtaining of requisite approvals for transfer thereunder. The closing
date referred to in Article 9.03 is hereby deemed to be extended by the
amount of time of any delay or delays occasioned by a regulatory or
governmental agency which is required to give approval to a transfer
hereunder.
Article X
Right of First Refusal
Section 1. Right of First Refusal:
10.01 Except in cases where Article Eight or Article Nine, which
shall supersede the provisions hereof, would apply, no Member shall
entertain offers for the purchase of his Interest in the Corporation
nor make agreements for the sale, transfer or assignment of his Interest
in the Corporation except upon compliance with this Article Ten, (and where
applicable, compliance with Article Eleven), and subject to the terms and
conditions hereinafter set forth:
(a) no sale, transfer or assignment of Interest in the
Corporation shall be considered by a Member unless he shall have first
received a bona fide offer in writing form from a third party dealing at
arm's length, who is a responsible purchaser of good business reputation
and who has agreed to enter into an agreement with the remaining Members of
the Corporation identical to this Agreement, (except changes in the
Agreement required because it has ceased to apply to a party hereto),
to purchase all of his Interest in the Corporation, which offer shall
provide that the purchase price shall be payable in cash;
(b) a party to the Agreement receiving an offer as
contemplated by subsection (a) of this Article 10.01, (herein referred to as
the "Selling Party"), which the Selling Party is prepared to accept shall,
within ten (10) days of the receipt of such offer, deliver a copy of such
offer, together with his own offer to sell all of the Interest in the
Corporation so proposed to be sold, to the other Members upon the same terms
and conditions as the third party shall have offered;
(c) the Members receiving the offer of the Selling Party
shall have the first right and option to purchase on a pro rata basis the
Interest in the Corporation to be sold by the Selling Party for a period of
thirty (30) days from the date of receipt of the offer of the Selling Party,
such right and option to be exercised before the expiration of such thirty
(30) days by notice in writing;
(d) if the other Members accept the offer of the Selling
Party within the time stipulated, they shall purchase on a pro rata basis
all of the Interest in the Corporation owned by the Selling Party upon the
same terms and conditions as the third party shall have offered;
(e) if one or more of the other Members is prepared to
purchase his pro rata portion of the Interest in the Corporation, (the
"Accepting Party" or "Accepting Parties", as the case may be), but
the other Member or Members are not so prepared, then the Accepting Party
or Accepting Parties shall have the first right and option to purchase all
of the Interest in the Corporation of the Selling Party on a pro rata basis
equal to the Interest in the Corporation held by the Accepting Parties,
upon the same terms and conditions as the third party shall have offered;
(f) if the other Members do not accept the offer of the
Selling Party within the time stipulated in Article 10.01(c) hereof or if
the Accepting Party or Accepting Parties elect not to exercise the right and
option set out in Article 10.01(e) hereof or do not exercise the said right
and option within the time stipulated, the Selling Party shall accept the
offer of the said third party, and complete the transaction with the said
third party in accordance with the offer of such third party and the parties
to this Agreement hereby agree to take all steps and proceedings requisite
to have such third party entered on the books of the Corporation as a Member
of the Corporation and to execute and deliver an Operating Agreement in
replacement of this Agreement. The Selling Party is hereby appointed the
agent and attorney of the other Members for the purpose of effecting
registration of the third party as a Member of the Corporation.
10.02 The provisions of Article 10.01 shall, in any event, be
subject to the compliance by the Selling Party and the third party with
applicable law and the obtaining of requisite approvals for transfer
thereunder.
Article XI
Piggyback Rights
Section 1. Piggy-back Rights. If the completion of any sale of Interest in
the Corporation to a third party in accordance with Article Ten would result
in the said third party acquiring more than a forty (40%) percent Interest
in the Corporation, each of the Members Receiving the offer of the Selling
Party, (hereinafter referred to the "Offerees"), shall have the further
right, to be exercised by notice in writing to the Selling Party within the
time limited for the acceptance of the Selling Party's offer, to require
the Selling Party to sell all but not less than all of the Interest in the
Corporation owned or controlled by each Offeree upon the same terms and
conditions as are contained in the third party's offer. If any of the
Offerees exercise such right, the Selling Party shall not complete the sale
of its Interest in the Corporation unless all of the Interest in the
Corporation of such Offerees who shall have so exercised such right are also
sold to the third party on the same terms and conditions as are contained in
the third party's offer.
Article XII
Security for Purchase of Interest in the Corporation
Section 1. Security for Purchase:
12.01 As security for the unpaid balance of the purchase price
with respect to a purchase and sale of Interest in the Corporation pursuant
to this Agreement, the purchasing Member shall pledge the said Interest in
the Corporation being the subject matter of such purchase and sale,
(hereinafter called the "Pledged Interest in the Corporation"), to and in
favor of the disposing Member, free and clear of any lien, charge or
encumbrance of whatsoever nature.
12.02 The Certificate(s) evidencing the Pledged Interest in the
Corporation shall be endorsed in blank by the purchasing Member with
signature guaranteed at the time of closing and be delivered to the
attorneys for the Corporation, or to such other persons as the parties
hereto may agree, (hereinafter called the "Trustee"), to be held in trust
as provided herein, together with a certified copy of a resolution of the
Members of the Corporation consenting to the transfer of the said Interest
in the Corporation to the disposing Member pursuant to the provisions of
this Article Twelve. Subject as herein provided, the Trustee shall hold the
Certificates evidencing the Pledged Interest in the Corporation until the
purchase price therefore has been paid in full, at which time and upon proof
thereof being furnished to the Trustee in the form of a receipt signed by
the disposing Member and an affirmative statement of payment signed by the
purchasing Member, the Trustee shall deliver the said Certificates to the
purchasing Member.
12.03 If at any time and from time to time during the period that
the purchase price remains outstanding:
(a) any of the said Interest in the Corporation are
subdivided, consolidated, changed or reclassified; or
(b) the Corporation is re-organized or amalgamated with
another Corporation or any other event occurs which results in the
substitution or exchange of any of the Interest in the Corporation for, or
the conversion of any of the said Interest in the Corporation into other
securities;
the Corporation, forthwith after the occurrence of any such event shall
substitute for the Pledged Interest in the Corporation, a Certificate
reflecting the resulting Interest in the Corporation, or other securities.
In this connection, Certificates or other evidence of ownership of such
resulting Interest in the Corporation or other securities in transferable
form with signatures guaranteed shall be forthwith deposited with the
Trustee against receipt of the said Certificates.
12.04 Until such time as the security hereby constituted shall
become enforceable, the purchasing Member shall be entitled to and may
exercise all voting and other rights attached to the Pledged Interest in
the Corporation.
12.05 While any part of the purchase price of any Interest in the
Corporation sold pursuant to this Agreement by the disposing Member is
unpaid, the purchasing Member insofar as it is permitted by law to do so,
covenants and agrees hereby that it will not vote in favor of nor suffer the
Corporation to do any of the following, namely:
(a) to allot or issue stock, bonds or other corporate
securities;
(b) to incur any obligations or liabilities, (absolute
or contingent), except if incurred under contracts or agreements entered
into in the course of business of the Corporation;
(c) to purchase or redeem any Member's Interest in the
Corporation;
(d) to mortgage, pledge or subject to lien, charge or
any other encumbrance any assets, tangible or intangible, of the Corporation
except in the ordinary course of business;
(e) to sell or transfer any assets, cancel any debts or
claims or transact any business except in each case in the ordinary course
of the business of the Corporation;
(f) to knowingly permit any extraordinary losses or
waive any rights of substantial value to the Corporation;
(g) to enter into any agreement other than in the
ordinary course of business of the Corporation including, but not limited
to, agreements regarding increases in salaries, bonuses, payments, stock
options or deferred compensation, provided that increments may be paid to
the purchasing Member, by way of increased salary or compensation in an
amount which shall not exceed ten (10%) percent of its previous year's
aggregate consideration;
(h) to grant options, warrants or other rights to
acquire Interest in the Corporation;
(i) to re-organize the capital structure of the
Corporation; or
(j) to merge, consolidate, amalgamate or sell the
business assets or undertakings of the Corporation unless the disposing
Member is supplied with evidence satisfactory to it that any amount owing
to it under this Agreement will be paid in full at the time of closing upon
completion of the foregoing events.
12.06 In the event that the purchasing Member defaults in payment
of the purchase price or the interest thereon or upon the breach of any of
the covenants set forth in Article 12.05 hereof, the disposing Member may
give notice thereof to the Trustee who shall forthwith give notice to the
purchasing Member that if the cure for the default is not made or such
breach is not cured by the purchasing Member within forty-five (45) days of
receiving notice thereof from the Trustee, the balance of the moneys then
remaining unpaid on account of the purchase price shall immediately become
due and payable.
If the purchasing Member fails to pay the balance of the moneys remaining
unpaid within thirty (30) days following such balance becoming due and
payable as aforesaid, the disposing Member shall have the right to realize
upon the said Interest in the Corporation by way of a sale thereof and
herein provided or, if the purchasing Member has not paid at least seventy-
five (75%) percent of the purchase price therefore, the disposing Member
shall alternatively have the right to take delivery of the Certificates
evidencing the Pledged Interest in the Corporation from the Trustee as
herein provided and continue to hold and own the same as if such Interest in
the Corporation had never been sold by it and the provisions of this
Agreement shall continue to govern the rights of the Members with respect to
the disposition of their Interest in the Corporation.
If less than seventy-five (75%) percent of the purchase price for the
Pledged Interest in the Corporation has been paid by the purchasing Member,
the disposing Member shall notify the Trustee within thirty (30) days of the
expiry of the aforesaid forty-five (45) days notice period as to whether it
intends to realize upon the Pledged Interest in the Corporation by way of a
sale thereof or intends to hold same. In the event that the disposing
Member fails to give such notice, it shall be deemed to have elected to hold
and own the Pledged Interest in the Corporation. The disposing Member
shall take delivery of the Pledged Interest in the Corporation for its own
account, in full and complete satisfaction of any claims that it may have
against the purchasing Member with respect to the unpaid balance of the
purchase price for the Pledged Interest in the Corporation and will not
pursue any other remedies available according to law. If however the
disposing Member elects to sell the said Interest in the Corporation as
provided herein, such action shall not be deemed to exclude any other remedy
which may be available to it at law to recover the moneys and interest
thereon due to it under this Agreement.
12.07 If the disposing Member elects to realize upon the Pledged
Interest in the Corporation by way of a sale, the following provisions
shall apply:
(a) any such sale shall be on the best terms which,
after making reasonable effort, the disposing Member is able to obtain;
provided however that the purchasing Member shall be given the opportunity
to obtain an offer for the purchase of the Pledged Interest in the
Corporation and if a bona fide offer is obtained by the purchasing Member
which provides for better terms, including the payment of the purchase
moneys in full by cash or certified check, then the offer obtained by the
purchasing Member shall be used for such realization;
(b) the disposing Member may, at its option, purchase
the said Interest in the Corporation on the same terms and conditions as the
best offer obtained by either the purchasing or disposing Member as provided
above; and
(c) after deducting from the proceeds of any such sale
reasonable allowance for all costs, charges and expenses reasonably incurred
by the disposing Member in connection therewith, the residue of the moneys
arising from such sale shall be applied on account of or in payment of the
balance of the moneys and accrued interest thereon then remaining unpaid on
account of the purchase price and if any surplus remains the same shall be
paid forthwith to the purchasing Member.
Article XIII
Purchase of Interest in the Corporation by the Corporation
Section 1. Purchase of Interest in the Corporation by the Corporation:
13.01 Except in cases where Article Eight, Nine or Ten, which
shall supersede the provisions hereof, would apply, any Member, (in this
Article Thirteen referred to as the "Selling Party"), may, at any time after
ninety days, during the term of this Agreement, send a notice in writing to
the Corporation and to the other Members which shall be signed by the
Selling Party and shall be notice of the Selling Party's intention to sell
all or a portion of the Interest in the Corporation owned by the Selling
Party.
13.02 Upon receipt of any notice pursuant to Article 13.01 hereof,
the Corporation shall be obligated to purchase the Interest in the
Corporation specified in the said notice upon the terms and conditions
recited in Articles 13.03 through 13.07 hereof.
13.03 The purchase price for the Interest in the Corporation to be
purchased pursuant to the provisions of this Article Thirteen shall be
determined in accordance with Article 13.04 through 13.06.
13.04 All Members shall meet within ten (10) days following
receipt of the said notice and at such meeting shall agree on a value for
the Interest in the Corporation which the Selling Party proposes to sell.
If the parties can not agree to a valuation, then the Selling party shall
nominate a representative and the Members shall nominate a representative,
the two representatives so nominated shall nominate a third representative
and a majority of the three representatives shall select a qualified
appraiser to make the necessary fair market 90 value determination. The
Members and the Selling Party shall pay for the cost of their own
representatives and the costs of the third representative and the
qualified appraiser shall be borne equally by the Members and the Selling
Party.
13.05 In arriving at its valuation, the Valuator shall:
(a) determine the value of all property, assets and
undertaking of the Corporation, less any amount which may, according to
such valuation, be due for income or capital gain taxes if any such property,
assets or undertaking were sold;
(b) refer to and use as a guide the valuation, if any,
last determined pursuant to their Article Thirteen; and
(c) consider any written representations which any
Member may make.
13.06 As soon as is practicable but in all cases within sixty (60)
days of its appointment, the Valuator shall prepare and deliver a report to
(in this Article Thirteen referred to as the Accountant/Auditor of the
Corporation). Based upon the Valuator's report, the auditors shall
determine the value to be attributed to the Interest in the Corporation
which the Selling Party proposes to sell. The Valuator's report and the
Accountant/Auditor's determination based thereon shall both be binding upon
the Members.
13.07 Unless other terms of sale are agreed to by the Members, the
terms of sale under this Article Thirteen shall be as follows:
(a) the Interest in the Corporation which the Selling
Party proposed to sell shall have a redemption amount equal to the value
attributed as determined above, (hereinafter referred to as the
"Redeemable Interest in the Corporation"):
(b) the Redeemable Interest in the Corporation shall
then be redeemed by the Corporation over a period not to exceed two (2)
years with a minimum annual redemption of fifty (50%) percent of the total
Redeemable Interest in the Corporation attributable to the Selling Party;
(c) if all of the Redeemable Interest in the Corporation
is immediately purchased by the Corporation, the Selling Party shall deliver
at closing a Certificate or Certificates representing the Redeemable
Interest in the Corporation to the Corporation duly endorsed by the Selling
Party in blank for transfer and/or cancellation;
(d) if on closing the Corporation does not redeem all of
the Redeemable Interest in the Corporation, the following provisions shall
apply:
(i) as stated above, the annual minimum
redemption will be fifty (50%) percent of the total Redeemable Interest in
the Corporation;
(ii) an annual dividend in the aggregate
to be equivalent to the interest that would accrue each year if the prime
lending rate charged by the Corporation's banker minus fifty (50%) percent
was applied to the aggregate redemption amount of all Redeemable Interest
in the Corporation not yet paid by the Corporation;
(iii) in the event any portion of the
Redeemable Interest in the Corporation is not paid by the Corporation within
two (2) years of the original closing date, thereafter the interest rate to
be used in determining the annual dividend payable on the outstanding
Redeemable Interest in the Corporation shall be varied to the prime lending
rate charged by the Corporation's banker, plus two (2%) percent;
(iv) the Selling Party shall deliver to
the Accountant/Auditor of the Corporation all Certificates representing the
Redeemable Interest in the Corporation duly endorsed in blank for transfer
and such Interest in the Corporation shall be held in escrow by the
Accountant/Auditor of the Corporation until the Accountant/Auditor receives,
on behalf of the Selling Party, the unpaid balance of the redemption amount
and dividends in full calculated as aforesaid;
(v) so long as the Corporation is not in
default in payment of any redemption amount or dividends thereon, the
Accountant/Auditor shall execute and deliver to the Corporation or its
nominee from time to time such instruments of proxy with respect to the
Redeemable Interest in the Corporation held in escrow as the Corporation
may request;
(vi) if the Corporation is in default in
respect of the payment of any redemption amount or dividends thereon, the
Accountant/Auditor shall give written notice to the Corporation, (with a
copy to the Selling Party), describing the nature of the default within
thirty (30) days from the occurrence of the default. If the default is not
corrected by the Corporation within the grace period, the Accountant/Auditor
of the Corporation will, at the request of the Selling Party, return all of
the Redeemable Interest in the Corporation to the Selling Party who shall be
entitled to re-transfer the said Interest in the Corporation into its own
name and thereafter require the Corporation to re-convert the Redeemable
Interest in the Corporation into the original Interest in the Corporation
held by the Selling Party. The Selling Party shall be entitled to retain
the portion of the redemption amount received by it and the Corporation
shall be discharged from liability for payment of the remaining unpaid
balance of the redemption amount; and
(vii) upon payment in full by the
Corporation of the redemption amount and dividends thereon, the Accountant/
Auditor shall deliver to the Corporation the Certificates representing the
Redeemable Interest in the Corporation duly endorsed in blank for transfer
and/or cancellation.
13.08 The rights granted by this Article Thirteen are in lieu of
any rights, statutory or otherwise, which a dissenting Member may now or
hereafter have to require a party hereto to purchase any of its Interest
in the Corporation.
13.09 The provisions of Article Thirteen shall, in any event, be
subject to the compliance of the selling Member(s) with applicable law and
the obtaining of requisite approvals for transfer thereunder. Any closing
date is hereby deemed to be extended by the amount of time of any delay or
delays occasioned by a regulatory or governmental agency which is required
to give approval to transfer hereunder.
Article XIV
Jurisdiction
Section 1. Jurisdiction: This Agreement shall be governed according to the
Laws of the state of Colorado, whose Courts shall have sole and exclusive
jurisdiction over any matter herein.
Article XV
General
Section 1. Miscellaneous Provisions:
15.01 Each of the parties severally agrees to indemnify each of
the other parties hereto against, and reimburse each of the other parties
for, any and all liabilities which such other party or parties may incur or
become subject to an amounts which such other party or parties may pay or
be required to pay which are in excess of the proportionate share of the
liabilities and obligations of the parties under the terms of this
Agreement, provided that nothing in this Article, 15.01 shall in any way
be deemed to or shall require any party to incur any liability or provide
any funds other than as may be expressly provided for in any other
provisions of this Agreement.
15.02 No consent or waiver, expressed implied, by any party hereto
of any breach or default by any other party hereto in the performance of his
obligations hereunder shall be deemed or construed to be a consent to or
waiver of any other breach or default in the performance by such other party
of the same or any other obligations of such party hereunder. Failure on
the part of any party to complain of any act or failure to act of any other
party or to declare the other party in default, irrespective of how
long such failure continues, shall not constitute a waiver by the first
mentioned party of his rights hereunder.
15.03 This Agreement shall continue to be effective notwithstanding
the sale of Interest in the Corporation by a Member howsoever, and this
Agreement shall be binding upon the remaining Members.
15.04 The invalidity of any provision of this Agreement or any
covenant herein contained on the part of any party shall not affect the
validity of any other provision or covenant hereof or herein contained which
shall remain in full force and effect.
15.05 The Members agree to sign all such documents and do all
such things as may be necessary or desirable to more completely and
effectively carry out the terms and intentions of this Agreement and to
cause the Corporation to act in the manner contemplated by this Agreement
and, to the extent permitted by law, cause the Board of Directors so to act.
15.06 Nothing in this Agreement shall be deemed in any way or for
any purposes to constitute any party a partner of, a member of a joint
venture or joint enterprise with any other party to this Agreement in the
conduct of any business or otherwise.
15.07 Time shall be of the essence of this Agreement.
15.08 This Agreement constitutes the entire agreement among
the parties and shall not be modified, amended or assigned except with the
consent in writing of the parties hereto. A consent to any assignment
required hereunder may be arbitrarily or unreasonably withheld until the
proposed assignee executes and delivers such documents as, in the opinion of
the legal counsel of the Corporation, are necessary to oblige himself or
itself hereunder.
15.9 If at the time of any sale of Interest in the Corporation as
contemplated in this Agreement:
(a) there are any loans outstanding from the Corporation
to the selling Member(s) or vise versa; such loans shall be paid; and
(b) there are any securities or covenants lodged by the
selling Member(s) with any person or institution or any personal guarantees
given by the selling Member(s) or his nominee(s) to secure any indebtedness,
liability or obligation of the Corporation, the remaining parties to this
Agreement shall use their best efforts to have the selling Member(s) and any
nominee(s) released therefrom. If, notwithstanding such best efforts, the
releases as aforesaid are not obtained, the remaining parties shall deliver
to the selling Member(s) their indemnity in writing indemnifying the selling
Member(s) and his nominee(s) from any and all liabilities thereunder.
15.10 All notices contemplated or required to be given hereunder
shall be effective if sent by prepaid registered mail or delivered personally
to any of the parties at the address of that party as it appears on the
books of the Corporation from time to time, or at such other address as the
party to whom such notice is to be given otherwise directs in writing. Any
notice delivered aforesaid shall be effective on the date of delivery and
any notice mailed as aforesaid shall be effective two (2) business days
after the mailing thereof, provided that where interruption of mail services
is likely by reason of any strike or other labor dispute, notice shall be
by personal delivery only to the person or to the address as aforesaid.
15.11 In this Agreement, wherever the singular and masculine or
neuter are used, they shall be construed as is the plural or the feminine or
the neuter had been used, where the context or the party or parties so
requires, and the rest of the sentence shall construed as if the grammatical
and terminological changes thereby rendered necessary had been made.
15.12 This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their Personal Representatives, successors and
permitted assign and any reference to a right or a obligation of a party
hereto shall be deemed to include a reference to such Personal
Representatives, successors and permitted assigns to the extent that the
context requires.
15.13 This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and such
instrument shall be deemed made on the first day of March, 1999,
irrespective of the time or times when any counterpart may be made,
executed and delivered.
15.14 Interest in the Corporation as used herein refers to a
Member's interest in the Capital of the Corporation.
15.15 In consideration of the sums paid on behalf of RTG-TPD
Holdings Co. Ltd. (RTG) for logo development, RTG hereby grants the company
non-exclusive use of the Trademarks, KOMART and KOMART MALL, provided
however such use is for and in connection with the mall being developed at
2000 S. Havana St., Denver CO only.
In Witness Whereof the parties hereto have duly executed this Agreement as
of the date and year first above written.
/s/Gina S. Koh/s/
Signed /s/John Jun/s/
and Delivered
in the presence of: ) /s/Bock Soo Lee/s/
)
) /s/Chang Moo Yi/s/
) Member
)
) _________________
) Member
)
) RTG-TPD Holdings Co. Ltd.
) /s/Stan J. H. Lee/s/
) Per:
)
)
) The Company
) /s/Stan J. H. Lee/s/
) Per:
Operating Agreement
of
RTG-TPD HOLDINGS CO., LLC.
(The Corporation)
Dated: March 1, 1999.
Article I
Offices
Section 1. Principal Office: The principal office of the Corporation shall
be located at 2000 South Havana St., Aurora, Colorado 80014.
Section 2. Additional Offices: The Corporation may have such additional
offices at such other place within or without the State of Colorado as the
Members may from time to time determine or as the business of the Corporation
may require.
Article II
Meetings
Section 1. Annual Meeting: An annual meeting of Members shall be held within
five (5) months after the close of the fiscal year of the Corporation on
such date and at the time and place as shall be fixed by the Members. At the
annual meeting the Members shall elect an Operating Manager and other
officers and transact such other business as may properly be brought before
the meeting.
Section 2. Special Meeting: A special meeting of Members may be called at
any time by the Operating Manager and shall be called by the Operating
Manager at the request in writing of a majority of the Members entitled to
vote at such meeting. Any such request shall state the purpose or purposes
of the proposed meeting. Business transacted at any special meeting of
Members shall be confined to the purposes set forth in the notice thereof.
Special meetings may be held by telephonic Conference Call, provided all
Members agree to the said Meeting by telephonic Conference Call in writing,
and attest to any resolutions passed at the said meeting in writing.
Section 3. Notice of Meetings: Written notice of the time, place and purpose
of every meeting of Members (and, if other than an annual meeting, the
person or persons at whose discretion the meeting is being called), shall
be given by the Operating Manager to each Member of record entitled to vote
at such meeting, not less than five nor more than fifty days prior to the
date set for the meeting. Notice shall be given either personally or by
mailing said notice by first class mail to each Member at his address
appearing on the record book of the Corporation or at such other address
supplied by him in writing to the Operating Manager of the Corporation for
the purpose of receiving notice.
A written waiver of notice setting forth the purposes of the meeting for
which notice is waived, signed by the person or persons entitled to such
notice, whether before or alter the time of the meeting stated therein,
shall be deemed equivalent to the giving of such notice. The attendance
by a Member at a meeting either in person or by proxy without protesting
the lack of notice thereof shall constitute a waiver of notice of such
Member.
All notices given with respect to an original meeting shall extend to any
and all adjournments thereof and such business as might have been transacted
at the original meeting may be transacted at any adjournment thereof; no
notice of any adjourned meeting need be given if an announcement of the
time and place of the adjourned meeting is made at the original meeting.
Section 4. Quorum: The holders of at least 70% in interest of the Members
present in person or represented in proxy, shall be requisite and shall
constitute a quorum at all meetings, of members except as otherwise provided
by statute or the Articles of Organization. A Members Interest in the
Corporation shall be in proportion to his contribution to the capital of
the Corporation adjusted from time to time to reflect additions or
withdrawals. The phrase "at least 70% in interest" of the Members shall
mean Members who, in the aggregate, shall have Capital Contributions in
excess of seventy (70%) percent of the total Capital Contributions of all of
the Members. If, however, a quorum shall not be present or represented at
any meeting of Members, the Members entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned meeting at which
a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally notified when
a quorum is once present to organize a meeting, such quorum is not deemed
broken by the subsequent withdrawal of any Members.
Section 5. Voting: Every Member entitled to vote at any meeting shall be
entitled to vote in accordance with his Interest in the Corporation held by
him of record on the date fixed as the record date for said meeting and may
so vote in person or by proxy. Any Corporation action shall be authorized
by a majority in interest of the votes cast by the Members entitled to vote
thereon except as may otherwise by provided by statute, the Articles of
Organization or this Operating Agreement.
Section 6. Proxies: Every proxy must be signed by the Members entitled to
vote or by his duly authorized attorney-in-fact and shall be valid only if
filed with the Operating Manager of the Corporation prior to the
commencement of voting on the matter in regard to which said proxy is to
be voted. No proxy shall be valid after the expiration of eleven months from
the date of its execution unless otherwise expressly provided in the proxy.
Every proxy shall be revocable at the pleasure of the person executing it
except as otherwise provided by statute. Unless the proxy by its terms
provided for a specific revocation date and except as otherwise provided by
statute, revocation of a proxy shall not be effective unless and until such
revocation is executed in writing by the Member who executed such proxy
and the revocation is filed with the Operating Manager of the Corporation
prior to the voting of the proxy.
Section 7. Minutes of Meetings: Minutes of the Corporation's last meeting,
and the resolutions passed thereat, shall be prepared for every meeting of
Members and shall be produced by the Operating Manager thereat. Annual
statements reflecting the financial status of the Corporation shall be
distributed to all members no later than 45 days after the end of every
fiscal year, and at least 30 days before any annual meeting. Minutes of any
Meeting shall be prepared by the Operating Manager and sent to the Members
at their last known address by ordinary mail not later than 30 days after
any meeting.
Section 8. Inspectors at Meetings: In advance of any Members meeting, the
Members may appoint one or more inspectors to act at the meeting or at any
adjournment thereof and if not so appointed the person presiding at any such
meeting may, and at the request of any Member entitled to vote thereat shall,
appoint one or more inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
Section 9. Conduct of Meeting: All meetings of Members shall he presided
over by the Operating Manager, or if he is not present, by a Member thereby
chosen by the Members at the meeting. The Operating Manager or the person
presiding at the meeting shall appoint any person present to act as secretary
of the meeting.
Article III
Officers
Section 1. Executive Officers: The officers of the Corporation shall be an
Operating Manager, a President, a Secretary and a Treasurer and such other
officers as the Members may determine. The same person may hold any two or
more offices. The initial Operating Manager shall be Stan J. H. Lee,
and the initial President shall be Stan J. H. Lee. These Officers may be
removed or replaced with, and only with, the unanimous consent of the Members.
Section 2. Election: Except as provided in Article 4(2), the Operating
Manager and the other officers shall be chosen by the Members and shall hold
office for the term for which elected and until their successors have been
elected and qualified. The Members may from time to time appoint all such
other officers as they determine and such officers shall hold office from
the time of their appointment and qualifications until the time at which
their successors are appointed and qualified. The Members may fill
a vacancy in any office arising from any cause for the unexpired portion
of the term.
Section 3. Removal: Subject to Article 4(2), ante, the Members may remove
any officer from office at any time with or without cause.
Section 4. Delegation of Powers: The Members may, with the unanimous consent
of all Members, from time to time delegate the powers or duties of any
officer of the Corporation, in the event of his absence or failure to act
otherwise, to any other officer or Member of person whom they may select.
Section 5. Compensation: The compensation of each officer shall be such as
the Members may from time to time determine.
Section 6. Operating Manager: The Operating Manager shall be the chief
executive officer of the Corporation and shall have general charge of the
business and affairs of the Corporation, subject, however, to the right of
the Members to confer specified powers on officers and subject generally to
the direction of the Members. The president shall have those powers as may
be conferred upon him by the Operating Manager, provided, however, that such
powers shall not exceed the powers conferred upon the Operating Manager.
Unless otherwise ordered by the Members, the Operating Manager, or in the
event of his inability to act, the President, shall have full power and
authority on behalf of the Corporation to attend and to act and to vote at
any meeting of security holders of companies in which the Corporation may
hold securities, and at such meetings shall possess and may exercise any and
all rights and powers incident to the ownership of such securities, and
which, as the owner thereof, the Corporation might have possessed and
exercised, if present. The Members by unanimous resolution from time to
time may confer like powers upon any other person or persons.
Section 7. Secretary: The Secretary shall keep the minutes of all meetings
and record all votes of Members and committees in a book to be kept for that
purpose. He shall give or cause to be given any required notice of meetings
of Members or any committee, and shall be responsible for preparing or
obtaining from a transfer agent appointed by the Members, the list of
Members required by Article II, Section 7 hereof. He shall be the custodian
of the seal of the Corporation and shall affix or cause to be affixed the
seal to any instrument requiring it and attest the same and exercise the
powers and perform the duties incident to the office of Secretary subject to
the direction of the Members.
Section 8. Treasurer: Subject to the direction of the Members, the Treasurer
shall have charge of the general supervision of the funds and securities of
the Corporation and the books of account of the Corporation and shall
exercise the powers and perform the duties incident to the office of the
Treasurer. If required by the Members, he shall give the Corporation a
bond in such sum and with such sureties as may be satisfactory to the
Members for the faithful discharge of his duties.
Section 9. Other Officers: All other officers, if any, shall have such
authority and shall perform such duties as may be specified from time to
time by the Members.
Article IV
Committees
Section 1. Committees: The Members, by resolution of a majority in interest
of the Members, may designate from among themselves one or more committees,
each consisting of three or more Members, and each of which, to the extent
provided in such resolution, shall have all the authority of the Members
except that no such committee shall have the authority as to any of the
following matters:
(a) The filing of vacancies in any committee;
(b) The fixing of compensation of the Members for serving on any committee;
(c) The amendment of repeal of this Operating Agreement or the adoption of
a new Operating Agreement; and;
(d) The amendment or repeal of any resolution of the Members which by its
terms shall not be so amenable or repealable.
The Members may designate one or more Members as alternate members of any
such committee who may replace any absent member or members at any such
meeting of such committee.
Each such committee shall serve at the pleasure of the Members. The Members
shall have the power at any time to fill vacancies in, to change the
membership of, or to discharge any such committee. Committees shall keep
minutes of their proceedings and shall report the same to the Members at
the meeting of the Members next succeeding, and any action by the committee
shall be subject to revision and alteration by the Members, provided that no
rights of a third party shall be affected in any such revision or alteration.
Article V
Resignations
Section 1. Resignations: Any officer of the Corporation or any members of
any committee of the Members may resign at any time by giving written notice
to the Members, the Operating Manager or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time is not
specified therein, upon the receipt thereof, irrespective of whether any
such resignations shall have been accepted.
Article VI
Certificates Representing Membership
Section 1. Form of Certificates: Each Member shall be entitled to a
Certificate or Certificates in such form as prescribed by the Members and by
any applicable statutes, which Certificate shall certify the interest of the
Member in the Corporation. The Certificates shall be numbered and registered
in the order in which they are issued and upon issuance the name in which
each Certificate has been issued together with the Interest in the
Corporation represented thereby and the date of issuance shall be entered in
the Membership book of the Corporation by the Secretary or by the transfer
agent of the Corporation. Each Certificate shall be signed by the Operating
Manager and countersigned by the Secretary and shall be sealed with the
Corporation Seal or facsimile thereof. The signatures of the officers upon
a Certificate may also be facsimiles if the Certificate is countersigned by
a transfer agent or registered by a registrar other than the Corporation
itself or an employee of the Corporation. In case any officer who has
signed or whose facsimile signature has been placed upon a Certificate
shall have ceased to be such officer before the Certificate is issued, such
Certificate may be issued by the Corporation with the same effect as if the
officer had not ceased to be such at the time of its issue.
Section 2. Record Date for Members: For the purpose of determining the
Members entitled to notice of; or to vote at any meeting of Members or any
adjournment thereof or to express consent or dissent from any proposal
without a meeting, or for the purpose of determining the Members entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Members may fix, in advance, a date as the
record date for any such determination of Members. Such date shall not be
more than fifty (50) nor less than ten (10) days before the date of any
meeting nor more than fifty days prior to any action taken without a
meeting, the payment of any dividend or the allotment of any rights, or
any other action.
Article VII
General Restriction on Transfer of Interest
Section 1. General Restriction on Transfer of Interest: Except as
hereinafter provided in this Agreement, no Member shall transfer by sale,
gift, bequest or otherwise, or encumber by pledge, assignment, mortgage,
charge or otherwise, or otherwise dispose of or cease to be the holder of
any of the interest in the Corporation of which it is at any time the
registered or beneficial owner, without the prior written consent of the
other Members. In the case of any permitted transfer, no Member shall
sell any of its Interest in the Corporation unless the purchaser is already
or becomes a party to this Agreement upon completion of the applicable sale.
Article VIII
Bankruptcy and Default
Section 1. Bankruptcy and Default Provisions:
8.01 Upon the happening of the earliest of:
(a) the bankruptcy of any one or more of the Members,
or in the event any one or more of the Members is at any time in breach of
or in default under any of the provisions of this Agreement, which breach
or default is not remedied within thirty (30) days of receipt or written
notice of same from the Corporation; or
(b) the bankruptcy of any one or more of the Members or
in the event any one or more of the Members is at any time in breach of or
in default under any of the provisions of this Agreement, which breach or
default is not remedied within thirty (30) days of receipt of written
notice of same from the Corporation;
then, upon the happening of such event, in the case of subparagraph
(a), The Member(s) shall, and in the case of subparagraph (b), the Member(s)
shall, for the purposes of this Article Eight, be deemed to be a "Retiring
Party".
8.02 Upon the happening of an event causing one of the Members to
become a Retiring Party;
(a) the other Members shall have the option to purchase
all but not less than all the Interest in the Corporation owned by the
Retiring Party on a pro rata basis equal to the Interest in the Corporation
then held by each Member, which option shall be exercised by giving written
notice to the Retiring Party or his Personal Representative and to the
Corporation within thirty (30) days of the said event; or
(b) in the event the other Members do not so elect, the
Corporation shall have the option to purchase all but not less than all of
the Interest in the Corporation owned by the Retiring Party or his personal
Representative within thirty (30) days of the expiry of the option period
specified in Article 7.02 (a) hereof, for a price and in the manner
calculated and set forth in Articles 8.03 through 8.06 hereof. If any
Member does not take up his option for his pro rate proportion of the
Interest in the Corporation of the Retiring Party, the unclaimed Interest
in the Corporation shall be used to satisfy any request made by any other
Members who have indicated that they desire to purchase the said Interest
in the Corporation in excess of their pro rata proportion.
8.03 The purchase price for any Interest in the Corporation to be
purchased pursuant to the provisions of this Article Eight shall be equal to
the fair market value of such Interest in the Corporation at the date that
written notice is given by the purchasing Members or the Corporation, as the
case may be, (hereinafter referred to as the "Purchaser"), of its intention
to purchase the Interest in the Corporation of the Retiring Party. If the
Purchaser and the Retiring Party, or his Personal Representative, are
unable to agree as to the fair market value of the Interest in the
Corporation to be purchased, such determination shall be made by the
Corporation's Accountant.
8.04 If the parties do not agree with the valuation made by the
Corporation's Accountant, then the Purchaser shall nominate a representative
and the Retiring Party or his Personal Representative shall nominate a
representative, the two representatives so nominated shall nominate a
third representative and a majority of the three representatives shall
select a qualified appraiser to make the necessary fair market value
determination. The Purchaser and the Retiring Party shall pay for the cost
of their own representatives and the costs of the third representative and
the qualified appraiser shall be borne equally by the Purchaser and by the
Retiring Party.
8.05 In arriving at the valuation, the qualified appraiser shall:
(a) determine the fair market value of the Interest in
the Corporation as of the appropriate date without premium for control or
discount for minority;
(b) refer to and use as a guideline the valuation, if
any, last determined pursuant to the provisions of this Article Eight; and
(c) consider any written representations which either
the Purchaser or Retiring Party may make.
The valuation determined by the appraiser in accordance
with this Article Eight shall be binding upon all of the parties hereto.
8.06 Unless other terms of sale are agreed to by the Members, the
terms of any sale under this Article Eight shall be as follows:
(a) a minimum of twenty (20%) percent of the total
purchase price shall be paid at the time of closing by certified check
against delivery of the relevant Certificates duly endorsed in blank
with signatures guaranteed. The unpaid balance of the total purchase
price, if any, from time to time of the purchase shall bear interest from
the time of closing at a rate per annum equal to the prime lending
rate charged by the Corporation's bank at the time of closing plus two
(2%) percent, and such principal and interest shall be paid in twelve (12)
equal monthly consecutive installments commencing one (1) calendar month
from the time of closing. The Purchaser shall execute and deliver to the
Retiring Party a promissory note in the amount equal to the unpaid balance
of the purchase price at the time of closing and bearing interest as recited
above. Default of any payment of principal or interest shall, at the
option of the holder of the promissory note, cause the entire balance
thereof to mature, provided that the Purchaser may prepay the same in whole
or in part, in reverse order of maturity, without notice or bonus payments;
(b) the closing shall be at 10:00 o'clock a.m. at the
registered office of the Corporation on the sixtieth (60th) day following
the event causing one of the Members to become a Retiring Party;
(c) if the Retiring Party refuses or neglects to
complete the sale for any reason, the Purchaser shall have the right, upon
payment of the purchase price to the credit of the Retiring Party in any
chartered bank in the State of Colorado for and on behalf of and in the name
of the Retiring Party or his nominee or nominees, to execute and deliver
such transfers, resignations and other documents as may be necessary or
desirable in order to complete the transaction.
Article IX
Buy-Sell Provisions
Section 1. Buy-Sell Provisions:
9.01 Except in cases where Article Eight, which supersedes the
provisions hereof, would apply, any Member (hereinafter referred to as the
"Offering Party") may, at any time during the term of the Agreement, send a
offer in writing to the other Members, (hereinafter referred to individually
as a "Notified Party" and collectively as the "Notified Parties"), which
shall be signed by the Offering Party and shall be an offer to sell to the
Notified Parties, on a pro rata basis equal to the Interest in the
Corporation held by each Notified Party, all of the Interest in the
Corporation owned by the Offering Party at an arbitrary price and on terms
stipulated in the offer. Each Notified Party shall have a period of sixty
(60) days following the delivery of the offer to accept by notice in writing
the offer in accordance with its terms.
9.02 If one or more of the Notified Parties is prepared to
purchase his pro rata portion of the Interest in the Corporation, (the
"Accepting Party" or "Accepting Parties", as the case may be), but the
other Notified Party or Notified Parties are not so prepared, then the
Accepting Party or Accepting Parties shall have the first right and option
to purchase all of the Interest in the Corporation owned by the
Offering Party on a pro rata basis equal to the Interest in the Corporation
held by the Accepting Parties at the specified price. The Accepting Party
or Accepting Parties shall have a period of thirty (30) days within which
to exercise the said option. If the Accepting Party or Accepting Parties
elect to exercise the said option within the time stipulated the Accepting
Party or Accepting Parties shall then purchase and pay for all of the
Interest in the Corporation owned by the Offering Party at the specified
price.
9.03 The terms of sale under this Article Nine shall be as follows:
(a) the purchase price shall be paid as set out in the
offer made pursuant to Article 9.01 hereof;
(b) the closing shall be at 10:00 o'clock a.m. at the
registered office of the Corporation on the sixtieth (60th) day following
the date of delivery of the offer under Article 9.01;
(c) if the selling Member(s) refuses or neglects to
complete the sale for any reason, the purchasing Member(s) shall have the
right, upon payment of the purchase price to the credit of the Selling
Member(s) at any chartered bank in the State of Colorado for and on behalf
of and in the name of the selling Member(s) or his nominee(s), to execute
and deliver such transfers, resignations and other documents as may be
necessary or desirable in order to complete the transaction.
9.04 The rights granted by this Article Nine are in lieu of any
rights, statutory or otherwise, which a dissenting Member may now or
hereafter have to require a party hereto to purchase any of his
Interest in the Corporation in the capital stock of the Corporation.
9.05 The provisions of Article 9.01 shall, in any event, be
subject to the compliance by the selling Member(s) with applicable law and
the obtaining of requisite approvals for transfer thereunder. The closing
date referred to in Article 9.03 is hereby deemed to be extended by the
amount of time of any delay or delays occasioned by a regulatory or
governmental agency which is required to give approval to a transfer
hereunder.
Article X
Right of First Refusal
Section 1. Right of First Refusal:
10.01 Except in cases where Article Eight or Article Nine, which
shall supersede the provisions hereof, would apply, no Member shall
entertain offers for the purchase of his Interest in the Corporation nor
make agreements for the sale, transfer or assignment of his Interest in the
Corporation except upon compliance with this Article Ten, (and where
applicable, compliance with Article Eleven), and subject to the terms and
conditions hereinafter set forth:
(a) no sale, transfer or assignment of Interest in the
Corporation shall be considered by a Member unless he shall have first
received a bona fide offer in writing form from a third party dealing at
arm's length, who is a responsible purchaser of good business reputation
and who has agreed to enter into an agreement with the remaining Members of
the Corporation identical to this Agreement, (except changes in the Agreement
required because it has ceased to apply to a party hereto), to purchase all
of his Interest in the Corporation, which offer shall provide that the
purchase price shall be payable in cash;
(b) a party to the Agreement receiving an offer as
contemplated by subsection (a) of this Article 10.01, (herein referred to as
the "Selling Party"), which the Selling Party is prepared to accept shall,
within ten (10) days of the receipt of such offer, deliver a copy of such
offer, together with his own offer to sell all of the Interest in the
Corporation so proposed to be sold, to the other Members upon the same terms
and conditions as the third party shall have offered;
(c) the Members receiving the offer of the Selling Party
shall have the first right and option to purchase on a pro rata basis the
Interest in the Corporation to be sold by the Selling Party for a period of
thirty (30) days from the date of receipt of the offer of the Selling Party,
such right and option to be exercised before the expiration of such thirty
(30) days by notice in writing;
(d) if the other Members accept the offer of the Selling
Party within the time stipulated, they shall purchase on a pro rata basis
all of the Interest in the Corporation owned by the Selling Party upon the
same terms and conditions as the third party shall have offered;
(e) if one or more of the other Members is prepared to
purchase his pro rata portion of the Interest in the Corporation, (the
"Accepting Party" or "Accepting Parties", as the case may be), but
the other Member or Members are not so prepared, then the Accepting Party
or Accepting Parties shall have the first right and option to purchase all
of the Interest in the Corporation of the Selling Party on a pro rata basis
equal to the Interest in the Corporation held by the Accepting Parties,
upon the same terms and conditions as the third party shall have offered;
(f) if the other Members do not accept the offer of the
Selling Party within the time stipulated in Article 10.01(c) hereof or if
the Accepting Party or Accepting Parties elect not to exercise the right and
option set out in Article 10.01(e) hereof or do not exercise the said right
and option within the time stipulated, the Selling Party shall accept the
offer of the said third party, and complete the transaction with the said
third party in accordance with the offer of such third party and the parties
to this Agreement hereby agree to take all steps and proceedings requisite
to have such third party entered on the books of the Corporation as a Member
of the Corporation and to execute and deliver an Operating Agreement in
replacement of this Agreement. The Selling Party is hereby appointed the
agent and attorney of the other Members for the purpose of effecting
registration of the third party as a Member of the Corporation.
10.02 The provisions of Article 10.01 shall, in any event, be
subject to the compliance by the Selling Party and the third party with
applicable law and the obtaining of requisite approvals for transfer
thereunder.
Article XI
Piggyback Rights
Section 1. Piggy-back Rights. If the completion of any sale of Interest in
the Corporation to a third party in accordance with Article Ten would result
in the said third party acquiring more than a forty (40%) percent Interest
in the Corporation, each of the Members Receiving the offer of the Selling
Party, (hereinafter referred to the "Offerees"), shall have the further
right, to be exercised by notice in writing to the Selling Party within the
time limited for the acceptance of the Selling Party's offer, to require
the Selling Party to sell all but not less than all of the Interest in the
Corporation owned or controlled by each Offeree upon the same terms and
conditions as are contained in the third party's offer. If any of the
Offerees exercise such right, the Selling Party shall not complete the sale
of its Interest in the Corporation unless all of the Interest in the
Corporation of such Offerees who shall have so exercised such right are also
sold to the third party on the same terms and conditions as are contained
in the third party's offer.
Article XII
Security for Purchase of Interest in the Corporation
Section 1. Security for Purchase:
12.01 As security for the unpaid balance of the purchase price
with respect to a purchase and sale of Interest in the Corporation pursuant
to this Agreement, the purchasing Member shall pledge the said Interest in
the Corporation being the subject matter of such purchase and sale,
(hereinafter called the "Pledged Interest in the Corporation"), to and in
favor of the disposing Member, free and clear of any lien, charge or
encumbrance of whatsoever nature.
12.02 The Certificate(s) evidencing the Pledged Interest in the
Corporation shall be endorsed in blank by the purchasing Member with
signature guaranteed at the time of closing and be delivered to the
attorneys for the Corporation, or to such other persons as the parties
hereto may agree, (hereinafter called the "Trustee"), to be held in trust as
provided herein, together with a certified copy of a resolution of the
Members of the Corporation consenting to the transfer of the said Interest
in the Corporation to the disposing Member pursuant to the provisions of
this Article Twelve. Subject as herein provided, the Trustee shall hold the
Certificates evidencing the Pledged Interest in the Corporation until the
purchase price therefore has been paid in full, at which time and upon proof
thereof being furnished to the Trustee in the form of a receipt signed by
the disposing Member and an affirmative statement of payment signed by the
purchasing Member, the Trustee shall deliver the said Certificates to the
purchasing Member.
12.03 If at any time and from time to time during the period that
the purchase price remains outstanding:
(a) any of the said Interest in the Corporation are
subdivided, consolidated, changed or reclassified; or
(b) the Corporation is re-organized or amalgamated with
another Corporation or any other event occurs which results in the
substitution or exchange of any of the Interest in the Corporation
for, or the conversion of any of the said Interest in the Corporation into
other securities;
the Corporation, forthwith after the occurrence of any such event shall
substitute for the Pledged Interest in the Corporation, a Certificate
reflecting the resulting Interest in the Corporation, or other securities.
In this connection, Certificates or other evidence of ownership of such
resulting Interest in the Corporation or other securities in transferable
form with signatures guaranteed shall be forthwith deposited with the
Trustee against receipt of the said Certificates.
12.04 Until such time as the security hereby constituted shall
become enforceable, the purchasing Member shall be entitled to and may
exercise all voting and other rights attached to the Pledged Interest in
the Corporation.
12.05 While any part of the purchase price of any Interest in the
Corporation sold pursuant to this Agreement by the disposing Member is
unpaid, the purchasing Member insofar as it is permitted by law to do so,
covenants and agrees hereby that it will not vote in favor of nor suffer
the Corporation to do any of the following, namely:
(a) to allot or issue stock, bonds or other corporate
securities;
(b) to incur any obligations or liabilities, (absolute
or contingent), except if incurred under contracts or agreements entered
into in the course of business of the Corporation;
(c) to purchase or redeem any Member's Interest in the
Corporation;
(d) to mortgage, pledge or subject to lien, charge or
any other encumbrance any assets, tangible or intangible, of the Corporation
except in the ordinary course of business;
(e) to sell or transfer any assets, cancel any debts or
claims or transact any business except in each case in the ordinary course
of the business of the Corporation;
(f) to knowingly permit any extraordinary losses or
waive any rights of substantial value to the Corporation;
(g) to enter into any agreement other than in the
ordinary course of business of the Corporation including, but not limited
to, agreements regarding increases in salaries, bonuses, payments, stock
options or deferred compensation, provided that increments may be paid to
the purchasing Member, by way of increased salary or compensation in an
amount which shall not exceed ten (10%) percent of its previous year's
aggregate consideration;
(h) to grant options, warrants or other rights to
acquire Interest in the Corporation;
(i) to re-organize the capital structure of the
Corporation; or
(j) to merge, consolidate, amalgamate or sell the
business assets or undertakings of the Corporation unless the disposing
Member is supplied with evidence satisfactory to it that any amount owing
to it under this Agreement will be paid in full at the time of closing upon
completion of the foregoing events.
12.06 In the event that the purchasing Member defaults in payment
of the purchase price or the interest thereon or upon the breach of any of
the covenants set forth in Article 12.05 hereof, the disposing Member may
give notice thereof to the Trustee who shall forthwith give notice to the
purchasing Member that if the cure for the default is not made or such
breach is not cured by the purchasing Member within forty-five (45) days of
receiving notice thereof from the Trustee, the balance of the moneys then
remaining unpaid on account of the purchase price shall immediately become
due and payable.
If the purchasing Member fails to pay the balance of the moneys remaining
unpaid within thirty (30) days following such balance becoming due and
payable as aforesaid, the disposing Member shall have the right to realize
upon the said Interest in the Corporation by way of a sale thereof and
herein provided or, if the purchasing Member has not paid at least seventy-
five (75%) percent of the purchase price therefore, the disposing Member
shall alternatively have the right to take delivery of the Certificates
evidencing the Pledged Interest in the Corporation from the Trustee as
herein provided and continue to hold and own the same as if such Interest
in the Corporation had never been sold by it and the provisions of this
Agreement shall continue to govern the rights of the Members with respect
to the disposition of their Interest in the Corporation.
If less than seventy-five (75%) percent of the purchase price for the
Pledged Interest in the Corporation has been paid by the purchasing Member,
the disposing Member shall notify the Trustee within thirty (30) days of the
expiry of the aforesaid forty-five (45) days notice period as to whether
it intends to realize upon the Pledged Interest in the Corporation by way of
a sale thereof or intends to hold same. In the event that the disposing
Member fails to give such notice, it shall be deemed to have elected to
hold and own the Pledged Interest in the Corporation. The disposing Member
shall take delivery of the Pledged Interest in the Corporation for its own
account, in full and complete satisfaction of any claims that it may have
against the purchasing Member with respect to the unpaid balance of the
purchase price for the Pledged Interest in the Corporation and will not
pursue any other remedies available according to law. If however the
disposing Member elects to sell the said Interest in the Corporation as
provided herein, such action shall not be deemed to exclude any other remedy
which may be available to it at law to recover the moneys and interest
thereon due to it under this Agreement.
12.07 If the disposing Member elects to realize upon the Pledged
Interest in the Corporation by way of a sale, the following provisions shall
apply:
(a) any such sale shall be on the best terms which,
after making reasonable effort, the disposing Member is able to obtain;
provided however that the purchasing Member shall be given the opportunity
to obtain an offer for the purchase of the Pledged Interest in the
Corporation and if a bona fide offer is obtained by the purchasing Member
which provides for better terms, including the payment of the purchase
moneys in full by cash or certified check, then the offer obtained by the
purchasing Member shall be used for such realization;
(b) the disposing Member may, at its option, purchase
the said Interest in the Corporation on the same terms and conditions as the
best offer obtained by either the purchasing or disposing Member as provided
above; and
(c) after deducting from the proceeds of any such sale
reasonable allowance for all costs, charges and expenses reasonably incurred
by the disposing Member in connection therewith, the residue of the moneys
arising from such sale shall be applied on account of or in payment of the
balance of the moneys and accrued interest thereon then remaining unpaid on
account of the purchase price and if any surplus remains the same shall be
paid forthwith to the purchasing Member.
Article XIII
Purchase of Interest in the Corporation by the Corporation
Section 1. Purchase of Interest in the Corporation by the Corporation:
13.01 Except in cases where Article Eight, Nine or Ten, which
shall supersede the provisions hereof, would apply, any Member, (in this
Article Thirteen referred to as the "Selling Party"), may, at any time after
ninety days, during the term of this Agreement, send a notice in writing to
the Corporation and to the other Members which shall be signed by the
Selling Party and shall be notice of the Selling Party's intention to sell
all or a portion of the Interest in the Corporation owned by the Selling
Party.
13.02 Upon receipt of any notice pursuant to Article 13.01 hereof,
the Corporation shall be obligated to purchase the Interest in the
Corporation specified in the said notice upon the terms and conditions
recited in Articles 13.03 through 13.07 hereof.
13.03 The purchase price for the Interest in the Corporation to be
purchased pursuant to the provisions of this Article Thirteen shall be
determined in accordance with Article 13.04 through 13.06.
13.04 All Members shall meet within ten (10) days following
receipt of the said notice and at such meeting shall agree on a value for
the Interest in the Corporation which the Selling Party proposes to sell. If
the parties can not agree to a valuation, then the Selling party shall
nominate a representative and the Members shall nominate a representative,
the two representatives so nominated shall nominate a third representative
and a majority of the three representatives shall select a qualified
appraiser to make the necessary fair market 90 value determination. The
Members and the Selling Party shall pay for the cost of their own
representatives and the costs of the third representative and the
qualified appraiser shall be borne equally by the Members and the Selling
Party.
13.05 In arriving at its valuation, the Valuator shall:
(a) determine the value of all property, assets and
undertaking of the Corporation, less any amount which may, according to such
valuation, be due for income or capital gain taxes if any such property,
assets or undertaking were sold;
(b) refer to and use as a guide the valuation, if any,
last determined pursuant to their Article Thirteen; and
(c) consider any written representations which any
Member may make.
13.06 As soon as is practicable but in all cases within sixty (60)
days of its appointment, the Valuator shall prepare and deliver a report to
(in this Article Thirteen referred to as the Accountant/Auditor of the
Corporation). Based upon the Valuator's report, the auditors shall
determine the value to be attributed to the Interest in the Corporation
which the Selling Party proposes to sell. The Valuator's report and the
Accountant/Auditor's determination based thereon shall both be binding
upon the Members.
13.07 Unless other terms of sale are agreed to by the Members, the
terms of sale under this Article Thirteen shall be as follows:
(a) the Interest in the Corporation which the Selling
Party proposed to sell shall have a redemption amount equal to the value
attributed as determined above, (hereinafter referred to as the "Redeemable
Interest in the Corporation"):
(b) the Redeemable Interest in the Corporation shall
then be redeemed by the Corporation over a period not to exceed two (2) years
with a minimum annual redemption of fifty (50%) percent of the total
Redeemable Interest in the Corporation attributable to the Selling Party;
(c) if all of the Redeemable Interest in the Corporation
is immediately purchased by the Corporation, the Selling Party shall
deliver at closing a Certificate or Certificates representing the Redeemable
Interest in the Corporation to the Corporation duly endorsed by the Selling
Party in blank for transfer and/or cancellation;
(d) if on closing the Corporation does not redeem all of
the Redeemable Interest in the Corporation, the following provisions shall
apply:
(i) as stated above, the annual minimum
redemption will be fifty (50%) percent of the total Redeemable Interest in
the Corporation;
(ii) an annual dividend in the aggregate
to be equivalent to the interest that would accrue each year if the prime
lending rate charged by the Corporation's banker minus fifty (50%) percent
was applied to the aggregate redemption amount of all Redeemable Interest
in the Corporation not yet paid by the Corporation;
(iii) in the event any portion of the
Redeemable Interest in the Corporation is not paid by the Corporation within
two (2) years of the original closing date, thereafter the interest rate to
be used in determining the annual dividend payable on the outstanding
Redeemable Interest in the Corporation shall be varied to the prime lending
rate charged by the Corporation's banker, plus two (2%) percent;
(iv) the Selling Party shall deliver to
the Accountant/Auditor of the Corporation all Certificates representing the
Redeemable Interest in the Corporation duly endorsed in blank for transfer
and such Interest in the Corporation shall be held in escrow by the
Accountant/Auditor of the Corporation until the Accountant/Auditor receives,
on behalf of the Selling Party, the unpaid balance of the redemption amount
and dividends in full calculated as aforesaid;
(v) so long as the Corporation is not in
default in payment of any redemption amount or dividends thereon, the
Accountant/Auditor shall execute and deliver to the Corporation or its
nominee from time to time such instruments of proxy with respect to the
Redeemable Interest in the Corporation held in escrow as the Corporation may
request;
(vi) if the Corporation is in default in
respect of the payment of any redemption amount or dividends thereon, the
Accountant/Auditor shall give written notice to the Corporation, (with a copy
to the Selling Party), describing the nature of the default within thirty (30)
days from the occurrence of the default. If the default is not corrected
by the Corporation within the grace period, the Accountant/Auditor of the
Corporation will, at the request of the Selling Party, return all of the
Redeemable Interest in the Corporation to the Selling Party who shall be
entitled to re-transfer the said Interest in the Corporation into its own
name and thereafter require the Corporation to re-convert the Redeemable
Interest in the Corporation into the original Interest in the Corporation
held by the Selling Party. The Selling Party shall be entitled to retain
the portion of the redemption amount received by it and the Corporation shall
be discharged from liability for payment of the remaining unpaid balance of
the redemption amount; and
(vii) upon payment in full by the
Corporation of the redemption amount and dividends thereon, the Accountant/
Auditor shall deliver to the Corporation the Certificates representing the
Redeemable Interest in the Corporation duly endorsed in blank for transfer
and/or cancellation.
13.08 The rights granted by this Article Thirteen are in lieu of
any rights, statutory or otherwise, which a dissenting Member may now or
hereafter have to require a party hereto to purchase any of its Interest in
the Corporation.
13.09 The provisions of Article Thirteen shall, in any event, be
subject to the compliance of the selling Member(s) with applicable law and
the obtaining of requisite approvals for transfer thereunder. Any closing
date is hereby deemed to be extended by the amount of time of any delay or
delays occasioned by a regulatory or governmental agency which is required
to give approval to transfer hereunder.
Article XIV
Jurisdiction
Section 1. Jurisdiction: This Agreement shall be governed according to the
Laws of the state of Colorado, whose Courts shall have sole and exclusive
jurisdiction over any matter herein.
Article XV
General
Section 1. Miscellaneous Provisions:
15.01 Each of the parties severally agrees to indemnify each of
the other parties hereto against, and reimburse each of the other parties
for, any and all liabilities which such other party or parties may incur or
become subject to an amounts which such other party or parties may pay or
be required to pay which are in excess of the proportionate share of the
liabilities and obligations of the parties under the terms of this Agreement,
provided that nothing in this Article, 15.01 shall in any way be deemed to
or shall require any party to incur any liability or provide any funds
other than as may be expressly provided for in any other provisions of this
Agreement.
15.02 No consent or waiver, expressed implied, by any party hereto
of any breach or default by any other party hereto in the performance of his
obligations hereunder shall be deemed or construed to be a consent to or
waiver of any other breach or default in the performance by such other party
of the same or any other obligations of such party hereunder. Failure on
the part of any party to complain of any act or failure to act of any other
party or to declare the other party in default, irrespective of how long such
failure continues, shall not constitute a waiver by the first mentioned
party of his rights hereunder.
15.03 This Agreement shall continue to be effective notwithstanding
the sale of Interest in the Corporation by a Member howsoever, and this
Agreement shall be binding upon the remaining Members.
15.04 The invalidity of any provision of this Agreement or any
covenant herein contained on the part of any party shall not affect the
validity of any other provision or covenant hereof or herein contained which
shall remain in full force and effect.
15.05 The Members agree to sign all such documents and do all such
things as may be necessary or desirable to more completely and effectively
carry out the terms and intentions of this Agreement and to cause the
Corporation to act in the manner contemplated by this Agreement and, to
the extent permitted by law, cause the Board of Directors so to act.
15.06 Nothing in this Agreement shall be deemed in any way or for
any purposes to constitute any party a partner of, a member of a joint
venture or joint enterprise with any other party to this Agreement in the
conduct of any business or otherwise.
15.07 Time shall be of the essence of this Agreement.
15.08 This Agreement constitutes the entire agreement among the
parties and shall not be modified, amended or assigned except with the
consent in writing of the parties hereto. A consent to any assignment
required hereunder may be arbitrarily or unreasonably withheld until the
proposed assignee executes and delivers such documents as, in the opinion of
the legal counsel of the Corporation, are necessary to oblige himself or
itself hereunder.
15.9 If at the time of any sale of Interest in the Corporation as
contemplated in this Agreement:
(a) there are any loans outstanding from the Corporation
to the selling Member(s) or vise versa, ;such loans shall be paid; and
(b) there are any securities or covenants lodged by the
selling Member(s) with any person or institution or any personal guarantees
given by the selling Member(s) or his nominee(s) to secure any indebtedness,
liability or obligation of the Corporation, the remaining parties to this
Agreement shall use their best efforts to have the selling Member(s) and any
nominee(s) released therefrom. If, notwithstanding such best efforts, the
releases as aforesaid are not obtained, the remaining parties shall deliver
to the selling Member(s) their indemnity in writing indemnifying the
selling Member(s) and his nominee(s) from any and all liabilities
thereunder.
15.10 All notices contemplated or required to be given hereunder
shall be effective if sent by prepaid registered mail or delivered personally
to any of the parties at the address of that party as it appears on the
books of the Corporation from time to time, or at such other address as the
party to whom such notice is to be given otherwise directs in writing. Any
notice delivered aforesaid shall be effective on the date of delivery and
any notice mailed as aforesaid shall be effective two (2) business days
after the mailing thereof, provided that where interruption of mail services
is likely by reason of any strike or other labor dispute, notice shall be by
personal delivery only to the person or to the address as aforesaid.
15.11 In this Agreement, wherever the singular and masculine or
neuter are used, they shall be construed as is the plural or the feminine or
the neuter had been used, where the context or the party or parties so
requires, and the rest of the sentence shall construed as if the grammatical
and terminological changes thereby rendered necessary had been made.
15.12 This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their Personal Representatives, successors and
permitted assign and any reference to a right or a obligation of a party
hereto shall be deemed to include a reference to such Personal
Representatives, successors and permitted assigns to the extent that the
context requires.
15.13 This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and such
instrument shall be deemed made on the first day of March, 1999, irrespective
of the time or times when any counterpart may be made, executed and
delivered.
15.14 Interest in the Corporation as used herein refers to a
Member's interest in the Capital of the Corporation.
15.15 In consideration of the sums paid on behalf of RTG-TPD
Holdings Co. Ltd. (RTG) for logo development, RTG hereby grants the company
non-exclusive use of the Trademarks, KOMART and KOMART MALL, provided
however such use is for and in connection with the mall being developed at
2000 S. Havana St., Denver CO only.
In Witness Whereof the parties hereto have duly executed this Agreement as
of the date and year first above written.
Signed
and Delivered
in the presence of:
) /s/Miyung Lee/s/
) Member
) /s/ Miyung Lee/s/
) for and on Behalf
) of Daniel Lee,
a minor
)
) RTG-TPD Holdings Co. Ltd.
) /s/Stan J. H. Lee/s/
EXHIBIT 22
Subsidiaries of the Registrant
Korean Restaurant, SAAN, LLC., a Colorado Limited Liability Corporation
BLANK PAGE
EXHIBITS- VOLUME 2
EXHIBIT 24.6
Consent of Registrant's Auditors
October 28, 2000
Securities and Exchange Commission
Washington, D.C. 20549
RE: eKomart, Inc.
Registration Number: 333-93671
Gentlemen:
We have audited the balance sheet and accompanying statements of the
Registrant, as found in the Prospectus which forms part of this Registration
Statement at page 40, et seq., for the 9 month period ending September 30,
2000, and the 1999 and 1998 fiscal years, ending on December 31, and
consent to the Auditor's reports, statements, and notes being filed with the
SB2/A Registration Statement of which this exhibit forms a part, and with any
amendment thereto.
This accounting firm hereby consents to the filing of this
consent as an exhibit to the Registration Statement.
/s/M. H. Park/s/
M. H. Park, CPA
440 West St., 3rd Fl.
Fort Lee, NJ 07024-5058
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
TABLE OF CONTENTS
PAGE
REPORT OF INDEPENDENT CERTFIED PUBLIC ACCOUNTANTS 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6-8
RCH
Rachlin
Cohen &
Holtz
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
A Partnership Including Professional Associations
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Directors
Diversified Medical Holdings, Inc. and Subsidiary
West Palm Beach, Florida
We have reviewed the accompanying consolidated balance sheet of Diversified
Medical Holdings, Inc. and its subsidiary (a development stage company) as of
December 31, 1997, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the period February 11, 1997
(inception) through December 31, 1997, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants. All information included in these financial
statements is the representation of the management of the Company.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially less
in scope than an audit in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements in
order for them to be in conformity' with generally accepted accounting
principles.
/s/Rachlin, Cohen & Holtz/s/
Fort Lauderdale, Florida
June 16, 1998
One Southeast Third Avenue, Tenth Floor, Miami, Florida 33131
Dade (305)377-4228. Fax (305) 377-8331
700 Southeast Third Avenue, Third Floor, Ft. Lauderdale, Florida 33316
Broward (954)525-1040. Fax (954) 525-2004
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(SEE ACCOUNTANTS' REVIEW REPORT)
ASSETS
Current Assets:
Cash $ 1,355
Note receivable, former subsidiary 7,800
Stock subscription receivable (subsequently paid) 600
Total current assets 9,755
Note Receivable, Net of Deferred Gain of $1,050,000 l50,000
$ 159,755
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,406
Stockholders' Equity:
Series A voting convertible preferred stock, $.001
par value authorized 2,000,000 shares; issued and
outstanding 300,000 shares (liquidation value $300,000) 300
Common stock, $.001 par value; authorized 6,000,000
shares; issued and outstanding 1,000,000 shares 1,000
Additional paid-in capital 199,700
Deficit accumulated during the development stage (43,651)
157,349
$ 159,755
See notes to consolidated financial statements.
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FEBRUARY 11, 1997 (INCEPTION) TO DECEMBER 31, 1997
(SEE ACCOUNTANTS' REVIEW REPORT)
Revenues $ 0-
Costs and Expenses:
Professional fees $ 35,545
General and administrative 8,106
43,651
Net Loss $ (43,651)
See notes to consolidated financial statements.
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FEBRUARY 11, 1997 (INCEPTION) TO DECEMBER 31, 1997
(SEE ACCOUNTANTS' REVIEW REPORT)
Deficit
Series A Accumulated
Preferred Stock Common Stock Additional During the
Paid-in Development
Shares Amount Shares Amount Capital Stage Total
Capital contribution
represented by costs
and expenses
paid on behalf of the
Company - $- 1,000,000 $1,000 $- - 1,000
Issuance of
preferred stock 300,000 300 - - 199,700 - 200,000
Net Loss - - - - (43,651) (43,651)
Balance,
December 31, 1997 300,000$ 300 1,000,000 $1,000$199,700$(43,651) $157,349
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FEBRUARY 11, 1997 (INCEPTION) TO DECEMBER 31, 1997
(SEE ACCOUNTANTS' REVIEW REPORT)
Cash Flows from Operating Activities:
Net loss $ (43,651)
Adjustments to reconcile net loss to net cash
used by operating activities:
Costs and expenses paid on behalf of the Company
by stockholder,
net of subscription receivable 400
Changes in operating assets and liabilities:
Increase in accounts payable 2,406
Net cash used in operating activities (40,845)
Cash Flows from Investing Activities:
Note receivable (7,800)
Cash Flows from Financing Activities:
Proceeds from issuance of preferred stock 50,000
Net Increase in Cash 1,355
Cash, Beginning -
Cash, Ending $ 1,355
See notes to consolidated financial statements.
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Capitalization
Diversified Medical Holdings, Inc. (the "Company"), was incorporated under
the laws of the State of Florida on February 11, 1997.
On October 1, 1997, the Company amended its Articles of Incorporation to
increase the Company's authorized common stock to consist of 6,000,000
shares, with a par value of $.001 and 1,000,000 shares of preferred stock,
with a par value of $.001.
During 1997, the Board of Directors authorized the issuance of 300,000
shares of Series A preferred stock. The Series A is a voting convertible
redeemable preferred stock. Each share is convertible into one share of the
Company's common stock. The preferred stock is subject to an anti-dilution
provision with respect to this conversion rate. The preferred stockholders
are entitled to participate with the holders of the common stock in any
dividend or distribution as if the preferred shares had been converted
into common shares.
The preferred stockholders are entitled to one vote for each share of
preferred stock they hold.
In the event of a liquidation of the Company, the preferred stockholders are
entitled to a liquidating distribution of $1.00 per share. In the event that
assets remain after the Common stockholders have also received $1.00 per
share, then those remaining assets are to be distributed ratably amongst
both the preferred and common stockholders.
In the event that the Company's common stock is not publicly traded prior to
December 31, 1999, the Series A preferred stock shall be subject to
mandatory redemption at the option of the holder for $1.00 per share.
The rights and privileges associated with additional series of preferred
stock if any, will be established by the Board of Directors.
Development Stage Enterprise
The Company was organized primarily for the purpose of raising capital to
take advantage of potential business opportunities in the healthcare
industry in a managed care environment. Accordingly, the Company is
considered to be in the development stage as of December 31, 1997, and the
accompanying financial statements represent those of a development stage
enterprise.
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principles of Consolidation
The consolidated financial statements include the accounts of Diversified
Medical Holdings, Inc. and its wholly owned subsidiary, Outsource Medical
Incorporated. All significant intercompany balances and transactions have
been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Income Taxes
The Company accounts for its income taxes using Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax liabilities and assets for expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
NOTE 2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate the continuance
of the Company as a going concern. The Company's continued existence is
dependent on management's ability to negotiate to raise additional
capital. Management is currently seeking additional capital. The financial
statements do not include any adjustments that may be necessary if the
Company is unable to continue as a going concern.
NOTE 3. BUSINESS ACQUISITIONS AND DISPOSITIONS
In October 1997, the Company acquired Outsource Medical Incorporated (OMI)
and its wholly-owned subsidiary, Essential Care Medical Center, Inc.
(Essential) and $50,000 in exchange for (i) 300,000
shares of Series A convertible preferred stock of the Company and (ii)
stock purchase warrants to acquire 200,000 shares of common stock of the
Company for $.001 per share.
DIVERSIFIED MEDICAL HOLDINGS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 3. BUSINESS ACQUISITIONS AND DISPOSITIONS (Continued)
Additionally, the Company agreed to pay the seller forty percent of certain
accounts receivable of Essential as of June 1, 1997 as collected.
On December 1, 1997, the Company sold 100% of the capital stock of Essential.
In payment, the Company received a promissory note in the amount of
$1,200,000 which bears interest at a rate of 8.75% per annum for the first
24 months beginning January 1998 and 10% per annum for 36 months. Thereafter,
principal and interest payments shall be due in equal monthly installments
based on a 7-year amortization schedule with a balloon payment of the
remaining principal balance at the earlier of the sale of the capital stock
or substantially all the assets of the purchaser or October 31, 2002. In the
first 24 months, the interest earned in excess of 6% per annum may be
deferred until maturity at the option of the buyer.
In addition, the purchase contract assigned responsibility for the payment
for certain accounts receivable as of June 1, 1997 to the purchaser.
Due in part to the fact that the purchaser is a newly formed, thinly
capitalized, highly leveraged entity, significant uncertainties exist as to
the ability of the purchaser to meet the obligations created by the note
receivable received by the Company in this transaction. As a result, the
gain on the above transaction has been deferred until such time as cash
flows of the purchaser are sufficient to fund the obligation on a full
accrual basis. As a result, the note receivable has been reflected net of
the deferred gain in the accompanying financial statements.
NOTE 4. INCOME TAXES
The Company has net operating loss carryforwards of approximately $44,000
that may be offset against future taxable income. These carryforwards expire
in 2012.
The deferred tax asset resulting from such loss carryforwards has been
fully offset by a valuation allowance of approximately $13,000 in accordance
with the provisions of Statement of Financial Accounting Standards No.109,
Accounting for Income Taxes.
Diversified Medical Holdings, Inc.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1998
(unaudited)
ASSETS:
Current Assets.
Cash: $ 105
Note Receivable,
Net of Deferred Gain of $l,230,000 150,000
$ 150,195
LIABILITIES AND STOCKHOLDERS EQUITY:
Current Liabilities:
Accounts Payable $ 27,570
Loans Payable (stockholders) 15,383
42,953
Stockholders Equity:
Series A voting convertible preferred stock,
$.00l par value authorized 2,000,000 shares;
issued and outstanding
300,000 shares (liquidation value $300,000) 300
Common Stock, $.001 par value;
authorized 6,000,000 shares;
issued and outstanding 1,000,000 shares 1,000
Additional paid-in capital 199,700
Deficit accumulated during the development stage (93,848)
107,152
Total Liabilities and Stockholders' Equity $ 150,105
Diversified Medical Holdings, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
DECEMBER 31, 1998
(unaudited)
Revenues: $ 0-
Costs and Expenses:
Professional Fees 45,520
General and Administrative 6,357
51,877
Net Loss: $ (51,877)
iNetboard Inc.,
(A Development Stage Company)
BALANCE SHEET
MARCH 31, 1999
(unaudited)
ASSETS:
Current Assets:
Cash: $ 350
Note Receivable, Net of Deferred Gain of $1,230,000 $ 150,000
$ 150,305
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 31,650
Loans Payable (stockholders) $ 20,113*
$ 51,763
Stockholders Equity:
Series A voting convertible preferred stock,
$.001 par value authorized 2,000,000 shares;
issued and outstanding
300,000 shares (liquidation value $300,000). $ 300
Common Stock, $.001 par value; authorized
20,000,000 shares; issued and outstanding
800,000 shares 800
Additional paid-in capital 199,700
Deficit accumulated during the development stage (102,258)
98,542
Total Liabilities and Stockholders' Equity $ 105,305
* Retired and Forgiven-DRD/11-3-99/SL
iNetboard Inc.,
(A Development Stage Company)
STATEMENT OF OPERATIONS
MARCH 31, 1999
(unaudited)
Revenues: $ 0-
Costs and Expenses:
Professional Fees 0
General and Administrative 6,830
Net Loss: $ ( 6,830)
Subj: Fwd: Domain Name Registration Confirmation - ekomart.com
Date: 12/4/99 9:33:10 AM Eastern Standard Time
From: SIERRA5533
To: PPNG
- -----------------
Forwarded Message:
Subj: Re: Domain Name Registration Confirmation - ekomart.com
Date: 11/27/99 2:57:28 PM Eastern Standard Time
From: administration@d-na.com (Administration)
To: sierra5533@aol.com
_)_)_)_)_) Domain NAmereserve (_(_(_(_(_
TO: Stan Lee
RE: DOMAIN NAME REGISTRATION
ekomart.com
Dear Mr. Lee,
I am happy to report that your Domain Name registration has been approved
and processed.
The following services and options that you chose on the registration form
have been recorded:
* DNS (Domain Name Services) on our servers.
* E-MAIL FORWARDING
* SITE UNDER CONSTRUCTION PAGE
Internet users who point their browsers to: http://www.ekomart.com
or www.ekomart.com or ekomart.com
Will be redirected to a SITE UNDER CONSTRUCTION PAGE http://
Additionally any e-mail sent to: Any Name name@ekomart.com
Will be forwarded to: sierra5533@aol.com
It normally takes one business day for the Domain Name to be entered into
the Internet's root servers, however it can take as long as two weeks for
the name to replicate over the entire Internet.
You can make changes to your forwarding and e-mail forwarding options any
time and as often as you like. To do this visit our UPDATES page, by
clicking on the UPDATE link at www.d-na.com/index2.htm.
Appended to this confirmation notice are: Internics' Registration Record and
Registration Agreement, for your records .
Additionally, although Internic will bill you by e-mail and by snail mail
within 10 to 14 days, you might wish to take advantage of their online
payment method at http://d-na.com/payregistryonline.htm
Once again thank you for choosing Domain NAmereserve to service your domain
registration.
Sincerely,
TS Rolle
Customer-Care
Domain NAmereserve - http://www.d-na.com
*********** So Whats Next? ************
HOST YOUR SITE WITH US: WE MAKE IT EASY FOR YOU
http://www.d-na.com/webhosting.htm
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______________________________________________________________________________
YOUR INTERNIC REGISTRATION RECORD
==============================================================================
RTG-TPD Holding Co. LLC (EKOMART-DOM)
P.O. Box 1777
Fort Lee, NJ 07024
US
Domain Name: EKOMART.COM
Administrative Contact:
Lee, Stan (SLT94) sierra5533@AOL.COM
201-363-0540
Technical Contact:
Network Administrator (NA466-ORG) hostmaster@D-NA.COM
1-407-322-4043
Fax- 1-407-322-1901
Billing Contact:
Lee, Stan (SLT94) sierra5533@AOL.COM
201-363-0540
Record last updated on 26-Nov-1999.
Domain servers in listed order:
ROME.NETWIDE.NET 209.26.140.2
NAPLES.NETWIDE.NET 209.26.140.4
==============================================================================
Domain Version Number: 4.0
NETWORK SOLUTIONS, INC.
DOMAIN NAME REGISTRATION AGREEMENT
A. Introduction. This domain name registration agreement
("Registration Agreement")is submitted to NETWORK SOLUTIONS, INC.
("NSI") for the purpose of applying for and registering a domain name
on the Internet. If this Registration Agreement is accepted by NSI,
and a domain name is registered in NSI's domain name database and
assigned to the Registrant, Registrant ("Registrant") agrees to be
bound by the terms of this Registration Agreement and the terms of
NSI's Domain Name Dispute Policy ("Dispute Policy") which is
incorporated herein by reference and made a part of this Registration
Agreement. This Registration Agreement shall be accepted at the
offices of NSI.
B. Fees and Payments.
1) Registration or renewal (re-registration) date through March 31, 1998:
Registrant agrees to pay a registration fee of One Hundred United States
Dollars (US$100) as consideration for the registration of each new domain
name or Fifty United States Dollars (US$50) to renew (re-register) an
existing registration.
2) Registration or renewal date on and after April 1, 1998: Registrant
agrees to pay a registration fee of Seventy United States Dollars (US$70)
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3) Period of Service: The non-refundable fee covers a period of two (2)
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and includes any permitted modification(s) to the domain name record
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4) Payment: Payment is due to Network Solutions within thirty (30)
days from the date of the invoice.
C. Dispute Policy. Registrant agrees, as a condition to
submitting this Registration Agreement, and if the Registration
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"http://www.netsol.com/rs/dispute-policy.html".
D. Dispute Policy Changes or Modifications. Registrant agrees
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provisions which shall continue to be binding.
O. Entirety. Registrant agrees that this Registration Agreement
and the Dispute Policy is the complete and exclusive agreement between
Registrant and NSI regarding the registration of Registrant's domain
name. This Registration Agreement and the Dispute Policy supersede all
prior agreements and understandings, whether established by custom,
practice, policy, or precedent.
P. Governing Law. Registrant agrees that this Registration
Agreement shall be governed in all respects by and construed in
accordance with the laws of the Commonwealth of Virginia, United
States of America. By submitting this Registration Agreement,
Registrant consents to the exclusive jurisdiction and venue of the
United States District Court for the Eastern District of Virginia,
Alexandria Division. If there is no jurisdiction in the United States
District Court for the Eastern District of Virginia, Alexandria
Division, then jurisdiction shall be in the Circuit Court of Fairfax
County, Fairfax, Virginia.
Q. This is Domain Name Registration Agreement Version
Number 4.0. This Registration Agreement is only for registrations
under top-level domains: COM, ORG, NET, and EDU. By completing
and submitting this Registration Agreement for consideration and
acceptance by NSI, the Registrant agrees that he/she has read and
agrees to be bound by A through P above.
Authorization
0a. (N)ew (M)odify (D)elete....: N
0b. Auth Scheme................:
0c. Auth Info..................:
1. Comments...................:
2. Complete Domain Name.......: ekomart.com
Organization Using Domain Name
3a. Organization Name..........: RTG-TPD Holding Co. LLC
3b. Street Address.............: P.O. Box 1777
3c. City.......................: Fort Lee
3d. State......................: NJ
3e. Postal Code................: 07024
3f. Country Code...............: US
Administrative Contact
4a. NIC Handle (if known)......:
4b. (I)ndividual (R)ole........: I
4c. Name.......................: Lee, Stan
4d. Organization Name..........: RTG-TPD Holding Co. LLC
4e. Street Address.............: P.O. Box 1777
4f. City.......................: Fort Lee
4g. State......................: NJ
4h. Postal Code................: 07024
4i. Country Code...............: US
4j. Phone Number...............: 201-363-0540
4k. Fax Number.................: 815-846-7550
4l. E-Mailbox..................: sierra5533@aol.com
Technical Contact
5a. NIC Handle (if known)......: NA466-ORG
5b. (I)ndividual (R)ole........: R
5c. Name.......................:
5d. Organization Name..........:
5e. Street Address.............:
5f. City.......................:
5g. State......................:
5h. Postal Code................:
5i. Country Code...............:
5j. Phone Number...............:
5k. Fax Number.................:
5l. E-Mailbox..................:
Billing Contact
6a. NIC Handle (if known)......:
6b. (I)ndividual (R)ole........: I
6c. Name.......................: Lee, Stan
6d. Organization Name..........: RTG-TPD Holding Co. LLC
6e. Street Address.............: P.O. Box 1777
6f. City.......................: Fort Lee
6g. State......................: NJ
6h. Postal Code................: 07024
6i. Country Code...............: US
6j. Phone Number...............: 201-363-0540
6k. Fax Number.................: 815-846-7550
6l. E-Mailbox..................: sierra5533@aol.com
Primary Name Server
7a. Primary Server Hostname....: ROME.NETWIDE.NET
7b. Primary Server Netaddress..: 209.26.140.2
Secondary Name Server(s)
8a. Secondary Server Hostname..: NAPLES.NETWIDE.NET
8b. Secondary Server Netaddress: 209.26.140.4
8a. Secondary Server Hostname..:
8b. Secondary Server Hostname..:
8a. Secondary Server Hostname..:
8b. Secondary Server Netaddress:
END OF AGREEMENT
- --------------------
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<META content=text/html;charset=iso-8859-1 http-equiv=Content-Type>
<META content='"MSHTML 4.71.1712.3"' name=GENERATOR>
_)_)_)_)_) Domain NAmereserve (_(_(_(_(_
TO: Stan Lee
RE: DOMAIN NAME REGISTRATION
ekomart.com
Dear Mr. Lee,
I am happy to report that your Domain Name registration has been approved
and processed.
The following services and options that you chose on the registration form
have been recorded:
* DNS (Domain Name Services) on our servers.
* E-MAIL FORWARDING
* SITE UNDER CONSTRUCTION PAGE
Internet users who point their browsers to: http://www.ekomart.com
or www.ekomart.com or ekomart.com
Will be redirected to a SITE UNDER CONSTRUCTION PAGE http://
Additionally any e-mail sent to: Any Name name@ekomart.com
Will be forwarded to: sierra5533@aol.com
It normally takes one business day for the Domain Name to be entered into
the Internet's root servers, however it can take as long as two weeks for
the name to replicate over the entire Internet.
You can make changes to your forwarding and e-mail forwarding options any
time and as often as you like. To do this visit our UPDATES page, by
clicking on the UPDATE link at www.d-na.com/index2.htm.
Appended to this confirmation notice are: Internics' Registration Record
and Registration Agreement, for your records .
Additionally, although Internic will bill you by e-mail and by snail mail
within 10 to 14 days, you might wish to take advantage of their online
payment method at http://d-na.com/payregistryonline.htm
Once again thank you for choosing Domain NAmereserve to service your domain
registration.
Sincerely,
TS Rolle
Customer-Care
Domain NAmereserve - http://www.d-na.com
*********** So Whats Next?
************
HOST YOUR SITE WITH US: WE MAKE IT EASY FOR YOU
http://www.d-na.com/webhosting.htm
JOIN OUR RESELLER TEAM
http://www.d-na.com/resellerteam.htm
______________________________________________________________________________
YOUR INTERNIC REGISTRATION RECORD
==============================================================================
RTG-TPD Holding Co. LLC (EKOMART-DOM)
P.O. Box 1777
Fort Lee, NJ 07024
US
Domain Name: EKOMART.COM
Administrative Contact:
Lee, Stan (SLT94) sierra5533@AOL.COM
201-363-0540
Technical Contact:
Network Administrator (NA466-ORG) hostmaster
@D-NA.COM
1-407-322-4043
Fax- 1-407-322-1901
Billing Contact:
Lee, Stan (SLT94) sierra5533@AOL.COM
201-363-0540
Record last updated on 26-Nov-1999.
Domain servers in listed order:
ROME.NETWIDE.NET
209.26.140.2
NAPLES.NETWIDE.NET
209.26.140.4
=========================================================================
Domain Version Number: 4.0
NETWORK SOLUTIONS, INC.
DOMAIN NAME REGISTRATION AGREEMENT
A. Introduction. This domain name registration agreement
("Registration Agreement")is submitted to NETWORK SOLUTIONS, INC.
("NSI") for the purpose of applying for and registering a domain
name on the Internet. If this Registration Agreement is accepted by NSI,
and a domain name is registered in NSI's domain name database and
assigned to the Registrant, Registrant ("Registrant") agrees to be
bound by the terms of this Registration Agreement and the terms of
NSI's Domain Name Dispute Policy ("Dispute Policy") which is
incorporated herein by reference and made a part of this Registration
Agreement. This Registration Agreement shall be accepted at the
offices of NSI.
B. Fees and Payments.
1) Registration or renewal (re-registration) date through March 31, 1998:
Registrant agrees to pay a registration fee of One Hundred United States
Dollars (US$100) as consideration for the registration of each new domain
name or Fifty United States Dollars (US$50) to renew (re-register) an
existing registration.
2) Registration or renewal date on and after April 1, 1998: Registrant
agrees to pay a registration fee of Seventy United States Dollars (US$70)
as consideration for the registration of each new domain name or the
applicable renewal (re-registration) fee (currently Thirty-Five United
States Dollars (US$35)) at the time of renewal (re-registration).
3) Period of Service: The non-refundable fee covers a period of two (2)
years for each new registration, and one (1) year for each renewal,
and includes any permitted modification(s) to the domain name record
during the covered period.
4) Payment: Payment is due to Network Solutions within thirty (30)
days from the date of the invoice.
C. Dispute Policy. Registrant agrees, as a condition to
submitting this Registration Agreement, and if the Registration
Agreement is accepted by NSI, that the Registrant shall be bound by
NSI's current Dispute Policy. The current version of the Dispute
Policy may be found at the InterNIC Registration Services web site:
"http://www.netsol.com/rs/dispute-policy.html".
D. Dispute Policy Changes or Modifications. Registrant agrees
that NSI, in its sole discretion, may change or modify the Dispute
Policy, incorporated by reference herein, at any time. Registrant
agrees that Registrant's maintaining the registration of a domain name
after changes or modifications to the Dispute Policy become effective
constitutes Registrant's continued acceptance of these changes or
modifications. Registrant agrees that if Registrant considers any such
changes or modifications to be unacceptable, Registrant may request
that the domain name be deleted from the domain name database.
E. Disputes. Registrant agrees that, if the registration of its
domain name is challenged by any third party, the Registrant will be
subject to the provisions specified in the Dispute Policy.
F. Agents. Registrant agrees that if this Registration Agreement
is completed by an agent for the Registrant, such as an ISP or
Administrative Contact/Agent, the Registrant is nonetheless bound as a
principal by all terms and conditions herein, including the Dispute
Policy.
G. Limitation of Liability. Registrant agrees that NSI shall have
no liability to the Registrant for any loss Registrant may incur in
connection with NSI's processing of this Registration Agreement, in
connection with NSI's processing of any authorized modification to the
domain name's record during the covered period, as a result of the
Registrant's ISP's failure to pay either the initial registration fee
or renewal fee, or as a result of the application of the provisions of
the Dispute Policy. Registrant agrees that in no event shall the
maximum liability of NSI under this Agreement for any matter exceed
Five Hundred United States Dollars (US$500).
H. Indemnity. Registrant agrees, in the event the Registration
Agreement is accepted by NSI and a subsequent dispute arises with any
third party, to indemnify and hold NSI harmless pursuant to the terms
and conditions contained in the Dispute Policy.
I. Breach. Registrant agrees that failure to abide by any
provision of this Registration Agreement or the Dispute Policy may be
considered by NSI to be a material breach and that NSI may provide a
written notice, describing the breach, to the Registrant. If, within
thirty (30) days of the date of mailing such notice, the Registrant
fails to provide evidence, which is reasonably satisfactory to NSI,
that it has not breached its obligations, then NSI may delete
Registrant's registration of the domain name. Any such breach by a
Registrant shall not be deemed to be excused simply because NSI did
not act earlier in response to that, or any other, breach by the
Registrant.
J. No Guaranty. Registrant agrees that, by registration of a
domain name, such registration does not confer immunity from objection
to either the registration or use of the domain name.
K. Warranty. Registrant warrants by submitting this Registration
Agreement that, to the best of Registrant's knowledge and belief, the
information submitted herein is true and correct, and that any future
changes to this information will be provided to NSI in a timely manner
according to the domain name modification procedures in place at that
time. Breach of this warranty will constitute a material breach.
L. Revocation. Registrant agrees that NSI may delete a
Registrant's domain name if this Registration Agreement, or subsequent
modification(s) thereto, contains false or misleading information, or
conceals or omits any information NSI would likely consider material
to its decision to approve this Registration Agreement.
M. Right of Refusal. NSI, in its sole discretion, reserves the
right to refuse to approve the Registration Agreement for any
Registrant. Registrant agrees that the submission of this Registration
Agreement does not obligate NSI to accept this Registration Agreement.
Registrant agrees that NSI shall not be liable for loss or damages
that may result from NSI's refusal to accept this Registration
Agreement.
N. Severability. Registrant agrees that the terms of this
Registration Agreement are severable. If any term or provision is
declared invalid, it shall not affect the remaining terms or
provisions which shall continue to be binding.
O. Entirety. Registrant agrees that this Registration Agreement
and the Dispute Policy is the complete and exclusive agreement between
Registrant and NSI regarding the registration of Registrant's domain
name. This Registration Agreement and the Dispute Policy supersede all
prior agreements and understandings,
whether established by custom,
practice, policy, or precedent.
P. Governing Law. Registrant agrees that this Registration
Agreement shall be governed in all respects by and construed in
accordance with the laws of the Commonwealth of Virginia, United
States of America. By submitting this Registration Agreement,
Registrant consents to the exclusive jurisdiction
and venue of the
United States District Court for the Eastern District of Virginia,
Alexandria Division. If there is no jurisdiction in the United States
District Court for the Eastern District of Virginia, Alexandria
Division, then jurisdiction shall be in the Circuit Court of Fairfax
County, Fairfax, Virginia.
Q. This is Domain Name Registration Agreement Version
Number 4.0. This Registration Agreement is only for registrations
under top-level domains: COM, ORG, NET, and EDU. By completing
and submitting this Registration Agreement for consideration and
acceptance by NSI, the Registrant agrees that he/she has read and
agrees
to be bound by A through P above.
Authorization
0a. (N)ew (M)odify (D)elete....: N
0b. Auth Scheme................:
0c. Auth Info..................:
1. Comments...................:
2. Complete Domain Name.......: ekomart.com
Organization
Using Domain Name
3a. Organization Name..........: RTG-TPD Holding Co. LLC
3b. Street Address.............: P.O. Box 1777
3c. City.......................: Fort Lee
3d. State......................: NJ
3e. Postal Code................: 07024
3f. Country Code...............: US
Administrative Contact
4a. NIC Handle (if known)......:
4b. (I)ndividual (R)ole........: I
4c. Name.......................: Lee, Stan
4d. Organization Name..........: RTG-TPD Holding Co. LLC
4e. Street Address.............: P.O. Box 1777
4f. City.......................: Fort Lee
4g. State......................: NJ
4h. Postal Code................: 07024
4i. Country Code...............: US
4j. Phone Number...............: 201-363-0540
4k. Fax Number.................: 815-846-7550
4l. E-Mailbox..................: sierra5533@aol.com
Technical Contact
5a. NIC Handle (if known)......: NA466-ORG
5b. (I)ndividual (R)ole........: R
5c. Name.......................:
5d. Organization Name..........:
5e. Street Address.............:
5f. City.......................:
5g. State......................:
5h. Postal Code................:
5i. Country Code...............:
5j. Phone Number...............:
5k. Fax Number.................:
5l. E-Mailbox..................:
Billing Contact
6a. NIC Handle (if known)......:
6b. (I)ndividual (R)ole........: I
6c. Name.......................: Lee, Stan
6d. Organization Name..........: RTG-TPD Holding Co. LLC
6e. Street Address.............: P.O. Box 1777
6f. City.......................: Fort Lee
6g. State......................: NJ
6h. Postal Code................: 07024
6i. Country Code...............: US
6j. Phone Number...............: 201-363-0540
6k. Fax Number.................: 815-846-7550
6l. E-Mailbox..................: sierra5533@aol.com
Primary Name Server
7a. Primary Server Hostname....: ROME.NETWIDE.NET
7b. Primary Server Netaddress..: 209.26.140.2
Secondary Name Server(s)
8a. Secondary Server Hostname..: NAPLES.NETWIDE.NET
8b. Secondary Server Netaddress: 209.26.140.4
8a. Secondary Server Hostname..:
8b. Secondary Server Hostname..:
8a. Secondary Server Hostname..:
8b. Secondary Server Netaddress:
END OF AGREEMENT
- ----------------------- Headers --------------------------------
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From: "Administration" <administration@d-na.com>
To: <sierra5533@aol.com>
Subject: Re: Domain Name Registration Confirmation - ekomart.com
Date: Sat, 27 Nov 1999 10:29:45 -0500
Message-ID: <01bf38ec$3c1af460$0a0030ce@grouper.batelnet.bs>
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STOCK PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 3rd day of November, 1999
BETWEEN:
Stan J. H. Lee,
for and on behalf of RTG-TPD Holding Co., LLC., and
its Members
(hereinafter called the "Seller")
OF THE FIRST PART
A N D:
iNetboard, Inc.,
a corporation incorporated under the laws of the State of Florida
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the Seller controls and represents all of the authorized issued
and outstanding interest of all the members of RTG-TPD Holding Company,
LLC., (herein referred to as the "Corporation"), and;
WHEREAS, the Purchaser desires to acquire all of the outstanding
shares of the Corporation's Common Stock, and;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, in
consideration of the covenants, agreements, warranties, and payments herein
set out and provided for, the parties hereby respectively covenant and
agree as follows:
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following terms
shall have the following meanings respectively.
"Agreement" means this agreement and all schedules attached to this
agreement. The term includes each case where it may be supplemented or
amended from time to time. The expressions "hereof", "herein", "hereto",
"Hereunder", "hereby" and similar expressions refer to this agreement, and
"Article", "section" and "subsection" mean and refer to the specified
Article, section, and subsection of this agreement.
"books and records" means the accounting books of original entry including
the general ledger, record of cash receipts and disbursements, purchase
journal and banking records.
"Business" means the business presently and heretofore carried on by the
Corporation, consisting of being operating manager of Komart Shopping Mall,
Komart Supermarket, and San Restaurant located in Denver, Colorado as well
as the planned purchase and sale, development, support, maintenance, and
enhancement of commercial and retail shopping centers and developments, to
include related e-commerce and multi media online and outdoor advertising
businesses, and such other ventures as the directors of the Corporation may
from time to time deem appropriate.
"Business day" means a day other than a Saturday, Sunday or a day that is a
statutory holiday.
"Closing" means the closing of the transaction for purchase and sale
contemplated herein.
"Closing Date" or "Date of Closing" means September 14, 1999 or such other
date as may be mutually agreed upon in writing by the parties hereto.
"Closing Financial Statements" has the meaning ascribed to it in section
4.1.1.
"Common Shares" means the issued and outstanding common shares in the
capital of the Corporation.
"Corporation" means the companies listed hereinabove as the Seller.
"EBIT" means net earnings before income taxes, as determined by the auditors,
in accordance with GAAP.
"Exchange Shares" means 7,000,000 common.
"Financial statements" means, collectively, the Closing Financial Statements
defined hereinabove.
"Intercompany Transactions" means, collectively, all transactions of any
nature between the Corporation and any Person associated with or related to
the Corporation or otherwise not dealing with the Corporation on an arms-
length basis.
"GAAP" means generally accepted accounting principles in the United States,
as appropriate and as in effect from time to time, consistently applied.
"NASDAQ" means the National Association of Securities Dealers and
Quotations.
"Non Arm's Length Person" means any shareholder director, officer, employee,
affiliate, or associate (as defined in the Securities Act of 1933, as amended)
of the Corporation. This term includes any one or more of the Seller or any
other Person who does not deal at arm's length with the Corporation or any one
or more of the Seller within the meaning of such concept as used in the Income
Tax Act (USA).
"Person" includes an individual, a corporation, a joint venture, a partnership,
a trust or trustee, any unincorporated organization, an association, or any
other entity (including any governmental, administrative, or regulatory
authority).
"Permitted Liens" means, at any time, such Liens as the Purchaser may agree,
in writing, shall constitute a Permitted Lien for the purpose of this
Agreement.
"Preferred Shares" mean, preferred convertible voting shares in the capital
of the Purchaser, said shares being convertible at a price of $0.01 per share
one year from the effective date of a Registration Statement to be filed
with the SEC (defined hereinbelow) no later than 60 days from the Closing
Date.
"Purchased Shares" shall have the meaning attributed thereto in section 3.1
hereof.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational, governing documents of
such Person. This term includes any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority or
agency, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Rule 144" means rule 144 of the United States Securities and Exchange
Commission.
"SEC" means the Securities and Exchange Commission of the United States.
"Seller" shall mean, specifically for purposes of this agreement and
identifying the parties thereto, all of the shareholders of the Corporation.
"Subsidiary", in relation to any body corporate, means any corporation of
which issued and outstanding securities are held, other than by way of
security only, by such body corporate, and includes any corporation in like
relation to a Subsidiary.
"this agreement", "this agreement", "herein", "hereto", "hereunder", "hereof"
and similar expressions refer to the within agreement and not to any
particular portion thereof, and include the schedules referred to in
Article 2.00.
"Time of Closing" means two o'clock in the afternoon on the Closing Date.
ARTICLE 2.00 - SCHEDULES
2.1 The following schedules, at time of closing, shall be delivered and
attached to and incorporated in this Agreement by reference and deemed to be
part hereof:
Schedule 4.2.1 - Financial Statements of Corporation
Schedule 4.2.6 - Corporation's Shareholders
Schedule 4.2.22 - Outstanding Obligations of Corporation
Schedule 4.2.23 - Leases of Corporation
Schedule 4.2.26 - Insurance Policies of Corporation
Schedule 4.2.34 - Accounts List of Corporation
Schedule 5.2.1 - Financial Statements of Purchaser
Schedule 5.2.7 - Outstanding Rights to Securities of Purchaser
Schedule 5.2.22 - Outstanding Obligations of Purchaser
Schedule 5.2.33 - Accounts List of Purchaser
Schedule 5.2.37 - Shareholder Credit Facility to Purchaser
Schedule 6.2.4 - Power of Attorney
Schedule 9.9 - Indemnification Agreement
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Seller hereby agree to
sell, assign, and transfer to the Purchaser a 100% interest in the
Corporation ("the Purchased Shares"). The Purchaser covenants and agrees to
purchase from the Seller the Purchased Shares for an amount equal in the
aggregate to the Purchase Price of $7,000,000 dollars ($7,000,000), payable
as hereinafter set out. At time of Closing, the Purchased Shares will
constitute 100% of the interest of all members of the Corporation.
3.2 Subject to the hereinafter described conditions, the Purchaser
hereby agrees to exchange the equivalent of 7,000,000 shares of its Common
Shares (7/8.05 share or 875% of the outstanding shares of the Purchaser) on
the Closing Date, provided, however that 2.0 million common shares are
reserved for raising capital for the Corporation, (providing the Seller, on
a fully diluted basis including shares reserved for sale to the public for
raising Capital, shall have a total of 7/10.5 interest in the Purchaser),
with $0.01 par value (the "Exchange Shares"), with the Seller for all of the
Purchased Shares as follows:
(A) at Closing, the Purchaser will issue and deliver 7,000,000 shares of
its common stock to the Seller on a pari passu basis, and;
(B) at Closing and immediately following completion of the exchange
described in Section 3.2(A), the Purchaser shall call a special meeting of
its stockholders for the following purposes:
(1) new directors shall be elected and new bylaws shall
be adopted;
(2) Purchaser's entry into this agreement shall be ratified, provided,
however, that such ratification shall not be a condition subsequent but a
condition precedent to this agreement and that by executing this Agreement,
the Purchasers declare such ratification has been effected.
3.3 The Seller hereby represent, warrant, covenant, and acknowledge the
following.
3.3(A) The Purchased Shares are being transferred without registration under
the provisions of Section 5 of the Act.
3.3(B) All of the Purchased Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the jurisdictional
boundaries of the United States. This provision is exclusive of when such
Exchange Shares are registered under the provisions of Section 5 of the act
and under applicable state and provincial securities laws. Moreover, an
opinion of legal counsel may be provided by the Purchaser to certify that
such registration is not required as a result of applicable exemptions
therefrom.
3.3(C) The Seller shall not transfer any of the Exchanged Shares except in
compliance with all applicable laws.
3.3(D) The Seller is acquiring the Exchanged Shares for their own account,
for investment purposes only and not with a view to further sale or
distribution, except as permitted by law.
3.3(E) The Seller have made themselves fully and completely familiar with
all aspects of the Purchaser's business, operations, and financial statements
and, immediately following closing on this Agreement, will assume
operational control thereof.
3.4 The Purchaser hereby represents, warrants, covenants and acknowledges
the following.
3.4(A) The Exchange Shares are being transferred without Registration under
the provisions of Section 5 of the Securities Exchange Act of 1934, as
amended (the "Act") or Florida Blue Sky Law.
3.4(B) All of the Exchange Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the jurisdictional
boundaries of the United States. This provision is exclusive of when such
Exchange Shares are registered under the provisions of Section 5 of the act
and under applicable state and provincial securities laws. Moreover, an
opinion of legal counsel may be provided by the Purchaser to certify that
such registration is not required as a result of applicable exemptions
therefrom.
3.4(C) The Purchaser shall not transfer any of the Purchased Shares except
in compliance with all applicable laws.
3.4(D) The Purchaser is acquiring the Purchased Shares for its own account,
for investment purposes only and not with a view to further sale or
distribution.
3.4.1 The Purchaser has 22,000,000 shares of capital stock, $0.01 par value,
authorized, 1,050,000 of which will be the total outstanding and fully
diluted amount immediately prior to conclusion of this transaction and upon
its conversion of both the preferred stock and warrants held by Medical
Industries of America, Inc. A further 2.45 Million Shares shall be issued
by the Purchaser prior to the Closing Date, 2.0 million to be reserved for
sale of common shares to the public at a minimum of $6.00 per share.
3.4.2 Except as described herein, the Purchaser has no other, outstanding
securities of any class or of any kind or character. There are no
outstanding subscriptions, options, warrants, or other agreements or
commitments obligating the Purchaser to issue or sell any additional shares
or options or rights with respect thereto or any securities convertible into
any shares of Stock of any class.
3.5 The Purchase Price shall be paid and satisfied in full by the delivery
of the issued Exchange Shares at the Times of Closing.
3.6 The certificates representing the shares being exchanged shall each bear
the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR WITH THE
SECURITIES REGULATORY AUTHORITIES OF ANY STATE, PROVINCE, OR
NATIONAL AUTHORITY). CONSEQUENTLY, THESE SHARES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE
FIRST REGISTERED UNDER APPLICABLE STATE, PROVINCIAL AND
FEDERAL SECURITIES LAWS OR THE TRANSACTION'S EXEMPTION
THEREFROM IS DEMONSTRATED TO THE FULL SATISFACTION OF THE
CORPORAITON'S LEGAL COUNSEL."
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS, AND WARRANTIES OF AND THE
CORPORATION
4.1 The Shareholders of the Seller hereby covenant, represent, and warrant,
and the Seller, jointly and severally, represent to the best of their
knowledge, as follows:
4.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Seller, and made a part hereof as Schedule 4.2.1 are the
following:
(A) unaudited balance sheet of the Corporation to be acquired as of July 31,
1999, with the related statement of operations and unaudited statement of
cash flow for the period ending July 31, 1999 (such balance sheets,
statements of operations, and other statements are referred to herein as
the "Corporation's Financial Statements").
4.2.2 Corporation has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Colorado.
4.2.3 Corporation has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation to
do business under the laws of Colorado, being the only jurisdictions in which
the nature of its business or the property owned or leased by it makes such
qualification necessary.
4.2.4 At Time of Closing, the authorized capital of the Corporation shall
consist of 200 units without par value.
4.2.5 At Time of Closing, the authorized capital of the said corporation
shall be 200 units (and no more) and will have been duly and validly
allotted and issued and outstanding as fully paid and non-assessable and
beneficially owned by the Seller.
4.2.6 All of the Purchased Shares are owned by the shareholders of the
Corporation as the beneficial owners of record as listed at Schedule 4.2.6.
Such listed shareholders have good and marketable title thereto, free and
clear of all mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, and demands whatsoever. This provision includes
voting trusts, shareholders' agreements, options, or other agreements of
any kind. The Seller represent that said listed shareholders have the
absolute right to transfer the Purchased Shares, and they shall be enjoyed
by the Purchaser free from any interruption or disturbance subject only to
the terms and conditions herein.
4.2.7 The Corporation has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or
any shares of the capital of any other corporation or to acquire or lease
any other business operations.
4.2.8 No person, firm, or corporation has any agreement, option, or any
right or privilege (whether by law, pre-emptive, or contractual) for the
purchase, subscription, allotment, or issuance of either any of the
authorized stock in the capital of the Corporation or of any securities of
the Corporation. This provision includes convertible securities, warrants,
and convertible obligations of any nature.
4.2.9 Except with respect to product warranties provided by the
Corporation in the ordinary course of business, the Corporation is not a
party to or bound to any person, firm, or corporation. This provision
includes any agreement of guarantee, indemnification, assumption,
endorsement, or any other like commitment of obligations or liabilities
(contingent or otherwise) or indebtedness of any person, firm, or
corporation.
4.2.10 There are not now, nor will there be on Closing, any material claims
or potential or contingent claims against the Corporation for product
liability in respect of goods manufactured and/or sold by the Corporation.
4.2.11 The Corporation's Financial Statements have been prepared in
accordance with GAAP and present fairly to include:
4.2.11(A) all the assets, liabilities (whether accrued, absolute,
contingent, or otherwise), and the financial condition of the Corporation
as at the respective dates of the Corporation's Financial Statements; and
4.2.11(B) the sales, earnings, and results of the operations of the
Corporation during the periods covered by the Corporation's
Financial Statements.
4.2.12 The corporate records and minute books of the Corporation
contain complete and accurate minutes of all meetings of and copies of all
by-laws and resolutions passed by the directors and shareholders of the
Corporation since the incorporation of the Corporation. All such meetings
have been duly called and held. The share certificate book with register of
shareholders, register of transfers, register of directors, and other
corporate registers of the Corporation are complete and accurate in all
material respects.
4.2.13 The Business has been carried on in the ordinary course since
January 1999. Since then, there has been no change in the business
operations, affairs, or condition of the Corporation, financial or
otherwise. This provision includes changes arising as a result of any
legislative or regulatory change, revocation of any license or right to do
business, fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation, act of God, or otherwise. This provision
excludes changes occurring in the ordinary course of business, which changes
have not materially aversely affected and will not materially aversely
affect the organization, business, properties, prospects, and financial
condition of the Corporation or the ability of the Corporation to carry on
Business.
4.2.14 The books and records, financial and otherwise, of the Corporation
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Corporation as at the
date hereof. All material, financial transactions of the Corporation are
accurately recorded in such books and records.
4.2.15 Execution of this Agreement by the Seller and delivery of the
Agreement by them to the Purchaser and their performance hereunder has been
duly authorized. No further action is necessary on the part of the Seller
to make this agreement valid and binding in accordance with its terms upon
the Seller.
4.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Corporation. This provision
includes any indenture, agreement, instrument, license, permit, or
understanding to which the Corporation or any one or more of the Seller
is a party or by which any one or more of them is bound. Nor will the
consummation of this transaction accelerate any commitment or obligation of
the Corporation or result in the creation of any lien or encumbrance upon
any of the assets or property of the Corporation.
4.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority having
jurisdiction over the Corporation, the Seller, or their respective
properties or businesses.
4.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Corporation pursuant to any agreement affecting its assets or the Business
following closing.
4.2.19 The Corporation will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration of
any employee except in the normal course of business.
4.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Corporation, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
4.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Corporation after the date hereof and up
to the Time of Closing without the prior written consent of the Purchaser.
4.2.22 Annexed hereto as Schedule 4.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Corporation. None of
which are presently in default, and the Corporation is not under any
agreement to and shall not create or issue any bonds, debentures, mortgages,
notes, or other evidence of indebtedness or other security agreements from
the date hereof until Closing without the written consent of the Purchaser.
4.2.23 The Corporation is not a party to any lease or agreement in the
nature of a lease, whether as lessor or lessee, except those leases
described in Schedule 4.2.23 hereto. The schedule specifies the parties
to each of such leases, their dates of execution and expiry dates, any
options to renew, any consents required, the locations of any leased lands
and premises, and the rental payable thereunder. Each of such leases is in
good standing and in full force and effect without amendment thereto, and
the Corporation is not in breach of any of the covenants, conditions, or
agreements contained in each such lease. There are no consents required
from or on behalf of any persons to the transaction contemplated by this
Agreement.
4.2.24 The Corporation is not a party to any conditional sales contract,
hire-purchase agreement, or other title retention agreement.
4.2.25 The Corporation is not, and will not be at the Time of Closing, a
party to any agreement to acquire or to acquire any beneficial interest in
any real or immovable property.
4.2.26 The Corporation maintains appropriate policies of insurance, given
the nature of the Business, and such insurance coverage will be continued in
full force and effect to and including the Date of Closing. The Corporation
is not in default with respect to any of the provisions contained in any
such insurance policy, and it has not failed to give any notice or present
any claim under any such insurance policy in due and timely fashion.
Schedule 4.2.26 hereto lists all insurance policies of the Corporation,
specifying the insurance company, insurance agent, policy number, type of
coverage, and amount of coverage.
4.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the
Corporation, at law or in equity or before or by any federal, provincial,
municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign. The Seller are not
aware of any existing ground on which any such action, suit, or proceeding
might be commenced with any reasonable likelihood of success.
4.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Corporation is not a party to any outstanding
agreement, contract, or commitment, whether written or oral.
4.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Corporation.
4.2.30 The Corporation is and at Closing will be in substantial compliance
in all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar statutes.
4.2.31 The uses of the real properties owned or leased by the Corporation
referred to in this agreement or the schedules hereto are not in material
breach of any statute, by-law, ordinance, regulation, covenant, restriction,
or official plan.
4.2.32 The Corporation owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising
except as listed at Schedule 4.2.22; the purchase price is based on and
directly correlates to the net tangible worth (being assets less liabilities)
of the Corporation, which the Corporation represents to be approximately
$7,000,000 upon audit.
4.2.33 The conduct of the Business does not infringe upon the patents,
trade marks, trade names, or copyrights (domestic or foreign) of any other
person, firm, or corporation.
4.2.34 Annexed hereto as Schedule 4.2.34 is a true and complete list
showing the name of each bank, trust company, or similar institution in
which the Corporation has accounts or safe deposit boxes and the names of
all persons authorized to draw thereon or to have access thereto.
4.2.35 The Corporation is conducting the Business in compliance with all
applicable laws, rules and regulations of each jurisdiction in which the
Business is carried on, is not in breach of any such laws, rules or
regulations, except for breaches which in the aggregate are immaterial.
Also the Corporation is duly licensed, registered, or qualified in each
jurisdiction in which it owns or leases property or carries on the Business.
To enable the business to be carried on as now conducted and its property
and assets to be owned, leased, and operated, all such licenses,
registrations and qualifications are valid and subsisting and in good
standing. None of the same will be canceled or amended by virtue of the
transaction for purchase and sale provided for herein.
4.2.36 All facilities and equipment owned and used by the Corporation in
connection with the Business are in good operating condition and are in a
state of good repair and maintenance.
4.2.37 There are not now any loans or other indebtedness outstanding
between the Corporation and the Seller or either any current or former
directors, officers, shareholders, or employees of the Corporation or any
Non Arms Length Persons. This provision is exclusive of normal salaries,
bonuses, fringe benefits, and the obligation to reimburse for expense
incurred on behalf of the Corporation in the normal course of business or
otherwise disclosed in the Corporation's Financial Statements.
4.2.38 To the best of the Seller' knowledge, there are no liabilities of
the Corporation of any kind whatsoever, whether or not accrued and whether
or not determined or determinable, in respect of which the Corporation or
the Purchaser may become liable before, on, or after the Closing. This
provision is exclusive of liabilities disclosed on, reflected in, or
provided for in the Financial Statements or incurred in the ordinary course
of business. This provision is also exclusive of those liabilities
attributable to the period from the Corporation's Financial Statements
to the actual time of Closing and are not materially adverse, individually
or in the aggregate, to the Business, operations, affairs or financial
condition of the Corporation.
4.2.39 There is not now nor will there be at the Time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Corporation.
4.2.40 The Corporation is not in default in the filing of any corporate
return or report that may be required under any federal, provincial and/or
municipal law or regulation.
4.2.41 The Corporation has duly and timely filed all tax returns required
and has paid all taxes and installments of taxes which are due and payable.
This provision includes all assessments, reassessments, and all other taxes,
governmental charges, penalties, interest, and fines due and payable by it
on or before the date hereof. The income tax liability of the corporation
has been not reviewed or determined by the IRS or the applicable State for
all fiscal years up to and including the fiscal year to date. Adequate
provision has been made for taxes payable for the current period of which
tax returns are not yet required to be filed. There are no agreements,
waivers, or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of any tax,
governmental charge, or deficiency against the Corporation in respect of
taxes, governmental charges, or assessments, asserted by such authority.
The Corporation has withheld from each payment made to any of its officers,
directors, employees, former directors, officers, and employees the amount
of all taxes, including but not limited to income tax, and other deductions
required to be withheld therefrom. The Corporation has paid the same to
the proper tax or other receiving officers within the time required under
the applicable tax legislation.
4.2.42 The Seller have no information or knowledge of any facts relating to
the Seller, the Business, the Corporation, or the Purchased Shares which, if
known to the Purchaser, might reasonably be expected to deter the Purchaser
from completing the transaction of purchase and sale herein contemplated.
4.2.43 The Corporation shall prepare and file all documents and forms
necessary to effect the filing and registration of the combined companies
(with iNbd as the parent holding corporation) so as to complete and receive
approval of an effective registration statement for NASDAQ SmallCap
listing as soon as reasonable (i.e., within 90 days) from the date of
closing.
/s/ All items requested have been examined, and approved. DRD/s/
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser covenants, represents, and warrants as follows and
acknowledges that the Seller are relying upon such covenants,
representations, warranties, and covenants in connection with the sale
by the Seller of the Purchased Shares.
5.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Purchaser, and made a part hereof as Schedule 5.2.1 are the
following:
(A) unaudited balance sheet of the Purchaser to be acquired for the fiscal
years of 1997 and 1998, with the related statement of operations and
unaudited statement of cash flow for the same years, and;
(B) unaudited balance sheet of the Purchaser to be acquired as of March 31,
1999 (the "Purchaser's Interim Balance Sheet") with the related unaudited
statement of income and unaudited statement of cash flow for the one month
ended April 30, 1999 (such balance sheets, statements of operations, and
other statements are referred to herein as the "Purchaser's Financial
Statements").
5.2.2 Purchaser has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Florida.
5.2.3 Purchaser has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation
to do business under the laws of Florida, being the only jurisdiction in
which the nature of its business or the property owned or leased by it makes
such qualification necessary.
5.2.4 At time of Closing, the authorized capital of the Purchaser shall
consist of 22,000,000 shares with a par value of $0.01.
5.2.5 At time of Closing, the authorized issued capital of the Purchaser
shall be 4,000,000 shares of its common stock (and no more) and will have
been duly and validly allotted and issued and outstanding as fully paid and
non-assessable and beneficially owned by the Purchaser.
5.2.6 The Purchaser has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease any
other business operations.
5.2.7 Except as listed at Schedule 5.2.7, no person, firm, or corporation
has any agreement, option, or any right or privilege (whether by law, pre-
emptive, or contractual) for the purchase, subscription, allotment, or
issuance of either any of the authorized stock in the capital or any
securities of the Purchaser. This provision includes convertible securities,
warrants, and convertible obligations of any nature.
5.2.8 The Purchaser is not a party to or bound to any person, firm, or
corporation. This provision includes any agreement of guarantee,
indemnification, assumption, endorsement, or any other like commitment of
obligations or liabilities (contingent or otherwise) or indebtedness of any
person, firm, or corporation.
5.2.9 There are not now, nor will there be on Closing, any material claims or
potential or contingent claims against the Purchaser for product liability.
5.2.10 The Purchaser's Financial Statements have been prepared in accordance
with GAAP and present fairly to include:
(A) all the assets, liabilities (whether accrued, absolute, contingent, or
otherwise), and the financial condition of the Purchaser as at the respective
dates of the Purchaser's Financial Statements, and;
(B) the sales, earnings, and results of operations during the periods covered
by the Corporation's Financial Statements.
5.2.11 The corporate records and minute books of the Purchaser contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Purchaser
since the incorporation of the Purchaser. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Purchaser are complete and accurate in all material respects.
5.2.12 The Purchaser does not have an active business or operations.
5.2.13 The Purchaser has no inventory.
5.2.14 The books and records, financial and otherwise, of the Purchaser
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Purchaser as at the date
hereof. All material, financial transactions of the Purchaser are
accurately recorded in such books and records.
5.2.15 The execution and delivery of this Agreement by the Purchaser as well
as the performance by the Purchaser hereunder have been duly authorized.
No further action will be necessary on the part of the Purchaser to make
this Agreement valid and binding in accordance with its terms upon the
Purchaser.
5.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Purchaser. This provision
includes any indenture, agreement, instrument, license, permit, or
understanding to which the Purchaser is a party or by which any one or more
of them is bound. Nor will the consummation of this transaction accelerate
any commitment or obligation of the Purchaser or result in the creation of
any lien or encumbrance upon any of the assets or property of the Purchaser.
5.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority having
jurisdiction over the Purchaser.
5.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Purchaser pursuant to any agreement affecting its assets or the Business
following closing.
5.2.19 The Purchaser will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration
of any employee except in the normal course of business.
5.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Purchaser, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
5.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Purchaser after the date hereof and up to
the Time of Closing without the prior written consent of the Seller.
5.2.22 Annexed hereto as Schedule 5.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Purchaser. None of which
are presently in default, and the Purchaser is not under any agreement to
and shall not create or issue any bonds, debentures, mortgages, notes, or
other evidence of indebtedness or other security agreements from the date
hereof until Closing without the written consent of the Seller.
5.2.23 The Purchaser is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee.
5.2.24 The Purchaser is not a party to any conditional sales contract, hire-
purchase agreement, or other title retention agreement.
5.2.25 The Purchaser is not, and will not be at the Time of Closing, a party
to any agreement to acquire or to acquire any beneficial interest in any
real or immovable property.
5.2.26 The Purchaser does not maintain any insurance policies.
5.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the Purchaser,
at law or in equity or before or by any federal, provincial, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Purchaser is not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
5.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Purchaser is not a party to any outstanding
agreement, contract, or commitment, whether written or oral, except for the
Agreement of Purchase and Sale for all the outstanding shares of Tritium,
Inc. said Agreement as executed on or before August 17, 1999.
5.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Purchaser.
5.2.30 The Purchaser is and at Closing will be in substantial compliance in
all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar
statutes.
5.2.31 The Purchaser does not lease any real properties.
5.2.32 The Purchaser owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising.
5.2.33 The conduct of business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
5.2.34 Annexed hereto as Schedule 5.2.33 is a true and complete list showing
the name of each bank, trust company, or similar institution in which the
Purchaser has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto.
5.2.35 The Purchaser exists in compliance with all applicable laws, rules
and regulations of each jurisdiction in which the Business is carried on,
is not in breach of any such laws, rules or regulations, except for breaches
in the aggregate are immaterial. Also the Purchaser is duly licensed,
registered, or qualified in each jurisdiction in which it owns or leases
property or carries on the Business. To enable the business to be carried
on as now conducted and its property and assets to be owned, leased, and
operated, all such licenses, registrations and qualifications are valid and
subsisting and in good standing. None of the same will be canceled or
amended by virtue of the transaction for purchase and sale provided for
herein.
5.2.36 All facilities and equipment owned or used by the Purchaser are in
good operating condition and are in a state of good repair and maintenance.
5.2.37 Except as specified at Schedule 5.2.37, there are not any loans or
other indebtedness outstanding between the Purchaser and either the Seller
or either any current or former directors, officers, shareholders, or
employees of the Purchaser or any Non Arms Length Persons. This provision
is exclusive of normal salaries, bonuses, fringe benefits, and the
obligation to reimburse for expense incurred on behalf of the Purchaser
in the normal course of business.
5.2.38 There are no liabilities of the Purchaser of any kind whatsoever,
whether or not accrued and whether or not determined or determinable, in
respect of which the Purchaser may become liable before, on, or after the
Closing. This provision is exclusive of liabilities disclosed on, reflected
in, or provided for in the Financial Statements or incurred in the ordinary
course of business. This provision is also exclusive of those liabilities
attributable to the period from the Purchaser's Financial Statements to the
actual time of Closing and are not materially adverse, individually or in
the aggregate, to the Business, operations, affairs or financial condition
of the Purchaser.
5.2.39 There is not now nor will there be at the time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Purchaser.
5.2.40 The Purchaser is not in default in the filing of any corporate return
or report that may be required under any federal, provincial and/or
municipal law or regulation.
5.2.41 The Purchaser has duly and timely filed or has pending all tax
returns required and has paid all taxes and installments of taxes which are
due and payable. This provision includes all assessments, reassessments,
and all other taxes, governmental charges, penalties, interest, and fines
due and payable by it on or before the date hereof. The income tax
liability of the Purchaser has been not reviewed or determined by the IRS
or the applicable State for all fiscal years up to and including the fiscal
year to date.
5.2.42 The Purchaser has no information or knowledge of any facts relating
to the Purchaser which if known to the Seller might reasonably be expected
to deter the Seller from completing the transaction and sale herein
contemplated.
/s/ all items supplied, examined and approved/ SJHLs/
ARTICLE 6.00 - COVENANTS OF THE SELLER
6.1 The Seller covenant and agree with the Purchaser that on or before
the Closing Date they will do or cause to be done the following.
6.2.1 Take all necessary steps and proceedings required for all of the
Purchased Shares to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to operate the business of the
Corporation prudently and in such a manner as to preserve and maintain the
goodwill of the Corporation.
6.2.3 All necessary corporate actions and proceedings by the Purchaser
shall have been taken to permit the due execution and delivery of this
Agreement and the valid transfer of the Purchased Shares to the Purchaser
ARTICLE 7.00 - COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Seller that, on or before
the Closing Date, it will do or cause to be done the following.
7.2.1 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Exchange Shares to the Seller.
7.2.2 Provide the Seller, at least four (4) days prior to the Closing Date,
with a list of all persons in possession of all of the keys, credit cards,
books, records, files, and other properties of the Purchaser. The Purchaser
shall deliver to the Seller custody of all such keys, credit cards, books,
records, files, and other property in the possession of the Purchaser.
7.2.3 Cause such directors and officers of the Purchaser as the Seller may
specify to resign in favor of nominees of the Seller, such resignations to
be effective as at the time of Closing.
7.2.4 Up to the Time of Closing, continue to operate the businesses of the
Purchaser prudently and in such a manner as to preserve and maintain the
goodwill of the Purchaser.
ARTICLE 8.00 - SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1 The covenants, representations, and warranties of the Seller contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Purchaser and shall continue in full force and effect for the benefit of the
Purchaser following the Closing Date.
8.2 The covenants, representations and warranties of the Purchaser contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Seller and shall continue in full force and effect for the benefit of the
Seller following the Closing Date.
ARTICLE 9.00 - CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to the following
terms and conditions, each of which is hereby declared to be for the
exclusive benefit of the Purchaser to be fulfilled and performed at or
prior to the time of Closing.
9.2 The covenants, representations, and warranties of the Seller contained
in this Agreement or any schedule hereto or certificate or other document
delivered or given to the Purchaser pursuant to this Agreement, including
without limitation the representations and warranties contained in Article
4.00, shall be true and correct on and as of the Closing Date with the same
force and effect as if they had been made as of the date hereof, each and
every one of which is hereby deemed to be a condition.
9.3 The Seller shall provide at the time of Closing a certificate, dated the
Closing Date, to the effect that the covenants, representations, and
warranties of the Seller contained herein are true and correct on and as
of the Closing Date, with the same force and effect as though made on and
as of such date, provided that the acceptance of such certificate and the
closing of the transaction herein provided for shall not be a waiver of the
said covenants, representations, and warranties, which shall continue in
full force and effect as provided herein.
9.4 The Seller shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them.
9.5 At the Closing Date, there shall have been no material adverse change
in the affairs, assets, liabilities, financial condition, or business of the
Corporation from that shown on or reflected in the Financial Statements.
9.6 Any consent, authorization, license, franchise, permit, approval, or
order of any court or governmental agency or regulatory body required for
the acquisition by the Purchaser of the Purchased Shares shall have been
obtained.
9.7 The Purchaser shall provide at the time of Closing a certificate, dated
the Closing Date, to the effect that the covenants, representations, and
warranties of the Purchaser contained herein are true and correct on and
as of the Closing Date. This certificate shall have the same force and
effect as though made on and as of such date provided that the acceptance
of such certificate and the closing of the transaction herein provided for
shall not be a waiver of the said covenants, representations, and warranties
which shall continue in full force and effect as provided herein.
9.8 The Purchaser shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it.
9.9 The parties shall execute and deliver an indemnification agreement to be
annexed hereto as Schedule 9.9.
9.10 The parties shall not close and complete this transaction unless both
Seller and Purchaser have signed a written acknowledgment that the
exchange of shares between them does not create a taxable event for
either party.
9.11 The parties hereby agree that the scheduled closing shall be
conditional upon shareholder approval by the shareholders of both companies.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on September 14, 1999 and at the
Time of Closing at such offices as are agreed to in writing among the
parties hereto at least 24 hours prior to the said Closing.
10.2 At the Time of Closing and upon fulfillment of all the conditions set
out in this Agreement, which have not been waived in writing by the Seller
or the Purchaser, the Seller shall deliver to the Purchaser proper
certificates for all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any party hereto to any
other party shall be in writing and may be given by personal delivery or
by registered mail. Any notice directed to any party shall be addressed
to it as follows:
To the Purchaser:
iNetboard, Inc.,
Attn: D. R. Dimick, Chairman
668 Fergusson Lane
West Palm Beach, Florida 334145
To the Seller and the Corporation:
RTG-TPD Holding Co., LLC.,
71 Stony Hill Road
Second Floor
Bethel, Connecticut 06801
11.2 Any notice or other document aforesaid, if delivered, shall be deemed
to have been given or made on the date on which it was delivered or, if
mailed, shall be deemed to have been given and received on the fourth (4th)
business day following the date on which it was mailed. Provided that if
there exists at the time of mailing of a notice hereunder or within four (4)
business days thereafter a labor dispute or other event which would affect
the normal delivery of the notice by an express or postal service, then such
notice will only be effective if actually delivered.
11.3 The parties hereto may change any address for notices hereunder, from
time to time, by notice given in accordance with the foregoing.
ARTICLE 12.00 - GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original, and all of which
together shall constitute one and the same agreement.
12.3 This Agreement, including the schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any
verbal statements, representations, warranties, undertakings, or agreements
between the parties, and this Agreement may not be amended or modified in
any respect except by written instrument signed by the parties hereto.
12.4 This Agreement shall be construed and enforced in accordance with and
the rights of the parties shall be governed by the laws of the State of
Florida. Any and all disputes arising under this Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the exclusive
jurisdiction of the Courts of the State of Florida. Each of the parties
hereto irrevocably submit to the jurisdiction of the Courts of the State of
Florida.
12.5 The headings used herein are inserted for convenience of reference
only and shall not affect the construction of or interpretation of this
Agreement.
12.6 Except as otherwise set out in this Agreement, each of the parties
hereto shall pay all of its own costs and expenses of the transaction of
purchase and sale, including all fees and expenses of its accountants,
counsel, and officers.
12.7 In the event that any Article or section of this Agreement is held to
be invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of the
provisions hereof. Any such part shall be fully severable, and this
Agreement shall be construed and enforced as if such invalid or
unenforceable part had not been inserted herein. The parties hereby agree
that they would have signed this Agreement without such invalid or
unenforceable part included herein.
12.8 In this Agreement, words importing the singular number only include
the plural and vice versa; words importing the masculine gender include the
feminine and vice versa.
12.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors, and permitted assigns.
12.10 Where the date either for the expiration of any time period or for
the closing of anything hereunder expires or falls upon a day which is not a
Business Day, the time so limited extends to and the thing shall be done on
the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or public announcement
with respect to this Agreement, or any of the transactions contemplated by
this Agreement, shall be made by any party hereto without the prior written
consent of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/Stan J. H. Lee/s/
) SELLER
) By, Stan J. H. Lee
)
)
)
)
) /s/Douglas R. Dimick/s/
PURCHASER
BLANK PAGE
EXHIBITS- VOLUME 3
LEASE AGREEMENT
LANDLORD: GOLDEN GATE SHOPPING PLAZA, LLC
TENANT: ekomart.com, Inc.
THIS LEASE made and entered into this day of April , 2000 by and
between;
GOLDEN GATE SHOPPING PLAZA, LLC, whose Member/Manager is John D. Dinan and
whose address is 28815 W. Eight Mile Road, Suite 101, Livonia, MI 48152,
party of the first part, (hereinafter sometimes designated as "Landlord")
and ekomart.com, Inc. whose address is 71 Stony Hill Road, Rte 6, Second
Floor, Bethel, Conn. 06801, party of the second part, (hereinafter sometimes
designated as "Tenant").
WITNESSETH:
ARTICLE I GRANT AND TERM
Section 1.01 Leased Premises
In consideration of the mutual promises, covenants and agreements herein
contained, the adequacy of which consideration is by both parties confessed
and acknowledged, and in further consideration of the rents, covenants and
agreements hereinafter reserved and contained on the part of the Tenant to
be observed and performed, the Landlord leases to the Tenant, and the Tenant
rents from the Landlord those certain premises now or hereafter to be erected
in the Shopping Center property hereafter described, (hereinafter sometimes
called "Shopping Center", GOLDEN GATE SHOPPING PLAZA, LLC located in the
city of Troy, county of Oakland Michigan, described as containing 111.06
feet, of frontage (measured from outside of exterior wall or center of
common partition; as the case may be), and having an overall depth of 165
feet (measured from outside of exterior wall to outside of exterior wall)
for a total of 18,325 square feet of ground floor area, consisting of that
portion of the building highlighted on Exhibit "B" attached hereto, which
building shall be located within the Shopping Center approximately as shown
on Exhibit "A" attached hereto. Landlord and Tenant agree that Exhibit "A"
shows only the approximate shape and dimensions of the proposed buildings in
the Shopping Center, and further agree that Tenant's consent shall not be
required for any additions, reductions or modifications thereto, including
the construction of any freestanding buildings on any portion of the parking
or common areas of the Shopping Center, or the sale of any portions of the
Office Center for development of freestanding buildings, (sometimes herein
designated "Leased or Demised Premises"), and the same being located within
the Shopping Center property known and described as:
Land located in the City of Troy, Oakland County, Michigan, described as
beginning at a point north 89 degrees 20 minutes 00 seconds west 210.00 feet
from the southeast corner of section 24, town 2 north, range 11 east, City
of Troy, Oakland County, Michigan; thence north 89 degrees 20 minutes 00
seconds west 483.73 feet along the south line of said section 24; thence
north 0 degrees 56 minutes 50 seconds east 792.00 feet; thence south 89
degrees 20 minutes 00 seconds east, 688.64 feet to a point on the east line
of section 24; thence south 0 degrees 34 minutes 45 seconds west 469.99 feet
along said east line of section 24; thence north 89 degrees 20 minutes 00
seconds west 210.00 feet; thence south 0 degrees 34 minutes 45 seconds west,
322.00 feet to the point of beginning.
Whose address is: 2967 E. Big Beaver, Troy, Ml 48084
Section 1.02 Length and Term
To have and to hold, together with appurtenances, with a quiet and
undisturbed possession to the Tenant of the leased Premises for a term of
Twenty (20) years, commencing on the day 1st of July, 2000 and ending on the
30th day of June, 2020 upon the terms and conditions as are herein set
forth. *
Section 1.03 Construction of Leased Premises
Landlord agrees prior to the commencement of the term of this lease, at
Landlord's sole cost and expense, to construct on the site of the Shopping
Center, a new building in which the demised premises are to be located, in
accordance with the outline specification, where applicable, entitled
"Description of Landlord's Work" annexed hereto and made a part hereof,
and it is understood and agreed by Tenant that no minor changes from the
plans that have been agreed upon by and between the parties hereto, which
may be necessary during the preparation to the demised premises for Tenant
or during construction, will affect or change this lease or invalidate same.
Section 1.04 Possession after Completion of Construction
Except as hereinafter provided, Landlord covenants that actual possession of
the demised premises shall be delivered to Tenant on or before the date
specified for the commencement of the term hereof, it is understood that
delivery of possession prior to such commencement date shall not affect the
expiration date of the term of this lease. Landlord shall, form time to time
during the course of construction, provide to Tenant information concerning
the progress of construction of said building and shall, when construction
progress so permits, notify Tenant in advance of the exact or approximate
date by which the demised premises will be ready for occupancy, and will
notify Tenant when said premises are in fact ready for occupancy, and will
notify Tenant when said premises are in fact ready for occupancy. It is
agreed that by occupying said premises as a Tenant, Tenant formally accepts
the same and acknowledges that the demised promises are in the condition
called for hereunder. Then rentals herein reserved shall commence on the
date when the premises are ready for occupancy, provided, that for the first
90 days after obtaining building permit, Tenant shall be permitted to occupy
the said premises without the payment of rent for the purpose of installing
fixtures in the said building. However, should Tenant open demised premises
for business prior to the expiration of the free rent period, rent shall
nonetheless be payable from such a date of opening. Tenant, prior to
delivery of possession, shall be permitted to install fixtures and other
equipment so long as such activities do not interfere with construction work
and it is agreed by Tenant that Landlord shall have no responsibility or
liability whatsoever for any loss of or damage to, any fixtures or other
equipment so installed or left on the premises. Tenant covenants that it
shall open for business from the leased premise fully fixtured, stock and
staffed on or before the free rent period expiration.
Section 1.05 Extension of Lease Term, Because of Delayed Completion
Failure of Landlord to deliver actual possession of said premises at the time
and in the condition herein provide, shall postpone the date of commencement
of the term of this lease and extend the date of the expiration thereof for a
period of time equal to that which shall have elapsed between the first day
of said term as stated herein and the date on which the demised premises are
delivered to and accepted by Tenant. Solely for the purpose of computing the
term of this lease, the commencement date shall be deemed to be the first
day of the month next following the expiration of the free rent period
hereinbefore provided.
Section 1.06 Determination of Availability of Demised Premises
The demised premises shall be deemed as ready for occupancy when:
a) Landlord shall have substantially completed construction of the said
premises in accordance with the description of Landlords work as referred to
in section 1.03 of this article and the attached rider, in accordance with
all lawful statutes or ordinances and regulations affecting said premises.
If any disputes shall arise as to the premises being ready or Tenant's
occupancy, a certificate furnished by an architect selected by both parties
so certifying shall be conclusive and binding of the fact and date upon the
parties, and when,
b) A minimum of one-half of the parking facilities provided for in
Section 3.02 of Article III of this lease has been completed and is
available for use.
ARTICLE 11 RENT
Section 2.01 Minimum Rent
The fixed minimum annual rent during the term of this lease shall be payable
by Tenant in equal monthly installments on or before the first day of each
month in advance, at the office of the Landlord, without any prior demand
therefore, and without any deduction or set-off whatsoever, and shall be as
follows:
Twelve Thousand Two Hundred Sixteen Dollars & 67/100 ($12,216.67) per month
for the 1st and 2nd year of said lease.
Thirteen Thousand Seven Hundred Forty Three Dollars & 75/100 ($13,743.75)
per month for the 3rd and 4th years of said lease.
Fifteen Thousand Two Hundred Seventy Dollars & 83/100 ($15,270.83) per month
for the 5th and 6th year of said lease.
Sixteen Thousand Seven Hundred Ninety Seven Dollars & 92/100 ($16,797.92)
per month for the 7th and 8th year of said lease.
Eighteen Thousand Three Hundred Twenty Five Dollars & 00/100 ($18,325.00)
per month for the 9th and 10th years of said lease.
Years 11 and 12, Base rent increase, per month based on the Cost of Living
Index (CPI) for the previous two (2) year lease period or 3% per annum,
whichever is lower.
Years 13 and 14, Base rent increase, per month based on the Cost of Living
Index (CPI) for the previous two (2) year lease period or 3% per annum,
whichever is lower.
Years 15 and 16, Base rent increase, per month based on the Cost of Living
Index (CPI) for the previous two (2) year lease period or 3% per annum,
whichever is lower.
Years 17 and 18, Base rent increase, per month based on the Cost of Living
Index (CPI) for the previous two (2) year lease period or 3% per annum,
whichever is lower.
Years 19 and 20, Base rent increase, per month based on the Cost of Living
Index (CPI) for the previous two (2) year lease period or 3% per annum,
whichever is lower.
There will be a late charge of $25.00 if monthly rental payment is received
after the 10th of the month.
Section 2.02 Real Estate Taxes
a) Tenant shall pay to Landlord as additional rent during each lease
year it's "proportionate share", as hereinafter defined, of the real
property taxes and assessments (both ordinary and extraordinary) payable by
landlord during each lease year with respect to the entire Shopping Center.
Should the State of Michigan or any political subdivision thereof or any
governmental authority having jurisdiction therefore, impose a tax and/or
assessment (other than a franchise tax) upon or against the rentals payable
hereunder by Tenant to Landlord, or receivable rental, either by way of
substitution for the taxes and assessments levied or assessed against such
land and such building, or in addition thereto, such tax and land
assessment shall be deemed to constitute a tax and/or assessment against
such land and improvements for the purpose of section 2.02.
b) Tenant's "proportionate share" shall be equal to that proportion
which bears the same ratio to the total real estate taxes for buildings as
the total of the square footage of the Demised Premises bears to the total
square footage of the rental space in the Center. In payment of Tenant's
proportionate share of real estate taxes; the Tenant shall pay 1/l2th of the
previous years tax payment, per month, with each rent payment.
c) Tenant shall pay Landlord it's proportionate share of such excess
real estate taxes and assessments as additional rent within 15 days of
written notice, with the understanding that any amount in excess of $500.000
would be payable over 60 days after billing presented therefore by Landlord.
Section 2.03 Additional Rent
The Tenant shall pay as additional rent any money and charge required to be
paid pursuant to the terms of this lease agreement, whether or not the same
may be designated "additional rent". If such amounts or charges are not paid
at the time provided in this lease, they shall nevertheless, if not paid
when due, be collectible as of rent thereafter falling due hereunder, but
nothing herein contained shall be deemed to suspend or delay the payment of
any amount of money or charge at the time the same becomes due and payable
hereunder, or limit any other remedy of the Landlord.
Section 2.04 Past Due Rent
If Tenant shall fall to pay any rent or additional rent when the same shall
be due and payable, such unpaid amounts shall bear interest from the due
date thereof to the date of payment at the rate of fifteen (15%) percent per
annum.
ARTICLE III OPERATION AND MAINTENANCE OF COMMON AREAS
Section 3.01 Designation of Common Areas
For the purpose of this article and wherever also used in this lease, the
common area shall be defined as to include, by way of illustration arid not
limitation, all parking areas, access roads and facilities which may be
furnished by Landlord in or near the center, including driveways, pedestrian
sidewalks, landscaped and planting areas, retaining walls, lighting
facilities and all other areas and improvements which may be provided by the
Landlord for the general use is common of the Tenant's, their officers,
agents and employees.
Tenant's proportionate share shall be determined by the ratio between the
rental area of the demised premises 18,325 square feet and the total rental
floor area of the building 99,605 square feet. Tenant's proportionate share
shall be 18.4% at the execution of this lease.
Section 3.02 Construction of Common Areas
Landlord agrees, at Landlord's sole cost and expense, to hard surface,
properly drain, adequately light and landscape a parking area, or parking
areas, together with the necessary access roads within the limits of the
Shopping Center. Landlord hereby grants to Tenant and Tenant's employees,
agents, customers and invitees the right, during the term hereof, to use,
in common with others entitled to the use thereof, the parking area or
areas and access roads within the limits of the Shopping Center, Landlord
further agrees to operate, manage and maintain, during the term of this
lease, all parking areas, roads, sidewalks, landscaping, drainage and
lighting, facilities within the Shopping Center property. The manner in
which such areas and facilities shall be maintained and the expenditures
thereof shall be at the sole discretion of the Landlord and the use of such
areas and facilities shall be subject to such reasonable regulations as
Landlord shall make from time to time.
Section 3.03 Tenant's Pro Rata Share of Expenses
Tenant agrees to pay upon demand, in addition to the rental set forth in
Article 11 of this lease, a proportionate share of the cost of operation,
lighting, cleaning, snow removal, line painting, policing and maintenance,
including such replacement of paving, curbs, walkways, landscaping and
drainage and lighting facilities as may be from time to time necessary, of
all the common areas of the Shopping Center, to which shall be added an
amount equal to fifteen (15%) percent thereof in fill payment of all
administrative costs in relation thereto. Cost of operation and maintenance
shall include depreciation of equipment acquired for use in maintenance, but
shall not include taxes, assessments or depreciation of the original
investment. The proportionate share, to be paid by Tenant shall be computed
on the basis that the total floor area of the herein demised premises bears
to the total floor area of the Shopping Center. With each demand for payment
as herein provided of Tenant's proportionate share, Landlord shall submit a
statement showing in reasonable detail for the period in question, all
disbursements made in connection with the operation and maintenance herein
described.
a) Tenant's "proportionate share" shall be equal to that proportion
which bears the same ratio to the total parking lot maintenance for
buildings as the total of the square footage of the Demised Premises bears
to the total square footage of the rental space in the Center. In payment of
Tenant's proportionate share of parking lot maintenance, the Tenant shall
pay 1/12th of the previous years costs, per month, with each rent payment.
Section 3.03A
With regards to annual increases in Tenant's pro rata share of expenses, the
annual increase of operating and maintenance expenses, as mentioned in
section 3.03, shall not exceed 5% per annum per fiscal year.
ARTICLE IV USE OF PREMISES
Section 4.01 Use of Premises
It is understood and agreed between the parties hereto that said premises
during the continuance of this lease may be used and occupied only for the
Korean & Japanese Grocery Store, including Food Court, Bakery and general
merchandise and services and for no other purpose or purposes without the
written consent of Landlord. Tenant agrees to operate 100% of the leased
premises during the entire term of this lease; unless prevented form doing
so by causes beyond Tenant's control, and to conduct its business at all
times in a high class and reputable manner. Tenant shall promptly comply
with all laws, ordinances and lawful orders and regu1ations affecting the
premises hereby leased, and the cleanliness, safety, occupation and use of
same. Landlord represents that there is no exclusivity of merchandise to
sell and service to provide that are currently being offered to other
Tenants in Golden Gate Shopping Plaza, LLC, existing, that may be in
conflict with it's allowed use of space. This lease is subject to appropriate
authorities such as, Building Department, Health Department and Zoning
Department, approving the use of space for its intended use under the
leases, Retail Supermarket with food court, concessions and bakery.
Landlord reserves the right to approve in writing all sub-tenants and
their uses to avoid a conflict amongst various Tenants in Golden Gate
Shopping Plaza, LLC. Tenant cannot vacate premises without the permission
of Landlord. Golden Gate Shopping Plaza, LLC must have continuous use of
the premises.
Section 4.01B Storage, Office Space
Tenant shall warehouse, store and/or stock in the leased premises only such
goods, wares, and merchandise as Tenant intends to offer for sale at retail
at, in, from or upon the leased premises. This shall not preclude occasional
emergency transfers of merchandise to the other stores of Tenant, it any,
not located in the Shopping Center. Tenant shall use for office, clerical or
other non-selling purposes only such space in the leased premises as is from
time to time reasonably required for Tenant's business in the leased
premises.
Section 4.02 Care of Premises
a) Tenant shall not perform any acts or carry on any practices which
may injure the building or be a nuisance or menace to other Tenant's in the
Shopping Center, and shall keep the premises under its control, including
the sidewalks adjacent to the premises clean and free from rubbish and dirt
at all times, and shall store all trash and garbage within the leased
premises. Tenant shall not bum any trash or garbage of any kind in or about
the building. If Landlord shall provide any service or facilities for such
pickup, the Tenant shall be obligated and shall pay a proportionate share
of actual cost as determined or specified in Article IV.
b) Tenant shall not make any structural changes in the demised premises
without the written consent of Landlord.
c) Tenant shall not keep or display any merchandise or signs on or
otherwise obstruct the sidewalks or areaways adjacent to the premises
without the written consent of Landlord. Tenant shall not use or permit the
use of any portion of said premises as sleeping apartments, lodging rooms,
or for any unlawful purpose or purposes. Tenant shall maintain the show
windows and signs in a neat and clean condition. Tenant shall not make any
structural changes in the demised premises without the written consent of
Landlord.
Section 4.03 Hazardous Substances or Conditions
Tenant agrees not to keep in the premises any inflammable combustible or
explosive substance or any substance, which would create or tend to create
a dangerous or combustible condition. Tenant agrees not to cause or allow
the presence, storage use, maintenance or removal of asbestos, PCB
transformers, other toxic hazardous or contaminated substances or
underground storage tanks (collectively, "Hazardous Waste") in on or about
the premises without or prior written consent. If Tenant's business requires
use or possession of hazardous waste, Tenant must advise Landlord and obtain
consent before bringing any hazardous waste onto or creating such condition
within the premises. If Tenant uses or maintains hazardous waste on the
premises, Tenant agrees to handle, store, transport and dispose of all
hazardous waste at Tenant's sole cost and expense in accordance with all
then-existing local, state and federal rules and laws. Provided it is lawful
to do so, Tenant agrees to enter into a contract(s) with a company certified
to handle the hazardous waste for the transport and disposal of all
hazardous waste from the premises. A copy of all such contracts and all
renewals must be provided to Landlord.
Landlord may, at his option, now or in the future, obtain a report from an
environmental consultant of his choice as to whether Tenant has been or
currently is using any part of the premises for the improper use, handling,
storage, transportation or disposal of the hazardous waste. If any such
report indicates such improper use, handling, storage, transportation or
disposal of hazardous waste, Tenant agrees to immediately reimburse Landlord
for the cost of obtaining the environmental report, and in addition,
Landlord may require that all violations of the law with respect to the
hazardous waste be corrected and/or that Tenant obtain all necessary
environmental permits and approval not obtain all necessary permits within a
reasonable time after demand from Landlord, then Landlord may declare the
lease in default and/or may cause the premises and any surrounding areas to
be freed from the hazardous waste at Tenant's sole cost and expense, which
Tenant agrees to reimburse Landlord for on demand as additional rent. Tenant
hereby agrees to indemnify, defend, save and keep Landlord and
our employees, partners, successors and assigns, harmless from any and all
liabilities, obligations, charges, losses, damages, penalties, claims,
action and expenses, including without limitation, engineers, and
professional fees, soil tests and chemical analysis, court costs and legal
fees and expenses through all trial, appellate and administrative levels,
imposed on, incurred by or asserted against Landlord, in any way relating
to, arising out of, or in connection with the use, handling, storage,
transportation or disposal of the hazardous waste. The foregoing
indemnification shall survive any assignment or termination of the lease.
Landlord shall have the right to conduct an environmental audit at the
premises prior to the termination of the lease and to enter upon Tenant's
premises to conduct same. The decision whether to conduct such audit shall
be within Landlord's sole discretion and cost unless the premises are
contaminated by Tenant as described above. The audit shall consist of such
examinations, tests, inspections, samples, and reviews as Landlord's
consultant or Landlord shall determine to be advisable.
Failure to conduct an environmental audit, or to detect conditions
attributable to Tenant's operations if such audit is conducted, shall in no
fashion be intended as a release of any liability or environmental
conditions subsequently determined to be associated with Tenant's operation.
Tenant shall remain liable for any environmental condition related to
Tenant's operations regardless of when such conditions are discovered and
regardless of whether or not Landlord conducts an environmental audit at the
termination of the lease. The obligation set forth in this clause shall
survive the termination of the lease.
Section 5.01 Landlord and Tenant's Obligation for Maintenance
Landlord shall keep the four outer walls and roof of demised premises in
good repair, except that Landlord shall not be called on to make any such
repairs occasioned by the act or negligence of Tenant, its agents, or
employees, except to the extent that Landlord is reimbursed therefore under
any policy of insurance permitting waiver of subrogation in advance of loss.
Tenant shall notify Landlord of any repairs, which are the responsibility of
the Landlord to perform. Landlord shall not be called upon to make any other
improvements or repairs of any kind upon said premises and appurtenances
shall at all times be kept in good order, condition and repair by Tenant,
and shall also be kept in a clean, sanitary, and safe condition in
accordance with the laws of the State of Michigan, and in accordance with
all directions, rules and regulations of the health officer, Fire Marshall,
building inspector or other proper officers of the governmental agencies
having jurisdiction, at the sole cost and expense of Tenant, and Tenant shall
comply with all requirements of law, ordinance and otherwise touching said
premises. Tenant shall permit no waste, damage or injury to said
premises, and Tenant shall at it's own cost and expense replace any
glass window, doors, door hardware and frames in the premises
which may be broken. At the expiration of the tenancy created hereunder,
Tenant shall surrender the premises in good condition, reasonable wear and
tear, and loss by fire or other unavoidable casualty excepted.
Notwithstanding anything in this article contained, there shall be no
obligation on the part of the Tenant to comply with any of the laws,
directions, rules and regulations referred to which may require structural
alterations, structural changes, structural repairs or structural additions,
unless made necessary by act or work performed by Tenant, in which event
Tenant shall comply at it's expense. During the 1st 12 months of the leased
period, Landlord shall repair all nail pops, drywall cracks and other items
associated with new construction.
Section 5.02 Abuse of Plumbing, Walls, Etc.
The plumbing facilities and adjoining or connection sewer lines or mains
shall not be used for any other purpose than that for which they are
constructed, and no foreign substance of any kind shall be thrown therein,
and the expense of any breakage, stoppage, or damage resulting from a
violation of this provision shall be borne by Tenant, who shall, or whose
employees, agents, invitees, or licensees shall have caused it, The Tenant,
it's employees or agents, shall not paint, alter or deface any walls,
ceilings, partitions, floors, wood, atone or iron work without the Landlord's
written consent being first obtained.
ARTICLE VI SIGNS
Section 6.01
Tenant shall not erect or install any exterior or interior window or door
signs or advertising media or window or door lettering, or placards without
the previous written consent of Landlord. Tenant shall not install any
exterior lighting or plumbing fixtures, shades or awnings, or any exterior
decorations or painting, or build any fences or make any changes to the
building without the previous consent of Landlord.
Section 6.02 Tenant's Obligation to Light Display Windows
If requested by Landlord, Tenant shall keep the display windows in the
leased premises well lighted from dusk until 9:00 o'clock P.M., Detroit time,
or such other reasonable time as determined by Landlord, during each and
every day except holidays of the term of this Lease, unless prevented by
cause beyond the control of Tenant.
ARTICLE VII ALTERATIONS
Section 7.01
All alterations, additions, improvements and fixtures, other than trade
fixtures, which may be made or installed by either of the parties hereto
upon the premises and which in any manner are attached to the doors, walls
or ceilings shall be the property of Landlord and at the termination of this
lease shall remain upon and be surrendered with the premises as a part
thereof, without disturbance, molestation or injury. Any linoleum or other
floor covering of similar character which may be cemented or otherwise
adhesively affixed to the floor of the herein leased premises shall be and
become the property of Landlord absolutely; provided, however, that Landlord
may designate by written notice to Tenant those alterations and additions
which shall be removed by Tenant at the expiration or termination of the
lease, and Tenant shall promptly remove the name and repair any damage to
the leased premises caused by such removal or removal of trade fixtures.
ARTICLE VIII INSURANCE AND INDEMNITY
Section 8.01
Tenant shall be responsible for Insurance premiums for Fire Insurance and
extended coverage for all buildings and appurtenances.
Tenant's "proportionate share" shall be equal to that portion which bears
the same ratio to the total Insurance Coverage for buildings as the total of
the square footage of the Demised Premises bears to the total square footage
of the rent able space in the Shopping Center. After the first full year of
Insurance Coverage, the Tenant shall pay l/l2th, of previous years insurance
premium, per month, as part of their rent payment.
Section 8.02 Covenant to Hold Harmless
Landlord shall be defended and held harmless by Tenant from any liability
for damages to any person or any property in or upon said premises and the
sidewalks adjoining same; including the person and property of Tenant, and
it's employees and all persons in the building at it's invitation or with
it's consent. It is understood and agreed that all property kept, stored or
maintained in the demised premises shall be so kept, stored or maintained at
the risk of Tenant only. Tenant shall not suffer or give cause for the
filing of any lien against the therein demised premises.
Section 8.03 Tenant's Obligation to Carry Public Liability Insurance
Tenant shall, during the entire term hereof, keep in full force and effect a
policy of public liability insurance with respect to the demised premises
and the business operated by Tenant and/or any sub-Tenant's or Tenant in the
demised premises, in which both Landlord and Tenant shall be named as
parties covered thereby, or which provides equivalent protection to and is
approved by Landlord, and in which the limits of liability shall be no less
than five hundred thousand ($500,000.00) Dollars per person and one million
($1,000,000.00) dollars for each accident or occurrence for bodily injury
and fifty thousand ($50,000.00) dollars for property damages. Tenant shall
furnish Landlord with a certificate of insurance, or other acceptable
evidence that such insurance is in force at all times during the term hereof.
ARTICLE IX TENANT PARKING
Section 9.01 Tenant and Employee Parking
Notwithstanding any other provision of this lease, Tenant and its employees
shall park their cars only in areas specifically designated for that purpose
by Landlord from time to time. Tenant further agrees that upon written
notice from Landlord, it will, within five (5) days, furnish to Landlord the
automobile license numbers assigned to its car and the cars of all it's
employees. Tenant shall be responsible for its employees and any violation
by its employees.
Section 9.02 Receiving and Delivery of Tenant's Merchandise and Disposition
of Refuse
Tenant agrees that all receiving and delivery of goods and merchandise and
all removal or merchandise, supplies, equipment, garbage and refuse shall be
made only by way of the areas Tenant agrees that all receiving and delivery
of goods and merchandise and all removal or merchandise, supplies,
equipment, garbage and refuse shall be made only by way of the areas
provided therefore by Landlord. Landlord hereby grants to Tenant and
Tenant's employees, agents and invitees the right, during the term hereof,
to use, in common with others entitled to the use thereof, such areas
subject to reasonable regulations as Landlord shall make from time to time.
ARTICLE X ASSIGNMENT AND SUBLETTING
Section 10.01
Tenant agrees not to assign or in any manner transfer this lease or any
estate or interest therein without the previous written consent of Landlord,
and not to sublet the said premises or any part or parts thereof or allow
anyone to come in with, through or under it without like consent. Landlord
shall not withhold reasonable consent, Consent by Landlord to one or more
assignment of this lease or to one or more subletting of said premises shaft
not operate to exhaust Landlord's rights under this article. The sale or
sales totaling 50% or more of the capital stock of Tenant (if Tenant is a
nonpublic corporation) shall be deemed to be an assignment for purposes of
this section. Tenant may sub-let to Concession Stand and Food Court, using
the sub-lease attached hereto, subject to Landlord written approval.
ARTICLE XI ACCESS TO PREMISES
Section 11.01 Right of Entry by Landlord
Landlord shall have the right to enter upon the leased premises at all
reasonable hours for the purpose of inspecting the same, or of making
repairs, additions or alterations to the demised premises or any property
owned or controlled by Landlord, If Landlord deems any repairs required to
be made by Tenant necessary, it may demand that Tenant make the same
forthwith, and if Tenant refuses or neglects to commence such repairs and
complete the same with reasonable dispatch, Landlord may make or cause such
repairs to be made and shall not be responsible to Tenant for any loss or
damage that may accrue to its stock or business for reason thereof and if
Landlord makes or causes such repairs to be made, Tenant agrees that it will
forthwith, on demand, pay to landlord the cost thereof with interest at
fifteen (15%) percent per annum, and if it shall default in such payment,
Landlord shall have the remedies provided in Article XV, Section 15M1.
Section 11.02 Landlords Right to Exhibit Premises
For a period commencing ninety (90) days prior to the termination of this
lease, Landlord may have reasonable access to the premises herein demised
for the purpose of exhibiting the same to prospective Tenants.
ARTICLE XII EMINENT DOMAIN
Section 12.01 Total Condemnation
If the whole of the premises hereby leased shall be taken by any public
authority under the power of eminent domain, then the term of this lease
shall cease as of the day possession shall be taken by such public authority
and the rent shall be paid up to that day with a proportionate refund by
Landlord of such rent as may have been paid in advance.
Section 12.02 Partial Condemnation
If less than the whole, but more than 20% of the leased premises, shall be
taken under eminent domain, Tenant shall have the right either to terminate
this lease and declare same null and void, or continue in the possession of
the remainder of the leased premises, and shall notify Landlord in writing
prior to any such taking, of Tenant's intention. In the event Tenant elects
to remain in possession, all of the terms herein provided shall continue in
effect, except that the minimum rent shall be reduced in proportion to the
continue in effect, except that the mini amount of the premises taken, and
Landlord shall, at it's own cost and expense, make all necessary repairs or
alterations to the basic building, and interior work as covered by
description of Landlord's work attached hereto so as to constitute the
remaining premises a complete architectural unit.
Section 12.03 Landlord's and Tenant's Damages
All damages awarded for such taking under the power of eminent domain,
whether for the whole or a part of the leased premises, shall belong to and
be the property of Landlord whether such damages shall be awarded as
compensation for diminution in value to the leasehold or to the fee of the
premises; provided, however, that Landlord shall not be entitled to the
award made to Tenant for loss of business, depreciation to, and cost of
removal of stock and fixtures.
ARTICLE XIII DESTRUCTION OR DAMAGE TO DEMISED PREMISES
Section 13.01 Reconstruction of Damaged Premises
In case the demised premises shall be partially or totally destroyed by fire
or other casualty insurable under full standard extended covered insurance,
as to become partially or totally untenantable, the same shall be repaired
as speedily as possible at the expense of Landlord, unless Landlord shall
elect not to rebuild as hereinafter provided and a just and proportionate
part of the rent shall be abated until so repaired. The obligation of
Landlord hereunder shall be limited to the basic building, and interior work
as covered by description of Landlord's work attached hereto.
Section 13.02 Destruction of More Than Fifty Percent
If more than fifty (50%) percent of the first floor area of the building in
which the demised premises are located shall be destroyed by fire, or other
casualty, as to become wholly untenable, then Landlord may, if it so elects,
rebuild or put said building in good condition and fit for occupancy within
a reasonable time after such destruction or damage, or may give notice, in
writing, terminating lease. If Landlord elects to repair or rebuild said
building, it shall, within thirty (30) days after such injury, give Tenants
thereof notice of its intention to repair and then to proceed with
reasonable speed to repair. In case Landlord elects to rebuild or repair, as
herein.
Section 13.03 Subrogation
The Tenant shall be released from any liability resulting from damage by
fire or casualty (irrespective of the cause of such fire or casualty) upon
the express provision that if at any time Landlord's insurers shall refuse to
pen-nit waivers of subrogation, Landlord may in each instance revoke said
waiver of subrogation effective thirty (30) days from date of notice, unless
with such thirty (30) day period, Tenant is able to secure and furnish to
the Landlord, insurance in other companies with such waiver of subrogation.
If Tenant can secure such other insurance, then the Landlord shall pay so
much of the cost thereof as Landlord was paying for its own insurance, and
the Tenant shall pay the remainder, if any.
Section 13.04 Insurance Costs
a) Tenant shall pay to Landlord, as additional rent during each lease
year, it's "proportionate share" as hereinafter defined, of the amount by
which the cost of the fire and extended coverage insurance (including rental
interruption insurance and difference in conditions coverage, if any) on the
fill replacement value of the buildings in the Shopping Center and all
improvements thereon, payable by Landlord,
b) Tenant's "proportionate share" shall be computed on the basis that
the total first floor area of the demised premises bears to the total first
floor area rented or occupied by all of the occupants of said building.
c) In payment of Tenant's proportionate share of building insurance,
Tenant shall pay 1/12th of the previous years building insurance costs with
each rent payment.
ARTICLE XIV BANKRUPTCY OR INSOLVENCY
Section 14.01 Tenant's Interest Not Transferable
Neither this lease, nor any interest therein nor any estate thereby created
shall pass to any trustee or receiver or assignee for the benefit of
creditors or otherwise by operation of law.
Section 14.02 Landlord's Option to Terminate
In the event the estate created hereby shall be taken in execution or by
other process of law, or if Tenant or any Guarantor of Tenant's obligations
hereunder (hereinafter called "Guarantor") shall be adjudicated insolvent or
bankrupt pursuant to the provisions of any state or federal insolvency or
bankruptcy act, or if a receiver or trustee of the property of Tenant of
Guarantor shall be appointed by reason of Tenant's or Guarantor's insolvency
or inability to pay its debts, or if any assignment shall be made of
Tenant's or Guarantor's property for the benefit of creditors, then and in
any of such events, Landlord may at it's option terminate this lease and all
rights of Tenant hereunder, by giving to Tenant notice in writing of the
election of Landlord to so terminate.
Section 14.03 Tenant's Obligation to Avoid Creditors Proceedings
Neither Tenant nor Guarantor shall cause or give cause for the institution
of legal proceedings seeking to have Tenant or Guarantor adjudicated
bankrupt, reorganized or rearranged under the bankruptcy laws of the United
States, and shall not cause or give cause for the appointment of a trustee
or receiver for Tenant's or Guarantors assets, and shall not make any
assignment for the benefit of creditors, or become or be adjudicated
insolvent the allowance of any petition under the bankruptcy law or the
appointment of a trustee or receiver of Tenant or Guarantor or their assets,
shall be conclusive evidence that Tenant or Guarantor caused, or gave cause
therefore, unless such allowance of the petition, or the appointment of a
trustee or receiver, is vacated within thirty (30) days after such allowance
or appointment. Any act described in this section 14.03 shall be deemed a
material breach of Tenant's obligation hereunder, and upon such breach by
Tenant, Landlord may at it's option and in addition to any other remedy
available to Landlord terminate this lease and all rights of Tenant
hereunder, by giving to Tenant notice in writing of the election of Landlord
to so terminate.
ARTICLE XV DEFAULT OF THE TENANT
Section 15.01 Right to Re-enter
In the event of any failure of Tenant to pay any rental due hereunder within
ten (10) days after the same shall be due, or any failure to perform any
other of the terms, conditions or covenants of this lease to be observed or
performed by Tenant or Guarantor for more than thirty (30) days after
written notice of such default shall have been mailed to Tenant, or if
Tenant or Guarantor shall become bankrupt or insolvent, or file any debtor
proceedings, or take or have taken against Tenant or Guarantor in any court
pursuant to any stature either of the United States or any State, a petition
in bankruptcy or insolvency or for reorganization or for the appointment of
a receiver of trustee of all or a portion of Tenant's or Guarantor property,
or if Tenant or Guarantor makes an assignment for the benefit of creditors,
or petitions for or enters into an arrangement, or if Tenant or Guarantor
shall abandon said premises, or suffer this lease to be taken under any
writ of execution, then Landlord, besides other rights or remedies it my
have, shall have the immediate right of re-entry and may remove all persons
and property from the leased premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and for the
account of Tenant, all without service of notice or resort to legal process
and without being deemed guilty of trespass, or becoming liable for any loss
or damage which may be occasioned thereby.
Section 15.02 Right to Re-let
Should Landlord elect to re-enter, as herein provided, or should it take
possession pursuant to legal proceedings or pursuant to any notice provided
for by law, it may either terminate this lease or it may from time to time
without terminating this lease, make such alterations and repairs as may be
necessary in order to re-let the premises, and re-let said premises or any
part thereof for such term or terms (which may be for a term extending
beyond the term of this lease) and at such rental or rentals and upon such
other terms and conditions as Landlord in its sole discretion may deem
advisable; upon such re-letting all rentals received by Landlord from such
re-letting shall be applied, first, to the payment of any indebtedness
other than rent due hereunder from Tenant to Landlord; second, to the
payment of any costs and expenses of such re-letting, including brokerage
fees and attorneys fees and of costs of such alterations and repairs;
third, to the payment of rent due and unpaid hereunder, and the residue,
if any, shall be held by Landlord and applied in payment of future rent
as the same may become due and payable hereunder. If such rentals received
from such re-letting during any month be less than that to be paid during
that month by Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. No such
re-entry or taking of said premises by Landlord shall be construed as an
election on it's part to terminate this Lease unless a written notice of
such intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any such
re-letting without termination, Landlord may at any time thereafter elect
to terminate this Lease for such previous breach. Should Landlord at any
time terminate this Lease for any Breach, in addition to any other remedies
it may have, it may recover from Tenant all damages it may incur by reason
of such breach, including the cost of recovering the leased premised
reasonable attorney's fees, and including the worth at the time of such
termination of the excess, if any, of the amount of rent and charges
equivalent to rent reserved in this Lease for the remainder of the stated
term over the then reasonable rental value of the leased premises for the
remainder of the stated term, all of which amounts shall be immediately due
and payable from the Tenant to Landlord. In determining the rent which
would be payable by Tenant hereunder, subsequent to default, the annual
rent for each year of the unexpired term shall be equal to the average
annual minimum and percentage rents paid by Tenant from the commencement
of the term to the time of default, or during the preceding three full
calendar years, whichever period is shorter.
Section 15.03 Curing of Tenant's Default
Notwithstanding anything herein contained to the contrary, if Tenant shall
be in default in the performance of any of the terms or provisions of this
Lease and if Landlord shall give to Tenant notice in writing of such default
specifying the nature thereof, and if, Tenant shall fall to cure such
default within the time provided in Section 15.01 hereof or immediately if
such default requires emergency action, Landlord may in addition to it's
other legal and equitable remedies, cure such default for the account of and
at the cost and expense of Tenant and the sums so expended by Landlord shall
be deemed to be additional rent and shall be paid by Tenant on the day when
rent shall next become due and payable.
ARTICLE XVI ADVERTISING, MERCHANTS' ASSOCIATION
Section 16.01 Change of Name, Advertising
(a) Tenant's advertised name, as used by Tenant for identification of
the business operated in the Demised Premises, shall be Komart Korean and
Japanese Supermarket. Tenant shall not change such advertised name of the
business operation in the Demised Premises without the written permission
of Landlord.
(b) Tenant shall refer to the Shopping Center as GOLDEN GATE SHOPPING
PLAZA, LLC. (or such other name as shall be adopted in the future as the
shopping center name) in designation the location of the Demised Premises in
all newspaper or other advertising, stationery, other printed material and
all other references to the location of the Demised Premises. Tenant shall
include the address and identify of its business activity in the Demised
Premises in all advertising done by Tenant in which the address and
identify of any other local business activity of like character conducted
by Tenant shall be mentioned.
Section 16.02 Solicitation of Business
Tenant and Tenant's employees and agents shall not solicit business in the
parking or other common areas, not shall Tenant distribute any handbills or
other advertising matter on automobiles parked in the parking area or in
other common areas.
ARTICLE XVII TENANT'S PROPERTY
Section 17.01 Taxes on Leasehold
Tenant shall be responsible for and shall pay before delinquent all
municipal, county or state taxes assessed during the term of this lease
against any leasehold interest or personal property of any kind, owned
by or placed in, upon or about the leased premises by the Tenant.
Section 17.02 Notice by Tenant
Tenant shall give immediate notice to Landlord in case of fire or accidents
in the leased premises or in the building of which the premises are a part
or of defects therein or in any fixtures or equipment.
ARTICLE XVIII QUIET ENJOYMENT
Section 18.01 Landlord's Covenant
Upon payment by the Tenant of the rents herein provided, and upon the
observance and performance of all the covenants, terms and conditions on
Tenant's part to be observed and performed, Tenant shall peaceably and
quietly hold and enjoy the leased premises for the term hereby demised
without hindrance or interruption by Landlord or any other person or
persons lawfully or equitably claiming by, through or under the Landlord,
subject, nevertheless, to the terms and conditions of this lease.
ARTICLE XIX HOLDING OVER, SUCCESSORS
Section 19.01 Holding Over
Any holding over after the expiration of the term hereof, with the consent
of the Landlord, shall be construed to be a tenancy from month to month at
the rents herein specified (pro-rated on a monthly basis) and shall
otherwise be on the terms and conditions herein specified, so far as
applicable.
Section 19.02 Successors
All rights and liabilities herein given to, or imposed upon, the respective
parties hereto shall extend to and bind the several respective heirs,
executors, administrators, successors, and assigns of the said parties; and
if there shall be more than one Tenant, they shall all be bound jointly and
severally by the terms, covenants, and agreements herein. No rights,
however, shall inure to the benefit of any assignee of Tenant unless the
assignment to such assignee has been approved by Landlord in writing as
provided in section 10.01 hereof.
ARTICLE XX MISCELLANEOUS
Section 20.01 Waiver
One or more waivers of any covenant or condition by Landlord shall not be
construed as a waiver of a subsequent breach of the same covenant or
condition, and the consent or approval by Landlord to or of any act by
Tenant requiring Landlord's consent or approval shall not be deemed to
waive or render unnecessary Landlord's consent or approval to or of any
subsequent similar act by Tenant.
Section 20.02 Subordination
Tenant hereby grants the right to Landlord, and Landlord hereby reserves the
right to, to subject and subordinate this lease (at all times) to any first
mortgage or deed of trust that may hereafter be placed upon the demised
premises and to any and all advances to be made thereunder and to the
interest thereon and all renewals, replacements and extensions thereof
Landlord may execute and deliver any instrument or instruments subordinating
this lease to any such mortgage or deed of trust without any further action
or consent by Tenant, and Tenant hereby irrevocably appoints the Landlord
the attorney-fact of the Tenant to execute and delivery any such instrument
or instruments for and in the name of the Tenant.
Section 20.03 Notices
Whenever under this Lease a provision is made for notice of any kind, it
shall be deemed sufficient notice and service thereof if such notice to
Tenant is in writing, addressed to Tenant at the last known post office
address or office address of Tenant or at the leased premises, and sent
by registered or certified mail with postage prepaid. Notices need be sent
to but one Tenant or Landlord where Tenant or Landlord is more than one
person.
Section 20.04 Construction
Nothing contained herein shall be deemed or construed by the parties hereto,
nor by any third party, as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto,
it being understood and agreed that neither the method of computation of
rent, nor any other provision contained herein, nor any acts of the parties
herein, shall be deemed to create any relationship between the parties
hereto other than the relationship of Landlord and Tenant. Whenever herein
the singular number is used, the same shall include the plural, and the
masculine gender shall include the feminine and neuter genders. In the
event any language is deleted from this Lease, said language shall be
deemed to have never appeared and no other implication shall be drawn there
from.
Section 20. 05 Non-Liability
Landlord shall not be responsible nor liable to Tenant for any loss or
damage that may be occasioned by or through the acts or omissions of persons
occupying adjoining premises or any part of the premises adjacent to or
connected with the premises hereby leased or any part of the building of
which the leased premises are a part or for any loss or damage resulting
to Tenant or his property from burst, stopped or leaking water, gas, sewer
or steam pipe or for any damage or loss of property within the demised
premises from any cause whatsoever.
Section 20.06 Acceptance of Premises
Tenant agrees to furnish Landlord, upon receipt and after Tenant has taken
possession of the demised premises, a letter addressed to Landlord's
mortgage or financial institution, giving the information as described in
the attached Exhibit "I".
Failure of Tenant to provide Landlord at the request of Landlord's mortgage
or financial institution such a letter as above described shall give
Landlord the right to cancel this Lease at that time upon five (5) days
written notice to Tenant of such cancellation, and the Tenant shall remain
liable to the Landlord for any damages sustained by the Landlord because
of such failure by the Tenant.
Section 20.07 Accord and Satisfaction
No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly rental herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy in this lease provided.
Section 20.08 Captions and Section Numbers
The captions, section numbers, article numbers and index appearing in this
Lease are inserted only as a matter of convenience and in no way define,
limit, construe or describe the scope or intent of such sections or articles
of this Lease nor in any way affect this Lease.
Section 20.09 Partial Invalidity
If any term, covenant or condition of this Lease or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term,
covenant or condition to persons or circumstances other than those to
which it is held invalid or enforceable, shall not be affected thereby and
each term, covenant or condition of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
Section 20.10 No Option
The submission of this Lease for examination does not constitute a
reservation of or option for the leased premises, and this Lease becomes
effective as a lease only upon execution and delivery thereof by Landlord
and Tenant, upon expiration of the lease-term with mutually agreed terms
by Landlord and Tenant.
Section 20.15 Rider
A rider designated as "Description of Landlord's Work & Tenant's Work" is
attached hereto and made a part hereof, In witness whereof, Landlord and
Tenant have signed their names and affixed their seals the day and year
first above written.
Landlord: GOLDEN GATE SHOPPING
PLAZA, LLC.
Witness:
/s/John D. Dinan/s/
John D. Dinan, Member/Manager
Tenant: ekomart.com.,Inc.
/s/Stan J.H. Lee/s/ 3/16/2000
Stan J.H. Lee, President & CEO
Security Deposit Agreement
Simultaneously, with the execution of the attached Lease between GOLDEN
GATE SHOPPING PLAZA, LLC, as Landlord and, as Tenant, there has been
deposited with the Landlord the sum of Thirty Six Thousand Six Hundred
Fifty Dollars & 00/100 ($36,650.00) by the Tenant as additional security for
the Tenant's fulfillment of Tenant's obligations under the terms and
conditions of said lease.
It is specifically understood and agreed that this security deposit shall be
retained by the Landlord throughout the term of the lease agreement and
shall be subject to return to the Tenant after expiration of the full term
of the lease, vacation of the premises by the Tenant, and upon the full
compliance by the Tenant of Tenant's obligations there under.
The Landlord shall not be obligated to apply any portion of this security
deposit upon rents or other charges in arrears or upon damages for Tenant's
failure to perform, but may do so exclusively at Landlord's option. The
Tenant hereby agrees that the Landlord's right to possession of the premises
for non-payment of rent, or for any other reason stipulated in the lease
agreement, shall not be affected by reason of the fact that the Landlord
holds this security.
In the event of any default or defaults by the Tenant under the terms and
conditions of the lease because of the Tenant's failure to carry out and
perform the covenants, conditions, and agreements therein stipulated to be
performed by the Tenant, the Landlord shall avail itself of any of the
remedies available to the Landlord under the terms of the lease agreement.
The Landlord may apply said securities upon all damages suffered to that
date, including the date of any repossession of the premises, and the Tenant
shall remain liable for any deficiency.
The Landlord shall not be obligated to keep such security in a separate fund
but may mix the said security with its own funds.
Witnessed by:
Landlord: GOLDEN GATE SHOPPING
PLAZA, LLC.
/s/John D. Dinan/s/
John D. Dinan, Member/Manager
Tenant: eKomart.com, Inc.
/s/Stan J.H. Lee/s/ 3/16/2000
Stan J.H. Lee. President & CEO
Rider
Description of Landlord's Work & Tenant's Work
Landlord's Work: The following work is to be done exclusively by the
Landlord at the Landlord's expense.
A. Parking areas and roads
Hard surfaced, drained and lighted parking areas, together with access
roads, directional signs and markers.
B. Structure
1. Landlord to provide finished vanilla box, as per architect plan.
2. Roof- Shingles type, built up.
3. Walls- All walls closing the teased space from the outside, and
adjacent tenant spaces.
C. Exterior Finishes
1. Exterior finish of the building complex which faces the mall or
parking lot shall be face brick and decorative quality as designed and
selected by Landlord's architect.
D. Interior Finishes
1. Landlord will provide standard vinyl tile floor covering.
2. Walls - painted dry wall.
3. New ceiling tiles.
E. Utilities
1. Electrical work
A. Electric services will be metered and brought to the rear of the
Tenant space and there terminated in panel boards containing circuit
breakers for branch circuits.
B. Distribution systems as designed by architect.
C. Adequate electrical service and outlets, as per architect plan.
2. Plumbing work
A. Plumbing for restroom, as per plan, will be provided for the subject
premises.
3. Water service
A. A cold water line will be capped and terminated at each tenant space.
4. Sewer service
A. Waste line will be installed to all toilet rooms and sinks.
5. Heating and Air conditioning
A. Adequate heating and air conditioning will be provided for the subject
premises, as per architect plan.
6. Telephone
A. Landlord will provide telephone conduit in partition walls.
7. Entrance into the store from the customer parking lot with built-in
vestibule and three (3) sets of ingress/egress doors.
Description of Tenant's Work
All work required to complete and place the leased space in finished
condition for opening for business, except that work as described under
"Landlord's Work" is to be done at the Tenant's expense and, where
applicable, in accordance with the design criteria established by the
Landlord's architect. The Tenant's work may include, but is not limited
to the following:
A. Interior painting and wallpaper - Except that specified to be done
by the Landlord. Tenant will be responsible for any Formica countertops,
cabinetry, and shelving.
B. Plumbing - all plumbing except as set forth in "Landlord's Work".
C. Electrical fixtures - all electrical fixtures including lighting
fixtures, exhaust fans and equipment, and the installation thereof, except
as set forth in "Landlord's Work".
D. Furniture, fixtures, merchandise, fixtures, and signs - and their
installation.
E. Roof openings and hatches - If required. This work shall be done by
the project roofing contractor and paid for by the Tenant.
F. Telephone conduit - Tenant to provide telephone wiring from the
panel board to the telephone outlets.
G. Mechanical equipment - Dumbwaiters, elevators, conveyors, escalators,
etc. and their shafts, installation, and such additional equipment of every
kind, nature and description which the Tenant may desire to have
installed.
H. Miscellaneous electrical - All systems, where required, for
intercommunication, antennae, burglar alarms, vault wiring, fire protection,
and time clocks. Office light switches and additional office electrical
plugs, outlets and fixtures.
Witnessed by: Approved by: GOLDEN GATE SHOPPING PLAZA
/s/John D. Dinan/s/
Approved by: ekomart.com, INC.
/s/Stan J.H. Lee/s/ 3/16/2000
Stan J.H. Lee, President & CEO
SUBLEASE AGREEMENT
The parties agree as follows:
1. Effective Date of this Sublease. The date the Subtenant takes possession
of the Subleased Premises pursuant to Agreement of the parties.
2. Parties to this Sublease. Sublessor:
e-Komart.com, Inc.
71 Stony Hill Rd.
Bethel, CT 06801
Facsimile: (815) 846-7550
Attn: Stan J. H. Lee
Sublessee:
Asia-Komart, L.L.C.
Golden Gates Plaza
2967 E. Big Beaver Road
Troy, MI 48083
Attn: Eun Hyun Jo
With a copy to:
Michael J. Beals
Beals Hubbard, P.L.C.
30665 Northwestern Highway,
Suite 100
Farmington Hills, MI 48334
Facsimile: (248) 932-4186
3. Information from
Prime- lease
a: Landlord:
Golden Gate Shopping Plaza, L.L.C.
28815 W. Eight Mile Road,
Suite 101
Livonia, MI 48152
b: Tenant:
eKomart.com, Inc.
71 Stony Hill Rd.
Bethel, CT 06801
c: Date of Prime Lease:
March 16, 2000
d: Term of Prime Lease:
Twenty (20) Years from the 1st
of July, 2000 to the 30th day
of June 2020.
e: Leased Premises:
18,325 square feet of ground
floor space, as more
particularly described in the
Prime Lease.
f: A copy of the Prime-Lease
is attached as Exhibit A and
made a part of this Sublease.
4. Term of Sublease. This sublease shall commence on the effective date and
shall continue until June 30, 2020.
5. Sublease Premises. Approximately 12,000 sq. ft. of ground floor space
of the Leased Premises, as more particularly described in the attached
Exhibit B, it being understood that approximately six thousand (6,000)
square feet on the west wall shall be retained by Sublessor for purposes
of operating a food court and for no other purpose.
6. Minimum Rent. The fixed minimum annual rent shall be an amount equal
to sixty six point six six (66.66%) percent of the minimum annual rent sent
forth in Section 2.01 of the Prime Lease. Payment shall be paid in advance
on the first day of each month during the Term. Starting effective date as
specified in Section 1.04 of the Prime Lease (SJL).
7. Additional Rent. In addition to Minimum Rent, Sublessee shall pay sixty
six point six six (66.66%) percent of all additional rent charged to
Sublessor under the Prime Lease, starting effective date as specified in
Section 1.04 of the Prime Lease (SJL).
8. Security Deposit. Upon termination or expiration of the Prime Lease,
Sublessor shall be entitled to all Security deposits paid to the Landlord
by the Sublessor.
9. Agreement of Sub-Lease. Sublessor sublets the Sublease Premises to the
Sublessee, for the Term and Sublessor states that it has the authority to
do so. The Sublessee agrees to pay the Minimum Rent and other charges as
required in the Sublease, and Sublessee shall do everything required of
the Tenant in the Sublease proportionately with Sublessor. YOU THE
SUBLESSEE AGREE TO ABIDE BY ALL THE TERMS OF THE PRIME LEASE ATTACHED
HERETO, AND TO ATTORN TO THE SAME. YOU, THE SUBLESSEE UNDERSTAND THAT
IF FOR ANY REASON THE SUBLESSOR LOSES POSSESSION OF THE PREMISES, YOU ALSO
WILL LOSE POSSESSION OF THE PREMISES LEASED TO YOU BY THIS AGREEMENT,
SUBJECT ONLY TO THE AGREEMENT AS THE LANDLORD TO ALLOW TO STAY ON SUCH
TERMS AND CONDITIONS AS THE LANDLORD MAY DEEM FIT: AND SUBJECT TO THE RIGHT
OF SUBLESSEE TO CURE ANY DEFAULT BY SUBLESSOR UNDER THE PRIME LEASE AND
RECEIVE AN ASSIGNMENT OF THE PRIME LEASE FOR THE LEASED PREMISES.
The Sublease is subject to the Prime-Lease attached hereto. The
Sublessor state that it has read and initialed the Prime-Lease and will not
violate it in any way, and agree to be bound by all terms therein, save the
terms addressing payment of rent, including any terms with respect to loss
of possession, and, as above stated, you understand that if the Sublessor
should for any reason lose possession of the property, Sublessee may also
lose possession of the property leased herein, and that Sublessee will
peaceably give up possession to the Landlord as specified by the Prime-
Lease with respect to termination, or the Landlord's right to re-enter.
10. Notices. All notices in the Sublease shall be sent by certified mail,
"Return receipt requested", or by facsimile to the parties at the addresses
set forth above.
11. Sublessor's Duties. The Prime-Lease describes the Landlord's duties.
The Sublessor is not obligated to perform the Landlord's duties. If the
Landlord fails to perform, Sublessee, must send the Sublessor a notice.
Upon receipt of the notice, the Sublessor shall then promptly notify the
Landlord and demand that the Prime-Lease agreements be carried out. The
Sublessor shall continue the demands until the Landlord performs.
12. Consent. If the Landlord's consent to the Sublease is required, this
consent must be received within One Hundred and Twenty (120) days from the
date of this sublease. If the Landlord's consent is not received within
this time, the Sublease will be void. In such event all parties are
automatically released and all payment shall be refunded to you, the
Sublessee (Sublessor certifies that Landlord consented to the Sublease).
Landlord will agree to provide Sublessee with copies of all notices under
the Prime-Lease.
13. No Authority. You, the Sublessee have no authority to contact or make
any agreement with the Landlord about the premises or the Prime-Lease.
You, the Sublessee, may not pay rent of other charges to the Landlord, but
only to the Sublessor.
14. Successors. Unless otherwise stated, the Sublease is binding on all
parties who lawfully succeed to the rights or take the place of the
Sublessor of you, the Sublessee. Examples are an assign, heir, or legal
representative such as an executor of your will or administrator of your
estate.
15. Changes. This Sublease can be changed only by an agreement in writing
signed by the parties to the Sublease.
16. Choice of Law and Forum. This Agreement shall be governed by Michigan
law and any dispute settled in the appropriate Michigan Courts.
17. This Sublease Agreement is subject to Asia-Komart LLC. opening of Asia
grocery store on the premise before December 31, 2000 (SJL).
Dated: ______________
Sublessor Sublessee
__________________________ ____________________
By: /s/Stan J.H. Lee/s/ 5/1/2000 By: /s/ Eun Hyun Jo /s/
Its: President/CEO Its: Managing Member
Witness
_________________________
STOCK PURCHASE AGREEMENT BETWEEN ATA Sushi & TERIYAKI, LLC
MEMORANDUM OF AGREEMENT made as of the 31st day of December, 1999
BETWEEN:
ATA Sushi & Teriyaki, LLC ( a NJ Limited Liability Company)
Members:
Han Sik Shin ( residing at 10623 E. Jewell, Apt C219 Aurora, CO
80012) - 45 % Unit Holder Erica KL & Co. LLC (7884 Silverweed
Way, Little CO ) - 45 % Unit Holder Jae Hee Woo (residing at
210-19 41st Ave., 2nd Fl. Bayside, NY 11361) - 10% Unit Holder
(hereinafter called the "Sellers" or collectively "Seller")
OF THE FIRST PART
A N D:
eKomart.com, Inc. a corporation incorporated under the laws of the
State of Florida with headquarters in 71 Stony Hill Rd. (Rte 6) 2nd Fl.
Bethel CT 06801
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the Sellers owns all of the authorized issued and outstanding
ownership interest in ATA Sushi & Teriyaki, LLC. ( a NJ limited liability
company (herein referred to as the "Corporation"), and;
WHEREAS, the Purchaser desires to acquire all of the outstanding interest
in the Corporation, and;
WHEREAS Seller wishes to sell to Purchaser his outstanding interest in the
Corporation for the net book value thereof as of the date of closing plus
the future value of the business as agreed to between the parties said value
being equal to 25,000 shares of the Purchaser, or $ 150,000.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, in consideration of the
covenants, agreements, warranties, and payments herein set out and provided
for, the parties hereby respectively covenant and agree as follows:
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following terms
shall have the following meanings respectively.
"Agreement" means this agreement and all schedules attached to this
agreement. The term includes each case where it may be supplemented or
amended from time to time. The expressions "hereof", "herein", "hereto",
"Hereunder", "hereby" and similar expressions refer to this agreement, and "
Article", "section" and "subsection" mean and refer to the specified Article,
section, and subsection of this agreement.
"books and records" means the accounting books of original entry including
the general ledger, record of cash receipts and disbursements, purchase journal
and banking records.
"Business" means the business presently and heretofore carried on by the
Corporation, namely the development and operation of fast food outlets
specializing in Japanese fast foods and such other ventures as the directors
of the Corporation may from time to time deem appropriate.
"Business day" means a day other than a Saturday, Sunday or a day that is
a statutory holiday.
"Closing" means the closing of the transaction for purchase and sale
contemplated herein.
"Closing Date" or "Date of Closing" means December 31, 1999 or such other
date as may be mutually agreed upon in writing by the parties hereto.
"Closing Financial Statements" has the meaning ascribed to it in section
4.1.1.
"INTEREST" means the outstanding ownership interest in the capital of the
Corporation.
"Corporation" means ATA Sushi & Teriyaki, LLC.
"EBIT" means net earnings before income taxes, as determined by the auditors,
in accordance with GAAP.
"Exchange Shares" means 22,500 common shares of eKomart.com, Inc.
"Financial statements" means, collectively, the Closing Financial Statements
defined hereinabove.
"Intercompany Transactions" means, collectively, all transactions of any
nature between the Corporation and any Person associated with or related to
the Corporation or otherwise not dealing with the Corporation on an
arms-length basis.
"GAAP" means generally accepted accounting principles in the United States,
as appropriate and as in effect from time to time, consistently applied.
"NASDAQ" means the National Association of Securities Dealers and Quotations.
"Non Arm's Length Person" means any shareholder director, officer, employee,
affiliate, or associate (as defined in the Securities Act of 1933, as amended)
of the Corporation. This term includes any one or more of the Seller or any
other Person who does not deal at arm's length with the Corporation or any
one or more of the Seller within the meaning of such concept as used in the
Income Tax Act (USA).
"Person" includes an individual, a corporation, a joint venture, a partnership,
a trust or trustee, any unincorporated organization, an association, or any
other entity (including any governmental, administrative, or regulatory
authority).
"Permitted Liens" means, at any time, such Liens as the Purchaser may agree,
in writing, shall constitute a Permitted Lien for the purpose of this
Agreement.
"Purchased Interest" shall have the meaning attributed thereto in section
3.1 hereof.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational, governing documents of
such Person. This term includes any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority or
agency, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Rule 144" means Rule 144 of the United States Securities and Exchange
Commission.
"SEC" means the Securities and Exchange Commission of the United States.
"Seller" shall mean, specifically for purposes of this agreement and
identifying the parties thereto, all of the ownership of the Corporation.
" Subsidiary", in relation to any body corporate, means any corporation of
which issued and outstanding securities are held, other than by way of
security only, by such body corporate, and includes any corporation in
like Article 2.00.
"Time of Closing" means two o'clock in the afternoon on the Closing Date.
ARTICLE 2.00 - SCHEDULES
2.1 The following schedules, at time of closing, shall be delivered and
attached to and incorporated in this Agreement by reference and deemed to be
part hereof:
Schedule 4.2.1 - Financial Statements of Corporation
Schedule 4.2.6 - Corporation's Shareholders
Schedule 4.2.22 - Outstanding Obligations of Corporation
Schedule 4.2.23 - Leases of Corporation
Schedule 4.2.26 - Insurance Policies of Corporation
Schedule 4.2.34 - Accounts List of Corporation
Schedule 5.2.1 - Financial Statements of Purchaser
Schedule 5.2.7 - Outstanding Rights to Securities of Purchaser
Schedule 5.2.22 - Outstanding Obligations of Purchaser
Schedule 5.2.33 - Accounts List of Purchaser
Schedule 5.2.37 - Shareholder Credit Facility to Purchaser
Schedule 6.2.4 - Power of Attorney
Schedule 9.9 - Indemnification Agreement
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Seller hereby agree to
sell, assign, and transfer to the Purchaser a 100% interest in the Corporation
("the Purchased Interest"). The Purchaser covenants and agrees to purchase
from the Seller the Purchased Interest for an amount equal in the aggregate
to the Purchase Price of $ 150,000 dollars, payable as hereinafter set out.
At time of Closing, the Purchased Interest will constitute 100% of the interest
of all members of the Corporation.
3.2 Subject to the hereinafter described conditions, the Purchaser hereby
agrees to exchange the equivalent of 25,000 shares of its Common Shares on
the Closing Date, with $0.001 par value (the "Exchange Shares"), with the
Seller for all of the Purchased Interest as follows:
(A) at Closing, the Purchaser will issue and deliver 11,250 shares of its
common stock to HAN SIK SHIN 11,250 shares of its common stock to Erica KL &
Co. LLC and; 2,500 shares of its common stock to Jae Hee Woo.
3.3 The Seller hereby represent, warrant, covenant, and acknowledge the
following.
3.3(A) The Purchased Interest is being transferred without registration
under the provisions of Section 5 of the Act.
3.3(B) All of the Purchased Interest Certificates will bear legends
restricting the transfer, sale, conveyance, and hypothecation within the
jurisdictional boundaries of the United States. This provision is exclusive
of when such Exchange Shares are registered under the provisions of Section 5
of the act and under applicable state and provincial securities laws.
Moreover, an opinion of legal counsel may be provided by the Purchaser to
certify that such registration is not required as a result of applicable
exemptions there from.
3.3(C) The Seller shall not transfer any of the Exchanged Shares except in
compliance with all applicable laws.
3.3(D) The Seller is acquiring the Exchanged Shares for their own account,
for investment purposes only and not with a view to further sale or
distribution, except as permitted by law.
3.3(E) The Seller have made themselves fully and completely familiar with
all aspects of the Purchaser's business, operations, and financial statements
and, immediately following closing on this Agreement, will assume
operational control thereof.
3.4 The Purchaser hereby represents, warrants, covenants and acknowledges
the following:
3.4(A) The Exchange Shares are being transferred without Registration under
the provisions of Section 5 of the Securities Exchange Act of 1934, as amended
(the "Act") or New York Blue Sky Law.
3.4(B) All of the Exchange Shares will bear legends restricting the transfer,
sale, conveyance, and hypothecation within the jurisdictional boundaries of
the United States. This provision is exclusive of when such Exchange Shares
are registered under the provisions of Section 5 of the act and under
applicable state and provincial securities laws. Moreover, an opinion of
legal counsel may be provided by the Purchaser to certify that such
registration is not required as a result of applicable exemptions there from.
3.4(C) The Purchaser shall not transfer any of the Purchased Interest except
in compliance with all applicable laws.
3.4(D) The Purchaser is acquiring the Purchased Interest for its own account,
for investment purposes only and not with a view to further sale or
distribution.
3.5 The Purchase Price shall be paid and satisfied in full by the delivery of
the issued Exchange Shares at the Times of Closing.
3.6 The certificates representing the shares being exchanged shall each bear
the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR WITH THE SECURITIES REGULATORY AUTHORITIES OF ANY
STATE, PROVINCE, OR NATIONAL AUTHORITY). CONSEQUENTLY, THESE SHARES MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE FIRST
REGISTERED UNDER APPLICABLE STATE, PROVINCIAL AND FEDERAL SECURITIES LAWS OR
THE TRANSACTION'S EXEMPTION THEREFROM IS DEMONSTRATED TO THE FULL
SATISFACTION OF THE CORPORAITON'S LEGAL COUNSEL."
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS, AND WARRANTIES OF AND THE
CORPORATION
4.1 The Shareholders of the Seller hereby covenant, represent, and warrant,
and the Seller, jointly and severally, represent to the best of their
knowledge, as follows:
4.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Seller, and made a part hereof as Schedule 4.2.1 are the
following:
(A) unaudited balance sheet of the Corporation to be acquired as of December
31, 1999, with the related statement of operations and unaudited
statement of cash flow for the period then ended (such balance sheets,
statements of operations, and other statements are referred to herein as
the "Corporation's Financial Statements").
4.2.2 Corporation has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Colorado.
4.2.3 Corporation has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation to
do business under the laws of Colorado, being the only jurisdictions in which
the nature of its business or the property owned or leased by it makes
such qualification necessary.
4.2.4 DELETED
4.2.5 At Time of Closing, the paid up capital of the said corporation shall
be $ 150,000 and will have been duly and validly allotted and issued and
outstanding as fully paid and non-assessable and beneficially owned by the
Seller.
4.2.6 All of the Purchased Interest are owned by the unit holders of the
Corporation as the beneficial owners of record as listed at Schedule 4.2.6.
Such listed unit holders have good and marketable title thereto, free and
clear of all mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, and demands whatsoever. This provision includes
voting trusts, options, or other agreements of any kind. The Seller
represent that said listed unit holders have the absolute right to transfer
the Purchased Interest, and they shall be enjoyed by the Purchaser free from
any interruption or disturbance subject only to the terms and conditions
herein.
4.2.7 The Corporation has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or
any shares of the capital of any other corporation or to acquire or lease
any other business operations.
4.2.8 No person, firm, or corporation has any agreement, option, or any
right or privilege (whether by law, pre-emptive, or contractual) for
the purchase, subscription, allotment, or issuance of either any of the
authorized stock in the capital of the Corporation or of any securities of
the Corporation. This provision includes convertible securities, warrants,
and convertible obligations of any nature.
4.2.9 Except with respect to product warranties provided by the Corporation
in the ordinary course of business, the Corporation is not a party to or
bound to any person, firm, or corporation. This provision includes any
agreement of guarantee, indemnification, assumption, endorsement, or any
other like commitment of obligations or liabilities (contingent or otherwise)
or indebtedness of any person, firm, or corporation.
4.2.10 There are not now, nor will there be on Closing, any material claims
or potential or contingent claims against the Corporation for product liability
in respect of goods manufactured and/or sold by the Corporation.
4.2.11 The Corporation's Financial Statements have been prepared in
accordance with GAAP and present fairly to include:
4.2.11(A) all the assets, liabilities (whether accrued, absolute, contingent,
or otherwise), and the financial condition of the Corporation as at the
respective dates of the Corporation's Financial Statements; and
4.2.11(B) the sales, earnings, and results of the operations of the Corporation
during the periods covered by the Corporation's Financial Statements.
4.2.12 The corporate records and minute books of the Corporation contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Corporation
since the incorporation of the Corporation. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Corporation are complete and accurate in all material respects.
4.2.13 The Business has been carried on in the ordinary course since April
1999 Since then, there has been no change in the business operations, affairs,
or condition of the Corporation, financial or otherwise. This provision
includes changes arising as a result of any legislative or regulatory change,
revocation of any license or right to do business, fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation, act of God,
or otherwise. This provision excludes changes occurring in the ordinary
course of business, which changes have not materially aversely affected and
will not materially aversely affect the organization, business, properties,
prospects, and financial condition of the Corporation or the ability of the
Corporation to carry on Business.
4.2.14 The books and records, financial and otherwise, of the Corporation
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Corporation as at the date
hereof. All material, financial transactions of the Corporation are
accurately recorded in such books and records.
4.2.15 Execution of this Agreement by the Seller and delivery of the
Agreement by them to the Purchaser and their performance hereunder has been
duly authorized. No further action is necessary on the part of the Seller
to make this agreement valid and binding in accordance with its terms upon
the Seller.
4.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any term
or provision of or constitute any default under the constituting documents,
by-laws, or resolutions of the Corporation. This provision includes any
indenture, agreement, instrument, license, permit, or understanding to which
the Corporation or anyone or more of the Seller is a party or by which any one
or more of them is bound. Nor will the consummation of this transaction
accelerate any commitment or obligation of the Corporation or result in the
creation of any lien or encumbrance upon any of the assets or property of
the Corporation.
4.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any appli-
cable order of any court, arbitrator, or governmental authority having
jurisdiction over the Corporation, the Seller, or their respective properties
or businesses.
4.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Corporation pursuant to any agreement affecting its assets or the Business
following closing.
4.2.19 The Corporation will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration of
any employee except in the normal course of business.
4.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Corporation, subsequent to
the execution of this Agreement and up to the Time of Closing, will
be made only at the regular rates heretofore paid.
4.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Corporation after the date hereof and up
to the Time of Closing without the prior written consent of the Purchaser.
4.2.22 Annexed hereto as Schedule 4.2.22 is a complete list of all outstanding
bonds, debentures, mortgages, notes or other evidence of indebtedness or other
security instruments of the Corporation. None of which are presently in
default, and the Corporation is not under any agreement to and shall not create
or issue any bonds, debentures, mortgages, notes, or other evidence of
indebtedness or other security agreements from the date hereof until Closing
without the written consent of the Purchaser.
4.2.23 The Corporation is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee, except those leases described in
Schedule 4.2.23 hereto. The schedule specifies the parties to each of such
leases, their dates of execution and expiry dates, any options to renew, any
consents required, the locations of any leased lands and premises, and the
rental payable thereunder. Each of such leases is in good standing and in
full force and effect without amendment thereto, and the Corporation is not
in breach of any of the covenants, conditions, or agreements contained in
each such lease. There are no consents required from or on behalf of any
persons to the transaction contemplated by this Agreement.
4.2.24 The Corporation is not a party to any conditional sales contract,
hire-purchase agreement, or other title retention agreement.
4.2.25 The Corporation is not, and will not be at the Time of Closing,
a party to any agreement to acquire or to acquire any beneficial interest
in any real or immovable property.
4.2.26 The Corporation maintains appropriate policies of insurance, given
the nature of the Business, and such insurance coverage will be continued
in full force and effect to and including the Date of Closing. The Corporation
is not in default with respect to any of the provisions contained in any such
insurance policy, and it has not failed to give any notice or present any
claim under any such insurance policy in due and timely fashion.
Schedule 4.2.26 hereto lists all insurance policies of the Corporation,
specifying the insurance company, insurance agent, policy number, type of
coverage, and amount of coverage.
4.2.27 There are no actions, suits, or proceedings, including product warranty
claims, pending or threatened against or affecting the Corporation, at law
or in equity or before or by any federal, provincial, municipal, or other
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign. The Seller are not aware of any existing ground on which
any such action, suit, or proceeding might be commenced with any reasonable
likelihood of success.
4.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Corporation is not a party to any outstanding
agreement, contract, or commitment, whether written or oral.
4.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Corporation.
4.2.30 The Corporation is and at Closing will be in substantial compliance
in all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar
statutes.
4.2.31 The uses of the real properties owned or leased by the Corporation
referred to in this agreement or the schedules hereto are not in material
breach of any statute, by-law, ordinance, regulation, covenant, restriction,
or official plan.
4.2.32 The Corporation owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising
except as listed at Schedule 4.2.22; the purchase price is based on and
directly correlates to the net tangible worth (being assets less liabilities)
of the Corporation, which the Corporation represents to be approximately
$3,000,000 upon audit.
4.2.33 The conduct of the Business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
4.2.34 Annexed hereto as Schedule 4.2.34 is a true and complete list showing
the name of each bank, trust company, or similar institution in which the
Corporation has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto.
4.2.35 The Corporation is conducting the Business in compliance with all
applicable laws, rules and regulations of each jurisdiction in which the
Business is carried on, is not in breach of any such laws, rules or
regulations, except for breaches which in the aggregate are immaterial.
Also the Corporation is duly licensed, registered, or qualified in each
jurisdiction in which it owns or leases property or carries on the Business.
To enable the business to be carried on as now conducted and its property
and assets to be owned, leased, and operated, all such licenses, registrations
and qualifications are valid and subsisting and in good standing.
None of the same will be canceled or amended by virtue of the transaction for
purchase and sale provided for herein.
4.2.36 All facilities and equipment owned and used by the Corporation in
connection with the Business are in good operating condition and are in a
state of good repair and maintenance.
4.2.37 There are not now any loans or other indebtedness outstanding between
the Corporation and the Seller or either any current or former directors,
officers, shareholders, or employees of the Corporation or any Non Arms
Length Persons. This provision is exclusive of normal salaries, bonuses,
fringe benefits, and the obligation to reimburse for expense incurred on
behalf of the Corporation in the normal course of business or otherwise
disclosed in the Corporation's Financial Statements.
4.2.38 To the best of the Seller' knowledge, there are no liabilities of the
Corporation of any kind whatsoever, whether or not accrued and whether or
not determined or determinable, in respect of which the Corporation or
the Purchaser may become liable before, on, or after the Closing.
This provision is exclusive of liabilities disclosed on, reflected in, or
provided for in the Financial Statements or incurred in the ordinary course
of business. This provision is also exclusive of those liabilities
attributable to the period from the Corporation's Financial Statements to the
actual time of Closing and are not materially adverse, individually or in the
aggregate, to the Business, operations, affairs
or financial condition of the Corporation.
4.2.39 There is not now nor will there be at the Time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Corporation.
4.2.40 The Corporation is not in default in the filing of any corporate
return or report that may be required under any federal, provincial and/or
municipal law or regulation.
4.2.41 The Corporation has duly and timely filed all tax returns required
and has paid all taxes and installments of taxes which are due and payable.
This provision includes all assessments, reassessments, and all other taxes,
governmental charges, penalties, interest, and fines due and payable by it on
or before the date hereof. The income tax liability of the corporation has
been not reviewed or determined by the IRS or the applicable State for all
fiscal years up to and including the fiscal year to date. Adequate provision
has been made for taxes payable for the current period of which tax returns
are not yet required to be filed. There are no agreements, waivers, or other
arrangements providing for an extension of time with respect to the filing of
any tax return by, or payment of any tax, governmental charge, or deficiency
against the Corporation in respect of taxes, governmental charges, or assess-
ments, asserted by such authority. The Corporation has withheld from each
payment made to any of its officers, directors, employees, former directors,
officers, and employees the amount of all taxes, including but not limited to
income tax, and other deductions required to be withheld there from.
The Corporation has paid the same to the proper tax or other receiving
officers within the time required under the applicable tax legislation.
4.2.42 The Seller have no information or knowledge of any facts relating to
the Seller, the Business, the Corporation, or the Purchased Shares which,
if known to the Purchaser, might reasonably be expected to deter the
Purchaser from completing the transaction of purchase and sale herein
contemplated.
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser covenants, represents, and warrants as follows and
acknowledges that the Seller are relying upon such covenants, representations
, warranties, and covenants in connection with the sale by the Seller of the
Purchased Shares.
5.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Purchaser, and made a part hereof as Schedule 5.2.1 are
the following:
(A) unaudited balance sheet of the Purchaser to be acquired as of December
31, 1999, with the related statement of operations and unaudited statement
of cash flow for the period then ended, and;
(B) unaudited balance sheet of the Purchaser to be acquired as of December 31,
1999 (the "Purchaser's Interim Balance Sheet") with the related unaudited
statement of income and unaudited statement of cash flow for the period then
ended (such balance sheets, statements of operations, and other statements
are referred to herein as the "Purchaser's Financial Statements").
5.2.2 Purchaser has been duly incorporated and organized and is validly of
subsisting and in good standing under the laws of Florida.
5.2.3 Purchaser has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation
to do business under the laws of Florida, being the only jurisdiction in
which the nature of its business or the property owned or leased by it makes
such qualification necessary.
5.2.4 The authorized capital of the Purchaser shall consist of 22,000,00 shares
with a par value of $0.001.
5.2.5 At time of Closing, the authorized issued capital of the Purchaser
shall be 8,760,000 shares of its common stock (and no more) and will have
been duly and validly allotted and issued and outstanding as fully paid and
non-assessable and beneficially owned by the Purchaser.
5.2.6 The Purchaser has no subsidiaries and owns no shares in the capital of
any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease any
other business operations.
5.2.7 Except as listed at Schedule 5.2.7, no person, firm, or corporation has
any agreement, option, or any right or privilege (whether by law,
pre- emptive, or contractual) for the purchase, subscription, allotment, or
issuance of either any of the authorized stock in the capital or any
securities of the Purchaser. This provision includes convertible securities,
warrants, and convertible obligations of any nature.
5.2.8 The Purchaser is not a party to or bound to any person, firm, or
corporation. This provision includes any agreement of guarantee,
indemnification, assumption, endorsement, or any other like commitment of
obligations or liabilities (contingent or otherwise) or indebtedness of
any person, firm, or corporation.
5.2.9 There are not now, nor will there be on Closing, any material claims or
potential or contingent claims against the Purchaser for product liability.
5.2.10 The Purchaser's Financial Statements have been prepared in accordance
with GAAP and present fairly to include:
(A) all the assets, liabilities (whether accrued, absolute, contingent, or
otherwise), and the financial condition of the Purchaser as at the respective
dates of the Purchaser's Financial Statements, and;
(B) the sales, earnings, and results of operations during the periods covered
by the Corporation's Financial Statements.
5.2.11 The corporate records and minute books of the Purchaser contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Purchaser
since the incorporation of the Purchaser. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Purchaser are complete and accurate in all material respects.
5.2.12 The Purchaser does not have an active business or operations.
5.2.13 The Purchaser has no inventory.
5.2.14 The books and records, financial and otherwise, of the Purchaser
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Purchaser as at the date
hereof. All material, financial transactions of the Purchaser are accurately
recorded in such books and records.
5.2.15 The execution and delivery of this Agreement by the Purchaser as
well as the performance by the Purchaser hereunder have been duly authorized.
No further action will be necessary on the part of the Purchaser to make this
Agreement valid and binding in accordance with its terms upon the Purchaser.
5.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Purchaser. This provision includes
any indenture, agreement, instrument, license, permit, or understanding to
which the Purchaser is a party or by which any one or more of them is bound.
Nor will the consummation of this transaction accelerate any commitment or
obligation of the Purchaser or result in the creation of any lien or
encumbrance upon any of the assets or property of the Purchaser.
5.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any of
applicable order of any court, arbitrator, or governmental authority having
jurisdiction over the Purchaser.
5.2.18 No consent, authorization, license, franchise, permit, approval,
or order of any court, governmental agency or body, of any lessor, or of
any person is required for the acquisition by the Purchaser of the
Purchased Shares, including completion of any of the other transactions
contemplated hereby. This provision also includes the continuance of any
rights of the Purchaser pursuant to any agreement affecting its assets or
the Business following closing.
5.2.19 The Purchaser will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration
of any employee except in the normal course of business.
5.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Purchaser, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
5.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Purchaser after the date hereof and up to
the Time of Closing without the prior written consent of the Seller.
5.2.22 Annexed hereto as Schedule 5.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Purchaser. None of which
are presently in default, and the Purchaser is not under any agreement to
and shall not create or issue any bonds, debentures, mortgages, notes, or
other evidence of indebtedness or other security agreements from the date
hereof until Closing without the written consent of the Seller.
5.2.23 The Purchaser is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee.
5.2.24 The Purchaser is not a party to any conditional sales contract,
hire- purchase agreement, or other title retention agreement.
5.2.25 The Purchaser is not, and will not be at the Time of Closing, a party
to any agreement to acquire or to acquire any beneficial interest in any
real or immovable property.
5.2.26 The Purchaser does not maintain any insurance policies.
5.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the Purchaser,
at law or in equity or before or by any federal, provincial, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Purchaser is not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
5.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Purchaser is not a party to any outstanding
agreement, contract, or commitment, whether written or oral
5.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Purchaser.
5.2.30 The Purchaser is and at Closing will be in substantial compliance in
all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar
statutes.
5.2.31 The Purchaser does not lease any real properties.
5.2.32 The Purchaser owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising.
5.2.33 The conduct of business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
5.2.34 Annexed hereto as Schedule 5.2.33 is a true and complete list showing
the name of each bank, trust company, or similar institution in which the
Purchaser has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto.
5.2.35 The Purchaser exists in compliance with all applicable laws, rules
and regulations of each jurisdiction in which the Business is carried on,
is not in breach of any such laws, rules or regulations, except for breaches
in the aggregate are immaterial. Also the Purchaser is duly licensed,
registered, or qualified in each jurisdiction
in which it owns or leases property or carries on the Business.
To enable the business to be carried on as now conducted and its property
and assets to be owned, leased, and operated, all such licenses,
registrations and qualifications are valid and subsisting and in good
standing. None of the same will be canceled or amended by virtue of
the transaction for purchase and sale provided for herein.
5.2.36 All facilities and equipment owned or used by the Purchaser are
in good operating condition and are in a state of good repair and maintenance.
5.2.37 Except as specified at Schedule 5.2.37, there are not any loans or
other indebtedness outstanding between the Purchaser and either the Seller
or either any current or former directors, officers, shareholders, or
employees of the Purchaser or any Non-Arms Length Persons. This provision
is exclusive of normal salaries, bonuses, fringe benefits, and the obligation
to reimburse for expense incurred on behalf of the Purchaser in the normal
course of business.
5.2.38 There are no liabilities of the Purchaser of any kind whatsoever,
whether or not accrued and whether or not determined or determinable, in
respect of which the Purchaser may become liable before, on, or after the
Closing. This provision is exclusive of liabilities disclosed on, reflected
in, or provided for in the Financial Statements or incurred in the ordinary
course of business. This provision is also exclusive of those liabilities
attributable to the period from the Purchaser's Financial Statements to
the actual time of Closing and are not materially adverse, individually or
in the aggregate, to the Business, operations, affairs or financial condition
of the Purchaser.
5.2.39 There is not now nor will there be at the time of Closing any
application pending for the issuance of articles of amendment to the origi-
nating documents of the Purchaser.
5.2.40 The Purchaser is not in default in the filing of any corporate return
or report that may be required under any federal, provincial and/or municipal
law or regulation.
5.2.41 The Purchaser has duly and timely filed or has pending all tax returns
required and has paid all taxes and installments of taxes which are due and
payable. This provision includes all assessments, reassessments, and all
other taxes, governmental charges, penalties, interest, and fines due and
payable by it on or before the date hereof. The income tax liability of the
Purchaser has been not reviewed or determined by the IRS or the applicable
State for all fiscal years up to and including the fiscal year to date.
5.2.42 The Purchaser has no information or knowledge of any facts relating
to the Purchaser which if known to the Seller might reasonably be expected
to deter the Seller from completing the transaction and sale herein
contemplated.
ARTICLE 6.00 - COVENANTS OF THE SELLER
6.1 The Seller covenant and agree with the Purchaser that on or before
the Closing Date they will do or cause to be done the following.
6.2.1 Take all necessary steps and proceedings required for all of the
Purchased Shares to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to operate the business of the
Corporation prudently and in such a manner as to preserve and maintain the
goodwill of the Corporation.
6.2.3 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Purchased Shares to the Purchaser
ARTICLE 7.00 - COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Seller that, on or before
the Closing Date, it will do or cause to be done the following.
7.2.1 All necessary corporate actions and proceedings by the Purchaser
shall have been taken to permit the due execution and delivery of this
Agreement and the valid transfer of the Exchange Shares to the Seller.
7.2.2 Provide the Seller, at least four (4) days prior to the Closing Date,
with a list of all persons in possession of all of the keys, credit cards,
books, records, files, and other properties of the Purchaser. The Purchaser
shall deliver to the Seller custody of all such keys, credit cards, books,
records, files, and other property in the possession of the Purchaser.
7.2.3 Cause such directors and officers of the Purchaser as the Seller may
specify to resign in favor of nominees of the Seller, such resignations to
be effective as at the time of Closing.
7.2.4 Up to the Time of Closing, continue to operate the businesses of the
Purchaser prudently and in such a manner as to preserve and maintain the
goodwill of the Purchaser.
ARTICLE 8.00 - SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1 The covenants, representations, and warranties of the Seller contained
in this Agreement and contained in any document or certificate given pursuant
hereto shall survive the Closing herein. Notwithstanding Closing, this survival
is inclusive of any investigation made by or on behalf of the Purchaser and
shall continue in full force and effect for the benefit of the Purchaser
following the Closing Date.
8.2 The covenants, representations and warranties of the Purchaser contained
in this Agreement and contained in any document or certificate given pursuant
hereto shall survive the Closing herein. Notwithstanding Closing, this
survival is inclusive of any investigation made by or on behalf of the
Seller and shall continue in full force and effect for the benefit of the
Seller following the Closing Date.
ARTICLE 9.00 - CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to the following
terms and conditions, each of which is hereby declared to be for the
exclusive benefit of the Purchaser to be fulfilled and performed at or
prior to the time of Closing.
9.2 The covenants, representations, and warranties of the Seller contained
in this Agreement or any schedule hereto or certificate or other document
delivered or given to the Purchaser pursuant to this Agreement, including
without limitation the representations and warranties contained in Article
4.00, shall be true and correct on and as of the Closing Date with the same
force and effect as if they had been made as of the date hereof, each and
every one of which is hereby deemed to be a condition.
9.3 The Seller shall provide at the time of Closing a certificate, dated the
Closing Date, to the effect that the covenants, representations, and
warranties of the Seller contained herein are true and correct on and as
of the Closing Date, with the same force and effect as though made on and as
of such date, provided that the acceptance of such certificate and the
closing of the transaction herein provided for shall not be a waiver of the
said covenants, representations, and warranties, which shall continue in
full force and effect as provided herein.
9.4 The Seller shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them.
9.5 At the Closing Date, there shall have been no material adverse change
in the affairs, assets, liabilities, financial condition, or business of
the Corporation from that shown on or reflected in the Financial Statements.
9.6 Any consent, authorization, license, franchise, permit, approval, or
order of any court or governmental agency or regulatory body required
for the acquisition by the Purchaser of the Purchased Shares shall have been
obtained.
9.7 The Purchaser shall provide at the time of Closing a certificate, dated
the Closing Date, to the effect that the covenants, representations, and
warranties of the Purchaser contained herein are true and correct on and as
of the Closing Date. This certificate shall have the same force and effect
as though made on and as of such date provided that the acceptance of such
certificate and the closing of the transaction herein provided for
shall not be a waiver of the said covenants, representations, and warranties
which shall continue in full force and effect as provided herein.
9.8 The Purchaser shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it.
9.9 The parties shall execute and deliver an indemnification agreement to
be annexed hereto as Schedule 9.9.
9.10 The parties shall not close and complete this transaction unless both
Seller and Purchaser have signed a written acknowledgment that the exchange
of shares between them does not create a taxable event for either party.
9.11 The parties hereby agree that the scheduled closing shall be conditional
upon shareholder approval by the shareholders of both companies.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on December 31, 1999 and
at the Time of Closing at such offices as are agreed to in writing among
the parties hereto at least 24 hours prior to the said Closing.
10.2 At the Time of Closing and upon fulfillment of all the conditions set
out in this Agreement, which have not been waived in writing by the Seller
or the Purchaser, the Seller shall deliver to the Purchaser proper
certificates for all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any party hereto to any
other party shall be in writing and may be given by personal delivery or
by registered mail. Any notice directed to any party shall be addressed
to it as follows:
To the Purchaser:
eKomart.com, inc.
Stan J.H. Lee, President & CEO
71 Stony Hill Rd ( Rte 6) 2nd Fl.
Bethel, CT 06801
To the Sellers and the Corporation:
Corporation - ATA Sushi & Teriyaki, LLC
Han S. Shin, President & CEO
71 Stony Hill Rd ( Rte 6) 2nd Fl.
Bethel, CT 06801
Sellers:
Han S. Shin (10623 E Jewell Apt C219 Aurora CO 80012)
Erica KL & Co. LLC ( c/o Erica Kim and DMHD Hamilton Clark & Co.)
5445 DTC Parkway ) PH 4 Englewood CO 80111-3059
Jae Hee Woo - 210-19 41st Avenue, 2nd Fl. Bayside, NY 11361
11.2 Any notice or other document aforesaid, if delivered, shall be deemed
to have been given or made on the date on which it was delivered or,
if mailed, shall be deemed to have been given and received on the fourth (4th)
business day following the date on which it was mailed. Provided that if
there exists at the time of mailing of a notice hereunder or within four
(4) business days thereafter a labor dispute or other event which would
affect the normal delivery of the notice by an express or postal service,
then such notice will only be effective if actually delivered.
11.3 The parties hereto may change any address for notices hereunder, from
time to time, by notice given in accordance with the foregoing.
ARTICLE 12.00 - GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original, and all of which together
shall constitute one and the same agreement.
12.3 This Agreement, including the schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any
verbal statements, representations, warranties, undertakings, or agreements
between the parties, and this Agreement may not be amended or modified in
any respect except by written instrument signed by the parties hereto.
12.4 This Agreement shall be construed and enforced in accordance with and
the rights of the parties shall be governed by the laws of the State of
Florida. Any and all disputes arising under this Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the exclusive
jurisdiction of the Courts of the State of Florida. Each of the parties
hereto irrevocably submit to the jurisdiction of the Courts of the State of
Florida.
12.5 The headings used herein are inserted for convenience of reference only
and shall not affect the construction of or interpretation of this Agreement.
12.6 Except as otherwise set out in this Agreement, each of the parties
hereto shall pay all of its own costs and expenses of the transaction of
purchase and sale, including all fees and expenses of its accountants,
counsel, and officers.
12.7 In the event that any Article or section of this Agreement is held to
be invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of the
provisions hereof. Any such part shall be fully severable, and this
Agreement shall be construed and enforced as if such invalid or unenforceable
part had not been inserted herein. The parties hereby agree
that they would have signed this Agreement without such invalid or
unenforceable part included herein.
12.8 In this Agreement, words importing the singular number only include
the plural and vice versa; words importing the masculine gender include
the feminine and vice versa.
12.9 This Agreement shall ensure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors, and permitted assigns.
12.10 Where the date either for the expiration of any time period or for
the closing of anything hereunder expires or falls upon a day which is not a
Business Day, the time so limited extends to and the thing shall be done on
the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or public announcement
with respect to this Agreement, or any of the transactions contemplated by
this Agreement, shall be made by any party hereto without the prior written
consent of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
SIGNED, SEALED AND DELIVERED )
In the presence of
eKomart.com, inc. - PURCHASER
By: /s/Stan J.H. Lee/s/
Its: President
Date: __________________________
SELLERS
By: /s/ Han S. Shin/s/ By:/s/ Erica Kim/s/ By: /s/ Sonia Kim/s/
By : /s Jae Hee Woo /s/
Date: _________________________
STOCK PURCHASE AGREEMENT - Hans Restaurant Management, LLC
MEMORANDUM OF AGREEMENT made as of the 30th day of November, 1999
STOCK PURCHASE AGREEMENT
BETWEEN:
Han Sik Shin, Sole Unit Holder of Hans Restaurant Management, LLC.
(d/b/a Komart Food Court doing business at 2000 S. Havana St.
Aurora, CO 80014-1014)
(hereinafter called the "Seller")
OF THE FIRST PART
A N D:
eKomart.com, Inc.
a corporation incorporated under the laws of the State of Florida with
headquarters in 71 Stony Hill Rd. ( Rte 6) 2nd Fl. Bethel CT 06801
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the Seller owns all of the authorized issued and outstanding
ownership interest in Hans Restaurant Management, LLC. (herein referred
to as the "Corporation"), and;
WHEREAS, the Purchaser desires to acquire all of the outstanding interest
in the Corporation, and;
WHEREAS Seller wishes to sell to Purchaser his outstanding interest in the
Corporation for the net book value thereof as of the date of closing plus
the future value of the business as agreed to between the parties said
value being equal to 50,000 shares of the Purchaser, or $300,000.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, in consideration of the
covenants,
agreements, warranties, and payments herein set out and provided for, the
parties hereby respectively covenant and agree as follows:
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following terms
shall have the following meanings respectively.
"Agreement" means this agreement and all schedules attached to this
agreement. The term includes each case
where it may be supplemented or amended from time to time. The expressions
"hereof", "herein", "hereto", "Hereunder", "hereby" and similar expressions
refer to this agreement, and "Article", "section" and "subsection"
mean and refer to the specified Article, section, and subsection of this
agreement.
"books and records" means the accounting books of original entry including
the general ledger, record of cash receipts and disbursements, purchase
journal and banking records.
"Business" means the business presently and heretofore carried on by the
Corporation, namely the development and operation of fast food outlets
specializing in Korean and Japanese foods and such other ventures as the
directors of the Corporation may from time to time deem appropriate.
"Business day" means a day other than a Saturday, Sunday or a day that
is a statutory holiday.
"Closing" means the closing of the transaction for purchase and sale
contemplated herein.
"Closing Date" or "Date of Closing" means December 31, 1999 or such other
date as may be mutually agreed upon in writing by the parties hereto.
"Closing Financial Statements" has the meaning ascribed to it in
section 4.1.1.
"INTEREST" means the outstanding ownership interest in the capital of the
Corporation.
"Corporation" means Hans Restaurant Management, LLC.
"EBIT" means net earnings before income taxes, as determined by the auditors,
in accordance with GAAP.
"Exchange Shares" means 50,000 common shares of eKomart.com, Inc.
"Financial statements" means, collectively, the Closing Financial Statements
defined hereinabove.
"Intercompany Transactions" means, collectively, all transactions of any
nature between the Corporation and any Person associated with or related
to the Corporation or otherwise not dealing with the Corporation on an
arms-length basis.
"GAAP" means generally accepted accounting principles in the United States,
as appropriate and as in effect from time to time, consistently applied.
"NASDAQ" means the National Association of Securities Dealers and Quotations.
"Non Arm's Length Person" means any shareholder director, officer, employee,
affiliate, or associate (as defined in the Securities Act of 1933, as
amended) of the Corporation. This term includes any one or more of the Seller
or any other Person who does not deal at arm's length with the
Corporation or any one or more of the Seller within the meaning of such
concept as used in the Income Tax Act (USA).
"Person" includes an individual, a corporation, a joint venture, a partnership,
a trust or trustee, any unincorporated organization, an association, or any
other entity (including any governmental, administrative, or regulatory
authority).
"Permitted Liens" means, at any time, such Liens as the Purchaser may agree,
in writing, shall constitute a Permitted Lien for the purpose of this
Agreement.
"Purchased Interest" shall have the meaning attributed thereto in section
3.1 hereof.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational, governing documents of
such Person. This term includes any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority
or agency, in each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its property is subject.
"Rule 144" means rule 144 of the United States Securities and Exchange
Commission.
"SEC" means the Securities and Exchange Commission of the United States.
"Seller" shall mean, specifically for purposes of this agreement and
identifying the parties thereto, all of the ownership of the Corporation.
"Subsidiary", in relation to any body corporate, means any corporation of
which issued and outstanding securities are held, other than by way of
security only, by such body corporate, and includes any corporation in
like Article 2.00.
"Time of Closing" means two o'clock in the afternoon on the Closing Date.
ARTICLE 2.00 - SCHEDULES
2.1 The following schedules, at time of closing, shall be delivered and
attached to and incorporated in this Agreement by reference and deemed to
be part hereof:
Schedule 4.2.1 - Financial Statements of Corporation
Schedule 4.2.6 - Corporation's Shareholders
Schedule 4.2.22 - Outstanding Obligations of Corporation
Schedule 4.2.23 - Leases of Corporation
Schedule 4.2.26 - Insurance Policies of Corporation
Schedule 4.2.34 - Accounts List of Corporation
Schedule 5.2.1 - Financial Statements of Purchaser
Schedule 5.2.7 - Outstanding Rights to Securities of
Purchaser
Schedule 5.2.22 - Outstanding Obligations of Purchaser
Schedule 5.2.33 - Accounts List of Purchaser
Schedule 5.2.37 - Shareholder Credit Facility to
Purchaser
Schedule 6.2.4 - Power of Attorney
Schedule 9.9 - Indemnification Agreement
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Seller hereby agree to
sell, assign, and transfer to the Purchaser a 100% interest in the
Corporation ("the Purchased Interest"). The Purchaser covenants and agrees
to purchase from the Seller the Purchased Interest for an amount equal in
the aggregate to the Purchase Price of $300,000 dollars, payable as
hereinafter set out. At time of Closing, the Purchased Interest will
constitute 100% of the interest of all members of the Corporation.
3.2 Subject to the hereinafter described conditions, the Purchaser hereby
agrees to exchange the equivalent of 50,000 shares of its Common Shares on
the Closing Date, with $0.001 par value (the "Exchange Shares"), with the
Seller for all of the Purchased Interest as follows:
(A) at Closing, the Purchaser will issue and deliver 50,000 shares of its
common stock to HAN SIK SHIN and;
3.3 The Seller hereby represent, warrant, covenant, and acknowledge the
following.
3.3(A) The Purchased Interest is being transferred without registration
under the provisions of Section 5 of the Act.
3.3(B) All of the Purchased Interest Certificates will bear legends
restricting the transfer, sale, conveyance, and hypothecation within the
jurisdictional boundaries of the United States. This provision is exclusive
of when such Exchange Shares are registered under the provisions of Section
5 of the act and under applicable state and provincial securities laws.
Moreover, an opinion of legal counsel may be provided by the Purchaser to
certify that such registration is not required as a result of applicable
exemptions therefrom.
3.3(C) The Seller shall not transfer any of the Exchanged Shares except
in compliance with all applicable laws.
3.3(D) The Seller is acquiring the Exchanged Shares for their own account,
for investment purposes only and not with a view to further sale or
distribution, except as permitted by law.
3.3(E) The Seller have made themselves fully and completely familiar with
all aspects of the Purchaser's business, operations, and financial statements
and, immediately following closing on this Agreement, will assume operational
control thereof.
3.4 The Purchaser hereby represents, warrants, covenants and acknowledges
the following.
3.4(A) The Exchange Shares are being transferred without Registration under
the provisions of Section 5 of the Securities Exchange Act of 1934, as
amended (the "Act") or New York Blue Sky Law.
3.4(B) All of the Exchange Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the jurisdictional
boundaries of the United States. This provision is exclusive of when
such Exchange Shares are registered under the provisions of Section 5
of the act and under applicable state and provincial securities laws.
Moreover, an opinion of legal counsel may be provided by the Purchaser
to certify that such registration is not required as a result of applicable
exemptions there from.
3.4(C) The Purchaser shall not transfer any of the Purchased Interest
except in compliance with all applicable laws.
3.4(D) The Purchaser is acquiring the Purchased Interest for its own
account, for investment purposes only and not with a view to further sale or
distribution.
3.5 The Purchase Price shall be paid and satisfied in full by the delivery
of the issued Exchange Shares at the Times of Closing.
3.6 The certificates representing the shares being exchanged shall each bear
the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR WITH THE SECURITIES REGULATORY AUTHORITIES OF ANY
STATE, PROVINCE, OR NATIONAL AUTHORITY). CONSEQUENTLY, THESE SHARES MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE FIRST
REGISTERED UNDER APPLICABLE STATE, PROVINCIAL AND FEDERAL SECURITIES LAWS OR
THE TRANSACTION'S EXEMPTION THEREFROM IS DEMONSTRATED TO THE FULL SATISFACTION
OF THE CORPORAITON'S LEGAL COUNSEL."
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS, AND WARRANTIES OF AND THE
CORPORATION
4.1 The Shareholders of the Seller hereby covenant, represent, and warrant,
and the Seller, jointly and severally, represent to the best of their
knowledge, as follows:
4.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Seller, and made a part hereof as Schedule 4.2.1 are the
following:
(A) unaudited balance sheet of the Corporation to be acquired as of July 31,
1999, with the related statement of operations and unaudited statement of
cash flow for the period ending June 30, 1999 (such balance sheets,
statements of operations, and other statements are referred to herein as
the "Corporation's Financial Statements").
4.2.2 Corporation has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Colorado.
4.2.3 Corporation has the corporate power to own or lease its property
and carry on the Business. The Corporation is duly qualified as a
corporation to do business under the laws of Colorado, being the only
jurisdictions in which the nature of its business or the property owned or
leased by it makes such qualification necessary.
4.2.4 At Time of Closing, the authorized capital of the Corporation shall
consist of _____________.
4.2.5 At Time of Closing, the paid up capital of the said corporation shall
be _______________ and will have been duly and validly allotted and issued
and outstanding as fully paid and non-assessable and beneficially owned by
the Seller.
4.2.6 All of the Purchased Interest are owned by the unit holders of the
Corporation as the beneficial owners of record as listed at Schedule 4.2.6.
Such listed unit holders have good and marketable title thereto, free and
clear of all mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, and demands whatsoever. This provision includes
voting trusts, options, or other agreements of any kind. The Seller represent
that said listed unit holders have the absolute right to transfer the
Purchased Interest, and they shall be enjoyed by the Purchaser free from
any interruption or disturbance subject only to the terms and conditions
herein.
4.2.7 The Corporation has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease any other
business operations.
4.2.8 No person, firm, or corporation has any agreement, option, or any
right or privilege (whether by law, pre-emptive, or contractual) for the
purchase, subscription, allotment, or issuance of either any of the authorized
stock in the capital of the Corporation or of any securities of the
Corporation. This provision includes convertible securities, warrants, and
convertible obligations of any nature.
4.2.9 Except with respect to product warranties provided by the Corporation
in the ordinary course of business, the Corporation is not a party to or
bound to any person, firm, or corporation. This provision includes any
agreement of guarantee, indemnification, assumption, endorsement, or any other
like commitment of obligations or liabilities (contingent or otherwise) or
indebtedness of any person, firm, or corporation.
4.2.10 There are not now, nor will there be on Closing, any material
claims or potential or contingent claims against the Corporation for
product liability in respect of goods manufactured and/or sold by the
Corporation.
4.2.11 The Corporation's Financial Statements have been prepared in
accordance with GAAP and present fairly to include:
4.2.11(A) all the assets, liabilities (whether accrued, absolute, contingent,
or otherwise), and the financial condition of the Corporation as at the
respective dates of the Corporation's Financial Statements; and
4.2.11(B) the sales, earnings, and results of the operations of the
Corporation during the periods covered by the Corporation's Financial
Statements.
4.2.12 The corporate records and minute books of the Corporation contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the
Corporation since the incorporation of the Corporation. All such
meetings have been duly called and held. The share certificate book
with register of shareholders, register of transfers, register of directors,
and other corporate registers of the Corporation are complete and accurate
in all material respects.
4.2.13 The Business has been carried on in the ordinary course since
________________. Since then, there has been no change in the business
operations, affairs, or condition of the Corporation, financial or
otherwise. This provision includes changes arising as a result of any
legislative or regulatory change, revocation of any license or right to
do business, fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation, act of God, or otherwise. This
provision excludes changes occurring in the ordinary course of business,
which changes have not materially aversely affected and will not materially
aversely affect the organization, business, properties, prospects, and
financial condition of the Corporation or the ability of the Corporation to
carry on Business.
4.2.14 The books and records, financial and otherwise, of the Corporation
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Corporation as at the
date thereof. All material, financial transactions of the Corporation are
accurately recorded in such books and records.
4.2.15 Execution of this Agreement by the Seller and delivery of the
Agreement by them to the Purchaser and their performance hereunder has
been duly authorized. No further action is necessary on the part of the
Seller to make this agreement valid and binding in accordance with its terms
upon the Seller.
4.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of
any term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Corporation. This provision
includes any indenture, agreement, instrument, license, permit, or
understanding to which the Corporation or any one or more of the Seller
is a party or by which any one or more of them is bound. Nor will the
consummation of this transaction accelerate any commitment or obligation
of the Corporation or result in the creation of any lien or encumbrance
upon any of the assets or property of the Corporation.
4.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority
having jurisdiction over the Corporation, the Seller, or their respective
properties or businesses.
4.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of
any person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Corporation pursuant to any agreement affecting its assets or the Business
following closing.
4.2.19 The Corporation will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration
of any employee except in the normal course of business.
4.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Corporation, subsequent to
the execution of this Agreement and up to the Time of Closing, will be made
only at the regular rates heretofore paid.
4.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Corporation after the date hereof and up
to the Time of Closing without the prior written consent of the Purchaser.
4.2.22 Annexed hereto as Schedule 4.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Corporation. None of which
are presently in default, and the Corporation is not under any agreement to
and shall not create or issue any bonds, debentures, mortgages, notes, or
other evidence of indebtedness or other security agreements from the date
hereof until Closing without the written consent of the Purchaser.
4.2.23 The Corporation is not a party to any lease or agreement in the
nature of a lease, whether as lessor or lessee, except those leases
described in Schedule 4.2.23 hereto. The schedule specifies the parties
to each of such leases, their dates of execution and expiry dates, any
options to renew, any consents required, the locations of any leased
lands and premises, and the rental payable thereunder. Each of such
leases is in good standing and in full force and effect without amendment
thereto, and the Corporation is not in breach of any of the covenants,
conditions, or agreements contained in each such lease.
There are no consents required from or on behalf of any persons to the
transaction contemplated by this Agreement.
4.2.24 The Corporation is not a party to any conditional sales contract,
hire-purchase agreement, or other title retention agreement.
4.2.25 The Corporation is not, and will not be at the Time of Closing, a
party to any agreement to acquire or to acquire any beneficial interest
in any real or immovable property.
4.2.26 The Corporation maintains appropriate policies of insurance, given
the nature of the Business, and such insurance coverage will be continued
in full force and effect to and including the Date of Closing. The
Corporation is not in default with respect to any of the provisions contained
in any such insurance policy, and it has not failed to give any notice or
present any claim under any such insurance policy in due and timely fashion.
Schedule 4.2.26 hereto lists all insurance policies of the Corporation,
specifying the insurance company, insurance agent, policy number, type of
coverage, and amount of coverage.
4.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the
Corporation, at law or in equity or before or by any federal, provincial,
municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign.
The Seller are not aware of any existing ground on which any such action,
suit, or proceeding might be commenced with any reasonable likelihood
of success.
4.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Corporation is not a party to any outstanding
agreement, contract, or commitment, whether written or oral.
4.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Corporation.
4.2.30 The Corporation is and at Closing will be in substantial compliance
in all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and
similar employee rights, the Worker's Compensation Act, and all such similar
statutes.
4.2.31 The uses of the real properties owned or leased by the Corporation
referred to in this agreement or the schedules hereto are not in material
breach of any statute, by-law, ordinance, regulation, covenant, restriction,
or official plan.
4.2.32 The Corporation owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising
except as listed at Schedule 4.2.22; the purchase price is based on and
directly correlates to the net tangible worth (being assets less liabilities)
of the Corporation, which the Corporation represents to be approximately
$3,000,000 upon audit.
4.2.33 The conduct of the Business does not infringe upon the patents,
trade marks, trade names, or copyrights (domestic or foreign) of any other
person, firm, or corporation.
4.2.34 Annexed hereto as Schedule 4.2.34 is a true and complete list
showing the name of each bank, trust company, or similar institution in
which the Corporation has accounts or safe deposit boxes and the names of
all persons authorized to draw thereon or to have access thereto.
4.2.35 The Corporation is conducting the Business in compliance with
all applicable laws, rules and regulations of each jurisdiction in which
the Business is carried on, is not in breach of any such laws, rules or
regulations, except for breaches which in the aggregate are immaterial.
Also the Corporation is duly licensed, registered, or qualified in each
jurisdiction in which it owns or leases property or carries on the Business.
To enable the business to be carried on as now conducted and its property
and assets to be owned, leased, and operated, all such licenses, registrations
and qualifications are valid and subsisting and in good standing.
None of the same will be canceled or amended by virtue of the transaction
for purchase and sale provided for herein.
4.2.36 All facilities and equipment owned and used by the Corporation in
connection with the Business are in good operating condition and are in a
state of good repair and maintenance.
4.2.37 There are not now any loans or other indebtedness outstanding between
the Corporation and the Seller or either any current or former directors,
officers, shareholders, or employees of the Corporation or any Non
Arms Length Persons. This provision is exclusive of normal salaries, bonuses,
fringe benefits, and the obligation to reimburse for expense incurred on behalf
of the Corporation in the normal course of business or otherwise disclosed in
the Corporation's Financial Statements.
4.2.38 To the best of the Sellers' knowledge, there are no liabilities of the
Corporation of any kind whatsoever, whether or not accrued and whether or
not determined or determinable, in respect of which the Corporation or
the Purchaser may become liable before, on, or after the Closing. This
provision is exclusive of liabilities disclosed on, reflected in, or
provided for in the Financial Statements or incurred in the ordinary course
of business. This provision is also exclusive of those liabilities
attributable to the period from the Corporation's Financial Statements
to the actual time of Closing and are not materially adverse, individually
or in the aggregate, to the Business, operations, affairs or financial
condition of the Corporation.
4.2.39 There is not now nor will there be at the Time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Corporation.
4.2.40 The Corporation is not in default in the filing of any corporate
return or report that may be required under any federal, provincial
and/or municipal law or regulation.
4.2.41 The Corporation has duly and timely filed all tax returns required
and has paid all taxes and installments of taxes which are due and payable.
This provision includes all assessments, reassessments, and all
other taxes, governmental charges, penalties, interest, and fines due and
payable by it on or before the date hereof.
The income tax liability of the corporation has been not reviewed or
determined by the IRS or the applicable State for all fiscal years up to
and including the fiscal year to date. Adequate provision has been made
for taxes payable for the current period of which tax returns are not yet
required to be filed. There are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any tax
return by, or payment of any tax, governmental charge, or deficiency against
the Corporation in respect of taxes, governmental charges, or assessments,
asserted by such authority. The Corporation has withheld from each payment
made to any of its officers, directors, employees, former directors, officers,
and employees the amount of all taxes, including but not limited to income
tax, and other deductions required to be withheld therefrom. The
Corporation has paid the same to the proper tax or other receiving officers
within the time required under the applicable tax legislation.
4.2.42 The Seller have no information or knowledge of any facts relating to
the Seller, the Business, the Corporation, or the Purchased Shares which,
if known to the Purchaser, might reasonably be expected to deter the
Purchaser from completing the transaction of purchase and sale herein
contemplated.
/s/ All items requested have been examined, and approved. ___ /s/
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 The Purchaser covenants, represents, and warrants as follows and
acknowledges that the Seller are relying upon such covenants, representations,
warranties, and covenants in connection with the sale by the Seller of the
Purchased Shares.
5.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Purchaser, and made a part hereof as Schedule 5.2.1 are
the following:
(A) unaudited balance sheet of the Purchaser to be acquired for the fiscal 6
months of 1999, with the related statement of operations and unaudited
statement of cash flow for the same years, and;
(B) unaudited balance sheet of the Purchaser to be acquired as of December31,
1999 (the "Purchaser's Interim Balance Sheet") with the related unaudited
statement of income and unaudited statement of cash flow for the one month
ended June 30, 1999 (such balance sheets, statements of operations, and
other statements are referred to herein as the "Purchaser's Financial
Statements").
5.2.2 Purchaser has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of New York.
5.2.3 Purchaser has the corporate power to own or lease its property and
carry on the Business. The Corporation is duly qualified as a corporation
to do business under the laws of New York, being the only jurisdiction in
which the nature of its business or the property owned or leased by it makes
such qualification necessary.
5.2.4 The authorized capital of the Purchaser shall consist of 22,000,000
shares with a par value of $0.001.
5.2.5 At time of Closing, the authorized issued capital of the Purchaser
shall be 500 shares of its common stock (and no more) and will have been
duly and validly allotted and issued and outstanding as fully paid and
non-assessable and beneficially owned by the Purchaser.
5.2.6 The Purchaser has no subsidiaries and owns no shares in the capital
of any other corporation and has not agreed to acquire any subsidiary or
any shares of the capital of any other corporation or to acquire or lease
any other business operations.
5.2.7 Except as listed at Schedule 5.2.7, no person, firm, or corporation has
any agreement, option, or any right or privilege (whether by law, pre-
emptive, or contractual) for the purchase, subscription, allotment, or
issuance of either any of the authorized stock in the capital or any
securities of the Purchaser. This provision includes convertible securities,
warrants, and convertible obligations of any nature.
5.2.8 The Purchaser is not a party to or bound to any person, firm, or
corporation. This provision includes any agreement of guarantee,
indemnification, assumption, endorsement, or any other like commitment of
obligations or liabilities (contingent or otherwise) or indebtedness of any
person, firm, or corporation.
5.2.9 There are not now, nor will there be on Closing, any material claims or
potential or contingent claims against the Purchaser for product liability.
5.2.10 The Purchaser's Financial Statements have been prepared in accordance
with GAAP and present fairly to include:
(A) all the assets, liabilities (whether accrued, absolute, contingent, or
otherwise), and the financial condition of the Purchaser as at the
respective dates of the Purchaser's Financial Statements, and;
(B) the sales, earnings, and results of operations during the periods covered
by the Corporation's Financial Statements.
5.2.11 The corporate records and minute books of the Purchaser contain complete
and accurate minutes of all meetings of and copies of all by-laws and
resolutions passed by the directors and shareholders of the Purchaser
since the incorporation of the Purchaser. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate
registers of the Purchaser are complete and accurate in all material respects.
5.2.12 The Purchaser does not have an active business or operations.
5.2.13 The Purchaser has no inventory.
5.2.14 The books and records, financial and otherwise, of the Purchaser
fairly and correctly set out and disclose, in all material respects,
the financial position and result of operations of the Purchaser as at the
date hereof. All material, financial transactions of the Purchaser are
accurately recorded in such books and records.
5.2.15 The execution and delivery of this Agreement by the Purchaser as
well as the performance by the Purchaser hereunder have been duly authorized.
No further action will be necessary on the part of the Purchaser to make
this Agreement valid and binding in accordance with its terms upon the
Purchaser.
5.2.16 The execution and the consummation of this transaction for purchase
and sale contemplated by this Agreement will not result in a breach of any
term or provision of or constitute any default under the constituting
documents, by-laws, or resolutions of the Purchaser. This provision includes
any indenture, agreement, instrument, license, permit, or understanding to
which the Purchaser is a party or by which any one or more
of them is bound. Nor will the consummation of this transaction accelerate
any commitment or obligation of the Purchaser or result in the creation of
any lien or encumbrance upon any of the assets or property of the Purchaser.
5.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority
having jurisdiction over the Purchaser.
5.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Purchaser pursuant to any agreement affecting its assets or the Business
following closing.
5.2.19 The Purchaser will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration
of any employee except in the normal course of business.
5.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Purchaser, subsequent to
the execution of this Agreement and up to the Time of Closing, will be
made only at the regular rates heretofore paid.
5.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Purchaser after the date hereof and up to
the Time of Closing without the prior written consent of the Seller.
5.2.22 Annexed hereto as Schedule 5.2.22 is a complete list of all
outstanding bonds, debentures, mortgages, notes or other evidence of
indebtedness or other security instruments of the Purchaser. None of which
are presently in default, and the Purchaser is not under any agreement to
and shall not create or issue any bonds, debentures, mortgages, notes, or
other evidence of indebtedness or other security agreements from the date
hereof until Closing without the written consent of the Seller.
5.2.23 The Purchaser is not a party to any lease or agreement in the nature
of a lease, whether as lessor or lessee.
5.2.24 The Purchaser is not a party to any conditional sales contract, hire-
purchase agreement, or other title retention agreement.
5.2.25 The Purchaser is not, and will not be at the Time of Closing, a party
to any agreement to acquire or to acquire any beneficial interest in any
real or immovable property.
5.2.26 The Purchaser does not maintain any insurance policies.
5.2.27 There are no actions, suits, or proceedings, including product
warranty claims, pending or threatened against or affecting the Purchaser,
at law or in equity or before or by any federal, provincial, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Purchaser is not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
5.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Purchaser is not a party to any outstanding
agreement, contract, or commitment, whether written or oral, except for the
Agreement of Purchase and Sale for all the outstanding shares of The Last
Communication, Inc., said Agreement as executed on or before 12/31, 1999.
5.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of
the Purchaser.
5.2.30 The Purchaser is and at Closing will be in substantial compliance in
all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar statutes.
5.2.31 The Purchaser does not lease any real properties.
5.2.32 The Purchaser owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and
all mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising.
5.2.33 The conduct of business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
5.2.34 Annexed hereto as Schedule 5.2.33 is a true and complete list showing
the name of each bank, trust company, or similar institution in which
the Purchaser has accounts or safe deposit boxes and the names of all
persons authorized to draw thereon or to have access thereto.
5.2.35 The Purchaser exists in compliance with all applicable laws, rules
and regulations of each jurisdiction in which the Business is carried on,
is not in breach of any such laws, rules or regulations, except for breaches
in the aggregate are immaterial. Also the Purchaser is duly licensed,
registered, or qualified in each jurisdiction in which it owns or leases
property or carries on the Business. To enable the business to be carried
on as now conducted and its property and assets to be owned, leased, and
operated, all such licenses, registrations and qualifications are valid
and subsisting and in good standing. None of the same will be canceled
or amended by virtue of the transaction for purchase and sale provided for
herein.
5.2.36 All facilities and equipment owned or used by the Purchaser are
in good operating condition and are in a state of good repair and
maintenance.
5.2.37 Except as specified at Schedule 5.2.37, there are not any loans or
other indebtedness outstanding between the Purchaser and either the Seller
or either any current or former directors, officers, shareholders, or
employees of the Purchaser or any Non-Arms Length Persons. This provision is
exclusive of normal salaries, bonuses, fringe benefits, and the obligation to
reimburse for expense incurred on behalf of the Purchaser in the normal
course of business.
5.2.38 There are no liabilities of the Purchaser of any kind whatsoever,
whether or not accrued and whether or not determined or determinable,
in respect of which the Purchaser may become liable before, on, or after the
Closing. This provision is exclusive of liabilities disclosed on, reflected
in, or provided for in the Financial Statements or incurred in the ordinary
course of business. This provision is also exclusive of those liabilities
attributable to the period from the Purchaser's Financial Statements to the
actual time of Closing and are not materially adverse, individually or
in the aggregate, to the Business, operations, affairs or financial
condition of the Purchaser.
5.2.39 There is not now nor will there be at the time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Purchaser.
5.2.40 The Purchaser is not in default in the filing of any corporate
return or report that may be required under any federal, provincial
and/or municipal law or regulation.
5.2.41 The Purchaser has duly and timely filed or has pending all tax
returns required and has paid all taxes and installments of taxes which
are due and payable. This provision includes all assessments, reassessments,
and all other taxes, governmental charges, penalties, interest, and fines
due and payable by it on or before the date hereof. The income tax liability
of the Purchaser has been not reviewed or determined by the IRS or the
applicable State for all fiscal years up to and including the fiscal
year to date.
5.2.42 The Purchaser has no information or knowledge of any facts relating
to the Purchaser which if known to the Seller might reasonably be expected
to deter the Seller from completing the transaction and sale herein
contemplated.
/s/ all items supplied, examined and approved /s/BK
ARTICLE 6.00 - COVENANTS OF THE SELLER
6.1 The Seller covenant and agree with the Purchaser that on or
before the Closing Date they will do or cause to be done the following.
6.2.1 Take all necessary steps and proceedings required for all of the
Purchased Shares to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to operate the business of the
Corporation prudently and in such a manner as to preserve and maintain
the goodwill of the Corporation.
6.2.3 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Purchased Shares to the Purchaser
ARTICLE 7.00 - COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Seller that, on or before
the Closing Date, it will do or cause to be done the following.
7.2.1 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this
Agreement and the valid transfer of the Exchange Shares to the Seller.
7.2.2 Provide the Seller, at least four (4) days prior to the Closing Date,
with a list of all persons in possession of all of the keys, credit cards,
books, records, files, and other properties of the Purchaser. The Purchaser
shall deliver to the Seller custody of all such keys, credit cards, books,
records, files, and other property in the possession of the Purchaser.
7.2.3 Cause such directors and officers of the Purchaser as the Seller may
specify to resign in favor of nominees of the Seller, such resignations to
be effective as at the time of Closing.
7.2.4 Up to the Time of Closing, continue to operate the businesses of the
Purchaser prudently and in such a manner as to preserve and maintain
the goodwill of the Purchaser.
ARTICLE 8.00 - SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
8.1 The covenants, representations, and warranties of the Seller contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Purchaser and shall continue in full force and effect for the benefit of
the Purchaser following the Closing Date.
8.2 The covenants, representations and warranties of the Purchaser contained in
this Agreement and contained in any document or certificate given pursuant
hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Seller and shall continue in full force and effect for the benefit of the
Seller following the Closing Date.
ARTICLE 9.00 - CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to the following
terms and conditions, each of which is hereby declared to be for the
exclusive benefit of the Purchaser to be fulfilled and performed at or
prior to the time of Closing.
9.2 The covenants, representations, and warranties of the Seller contained in
this Agreement or any schedule hereto or certificate or other document
delivered or given to the Purchaser pursuant to this Agreement,
including without limitation the representations and warranties contained
in Article 4.00, shall be true and correct on and as of the Closing Date
with the same force and effect as if they had been made as of the date
hereof, each and every one of which is hereby deemed to be a condition.
9.3 The Seller shall provide at the time of Closing a certificate, dated the
Closing Date, to the effect that the covenants, representations, and
warranties of the Seller contained herein are true and correct on and as
of the Closing Date, with the same force and effect as though made on and
as of such date, provided that the acceptance of such certificate and the
closing of the transaction herein provided for shall not be a waiver of the
said covenants, representations, and warranties, which shall continue in full
force and effect as provided herein.
9.4 The Seller shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them.
9.5 At the Closing Date, there shall have been no material adverse change in
the affairs, assets, liabilities, financial condition, or business of the
Corporation from that shown on or reflected in the Financial Statements.
9.6 Any consent, authorization, license, franchise, permit, approval, or order
of any court or governmental agency or regulatory body required for the
acquisition by the Purchaser of the Purchased Shares shall have been obtained.
9.7 The Purchaser shall provide at the time of Closing a certificate, dated the
Closing Date, to the effect that the covenants, representations, and
warranties of the Purchaser contained herein are true and correct on and
as of the Closing Date. This certificate shall have the same force and
effect as though made on and as of such date provided that the acceptance of
such certificate and the closing of the transaction herein provided for
shall not be a waiver of the said covenants, representations, and warranties
which shall continue in full force and effect as provided herein.
9.8 The Purchaser shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by it.
9.9 The parties shall execute and deliver an indemnification agreement to be
annexed hereto as Schedule 9.9.
9.10 The parties shall not close and complete this transaction unless both
Seller and Purchaser have signed a written acknowledgment that the exchange
of shares between them does not create a taxable event for either party.
9.11 The parties hereby agree that the scheduled closing shall be conditional
upon shareholder approval by the shareholders of both companies.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on December 31, 1999 and at the
Time of Closing at such offices as are agreed to in writing among the parties
hereto at least 24 hours prior to the said Closing.
10.2 At the Time of Closing and upon fulfillment of all the conditions set out
in this Agreement, which have not been waived in writing by the Seller or
the Purchaser, the Seller shall deliver to the Purchaser proper certificates
for all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any party hereto to any other
party shall be in writing and may be given by personal delivery or by
registered mail. Any notice directed to any party shall be addressed to it
as follows:
To the Purchaser:
At the address to be given for service, in writing
To the Seller and the Corporation:
11.2 Any notice or other document aforesaid, if delivered, shall be deemed to
have been given or made on the date on which it was delivered or, if mailed,
shall be deemed to have been given and received on the fourth (4th) business
day following the date on which it was mailed. Provided that if there
exists at the time of mailing of a notice hereunder or within four (4)
business days thereafter a labor dispute or other event which would
affect the normal delivery of the notice by an express or postal service,
then such notice will only be effective if actually delivered.
11.3 The parties hereto may change any address for notices hereunder, from time
to time, by notice given in accordance with the foregoing.
ARTICLE 12.00 - GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more counterparts, each of which
when so executed shall constitute an original, and all of which together
shall constitute one and the same agreement.
12.3 This Agreement, including the schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any
verbal statements, representations, warranties, undertakings, or
agreements between the parties, and this Agreement may not be amended or
modified in any respect except by written instrument signed by the parties
hereto.
12.4 This Agreement shall be construed and enforced in accordance with and the
rights of the parties shall be governed by the laws of the State of New York.
Any and all disputes arising under this Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the exclusive
jurisdiction of the Courts of the State of New York. Each of the parties
hereto irrevocably submit to the jurisdiction of the Courts of the State of
New York.
12.5 The headings used herein are inserted for convenience of reference only
and shall not affect the construction of or interpretation of this Agreement.
12.6 Except as otherwise set out in this Agreement, each of the parties hereto
shall pay all of its own costs and expenses of the transaction of purchase
and sale, including all fees and expenses of its accountants, counsel, and
officers.
12.7 In the event that any Article or section of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of the
provisions hereof. Any such part shall be fully severable, and this
Agreement shall be construed and enforced as if such invalid or
unenforceable part had not been inserted herein. The parties hereby agree
that they would have signed this Agreement without such invalid or
unenforceable part included herein.
12.8 In this Agreement, words importing the singular number only include the
plural and vice versa; words importing the masculine gender include the
feminine and vice versa.
12.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors, and permitted assigns.
12.10 Where the date either for the expiration of any time period or for the
closing of anything hereunder expires or falls upon a day which is not a
Business Day, the time so limited extends to and the thing shall be
done on the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or public announcement with
respect to this Agreement, or any of the transactions contemplated by this
Agreement, shall be made by any party hereto without the prior written
consent of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of
SELLER
By: /s/Han S. Shin/s/
Its: President
Date: _______________________________
PURCHASER
By: /s/Stan J.H. Lee/s/
Its: President
Date: _______________________________
EMPLOYMENT AGREEMENT
This employment agreement, dated as of November 30, 1999, by and between
eKomart.com, Inc., a Florida corporation, ("Company") business headquarters
at 71 Stony Hill Rd. 2nd Fl. (Rte 6) Bethel, CT 06801 and Han S. Shin
("Executive") residing at 10623 E. Jewell Apt C219 Aurora, CO 80012 to be
effective March 1, 2000, (the "Employment Agreement").
RECITALS:
A. Company is a publicly traded entity which seeks to employ Executive.
B. The Executive is willing to be employed by the Company and has made
and is expected to continue to make major contributions to the profitability,
growth and financial strength of the Business to be conducted by the Company.
C. The Executive is willing to accept such employment.
D. The Board of Directors of the Company has authorized this Agreement
with the Executive, and has approved all of the terms, conditions and
undertakings hereof, all of which the board of the Company has found to be
reasonable, proper and in the best interest of the Company.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained, the parties agree as follows:
1.EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to accept employment with the Company in
accordance with the terms and conditions set forth in this Employment
Agreement.
2. TERM. The term of this Employment Agreement shall begin as of the date
hereof and continue until February 28, 2002. (The "Initial Term"). The
Company hereby employs the Executive, and the Executive hereby accepts
such employment by the Company, for the Initial Term, subject to earlier
termination pursuant to the provision of Section 7 hereof. The Executive's
term of employment, including Renewal Terms, shall hereinafter be referred
to as the "Employment Term".
AUTOMATIC RENEWAL. If this Employment Agreement is still in full
force and effect at the end of the Initial Term, it shall be
automatically extended and continued from year to year unless
terminated by the Executive or the Company at any time following the
Initial Term upon the giving of not less than sixty (60) days notice
of termination, or in the case of termination by the Company, any
combination of notice and termination pay totaling a sixty (60)
day period (each such one (1) year period referred to as a "Renewal
Term"). Except as otherwise provided herein, each Renewal Term shall
be on the same terms and conditions as the Initial Term under this
Employment Agreement. The Initial Term and any Renewal Terms are
herein collectively referred to as the "Term".
3. COMPENSATION. For all services to be rendered by the Executive in any
capacity during the Employment Term, including, without limitation, services
as an executive officer, director or member of any committee of Company or
any Related Entity, the Executive shall receive the following compensation:
A. Base Salary. During the Employment Term, the Company shall pay the
Executive an annual salary equal to 80% of the net profit of the Komart Food
Court in Denver Colorado for the first 2 years hereof, and thereafter a
salary to be negotiated in good faith by the parties hereto.
Executive shall receive a signing bonus of 103,750 shares (70,000 for
executive management and operation of Komart Food court in Denver and
developmental period not lasting more than one year each commencing from
the effective date of leasing signing for each and every site of future
Nationwide project of Komart Food Court and 33,750 for executive
management and operation of ATA Sushi & Teriyaki chain during its
developmental period not lasting more than one year commencing from the
effective in the Common Stock of the Company, said shares to be restricted
and subject to Rule 144 of the Securities and Exchange Commission.
B. Annual Performance Bonus. The Executive shall be considered for an
annual performance bonus based upon his performance during the applicable
fiscal year and shall participate with other employees of Company in any
executive compensation plan established by the Board of Directors of the
Company.
C. Expenses. The Company will reimburse or advance funds to Executive for
all reasonable business, travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this
Employment Agreement, in accordance with and subject to the Company's
standard practices for reimbursement of employee expenses.
D. Vacation. At such reasonable time as the Company shall in its discretion
permit, the Executive shall be entitled, without loss of pay, to absent
himself voluntarily from the performance of his employment under this
Employment Agreement, all such voluntary absences to count as vacation time,
provided that it complies with the Paid Day off ("PDO") package (which
includes sick time) available to all employees, but in no event less than
three (3) weeks per year (the ("Paid Vacation Time"). The Executive, at
the Executive's option, shall be allowed to accrue and carry over from
one year to the next any unused Paid Vacation Time due under the terms of
the Employment Agreement (including Paid Vacation Time accrued and unused
since the date of the Executive's employment through the date of the
Employment Agreement.)
E. Insurance.
i) During the Employment Term, the Executive shall be entitled to participate
in any and all group insurance, medical benefit, disability insurance,
retirement or other employee benefit plans in effect from time to time and
made generally available to employees of the Company of similar position,
rank and seniority as the Executive, or any successor Company to which this
Employment Agreement may be assigned.
ii) At the end of the Employment Term, the Executive shall have the option
to purchase any life insurance policy obtained by the Company and covering
his life for the case surrender value of such policy, if such purchase is
permitted under the terms of the policy obtained by the Company.
F. Professional Memberships. During the Employment Term, the Executive
shall be entitled to professional and other membership dues and fees.
G. Continuing Education. During the Employment Term, the Executive shall be
entitled to payment for all costs, including reasonable travel, meals and
hotel accommodations, for attending seminars for continuing education credit
hours required to maintain any license. If Executive determines to seek
other certification, such education credits necessary to meet such
requirements shall be paid. All continuing education courses to be selected
by Executive.
H. Option Plan. Executive shall be deemed a Key Management Employee and be
entitled to all employee and executive stock option plans.
I. Incentive Compensation. Executive will be an eligible employee for
Incentive Compensation and shall be a member of any Incentive Compensation
Committee established to determine the distribution of any Performance
Distribution payable.
4. DUTIES OF EXECUTIVE
A. The Executive hereby agrees to serve as President and CEO of Komart Food
Court and ATA Sushi & Teriyaki, LLC ( both divisions and wholly owned
subsidiaries of eKomart.com,inc.) and in such other additional executive
positions as shall be assigned to the Executive. The Executive agrees to
perform such services customary to such offices as shall from time to time
be assigned to the Executive by the Company, and, in the absence of such
assignment, such services customary to such office as are necessary to the
operations of the Company, (the "Executive's Services"). The Executive
shall devote all of his business time and effort to advance the business
objectives of the Company. During the Employment Term, the Executive shall
use his best efforts to discharge his duties under this Employment Agreement
in compliance with applicable federal, state and local laws.
B. The Executive understands and agrees that the Company may from time to
time require Executive to perform services for the related entities, in
which event, the Executive shall perform his obligations under this
Employment Agreement as if such related entities were a party to this
Employment Agreement. Specifically, but without limitation of the foregoing,
the provisions of Section 7 shall apply not only with respect to the Company
but also with respect to the Related Entities for whom the Executive renders
services.
5. WORKING FACILITIES. The Company, at its own cost, shall furnish the
Executive with office facilities, technical and secretarial personnel,
supplies, equipment and other facilities and services appropriate to his
position and adequate for the performance of his duties hereunder.
6. TERMINATION. Notwithstanding anything to the contrary herein, this
Employment agreement may be terminated at any time during the Term hereof
upon the earlier occurrence of any of the following events:
A. Mutual written agreement between the Company and the Executive.
B. At the Company's option on thirty (30) days, written notice in the event
of the Executive's Disability, as defined under any disability insurance
policy on the Executive, if the Company carries such insurance, or otherwise
meaning the Executive's inability to continuously perform the Executives
Services for the Company for a continuous period of ninety (90) days as a
result of adverse health or physical condition as reported by a physician
acceptable to the Executive and the Company, the acceptability of whom shall
not be unreasonably withheld by either party.
C. Upon the death of the Executive.
D. By the Board of Directors for "cause", which shall mean:
i) the Executive has been indicted, criminally charged or deemed guilty by
the Board of Directors of:
(a) fraud, stealing, embezzlement or misappropriation of funds;
(b) a material violation of the provisions hereof;
(c) continuing failure to perform the Executive's duties; or
(d) excessive unexcused absenteeism from work other than for the
Executive's Disability covered in Paragraph 7.B above; or
ii) the conviction of the Executive
of any criminal felony.
E. The Company shall give Executive reasonable written notice and opportunity
to cure and termination for cause based on Paragraph 7.D(1)(b), 7.D.(1)(c)
or 7.D.(1)(d) above.
F. Upon termination of the Executive's employment for cause under Paragraph
7.D.(1)(a) or 7.D.(2) above, the Executive shall be entitled to receive only
the compensation accrued, unpaid and payable as of the date of termination,
and shall not be entitled to additional compensation, bonuses or benefits,
except as otherwise expressly provided herein or required by law. Upon
termination of the Executive's employment for cause for any reason other
than stated in Paragraph 7.D.(1)(a) or 7.D(2) above, the Executive shall be
entitled to receive his Base Salary, exclusive of any bonus compensation
which could be earned for such period, for the Term as if the Employment
agreement were not terminated.
7. EXECUTIVE'S TERMINATION. If the Executive terminated his employment with
the Company, the Executive shall be entitled to receive only such Base
Salary and Paid Vacation Time as has accrued and is payable to the Executive
as of the date of such termination, but no other amounts otherwise payable
to the Executive.
8. CONFIDENTIALITY. The Executive shall execute the Company's standard
employee confidentiality and non-compete agreements required of all employees
of the Company (the "Non-Compete Agreement"). Upon termination of the
Executive's employment for cause for any reason other than stated in
Paragraph 7.A, 7.D.(1)(a) or 7.D.(2) above, the Executive shall be
released from the provisions of the Non-Compete Agreement.
9. FEDERAL INCOME TAX WITHHOLDING. The Company shall withhold from any
benefits payable under this Employment Agreement, or arrange for the payment
of, any federal, state, local or other taxes, as shall be required pursuant
to any law or governmental regulation or ruling.
10. WAIVER. No term or condition of this Employment Agreement shall be
deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Employment Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to the specific
term or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically
waived.
11. GOVERNING LAW. This Employment Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without
reference to the conflicts or laws or principals thereof.
12. RELATIONSHIP OF PARTIES. The relationship between the Company and the
Executive shall be that of employer and employee.
13. NOTICES. Any notice required or permitted to be given under this
Agreement shall be effective upon delivery in person or mailing by certified
mail, return receipt requested, to the parties at the addresses below:
TO COMPANY: 71 Stony Hill Rd 2nd Fl (Rte 6) Bethel, CT 06801
TO EXECUTIVE: 10623 E. Jewell Apt C219 Aurora CO 80012
or to such other address as either party shall
direct by notice to the other party.
14. ASSIGNMENT. This Employment Agreement and all of Executive's rights,
duties and obligations hereunder are personal in nature and shall not be
assignable by Executive. Any purported assignment thereof shall not be
valid or binding on the Company. This Employment Agreement shall be
assignable by the Company without the prior written consent of Executive.
This Employment Agreement shall inure to the benefit of and shall be legally
binding upon all permitted successors or assigns of the Company.
15. COUNTERPARTS. This Employment Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Employment
Agreement by signing any such counterpart.
16. ENTIRE AGREEMENT. This Employment Agreement, along with any documents
executed contemporaneously with the execution of this Employment Agreement,
constitutes the entire understanding of the parties and supersedes any and
all prior discussions, negotiations, employment agreements and
understandings, whether oral or written, with respect to the subject
matter hereof. This Employment Agreement can be modified only by a written
instrument properly executed by the Executive and the Company.
17. SEVERABILITY. In the event any one or more provisions of this
Employment Agreement shall, for any reasons, be held invalid, illegal or
unenforceable, the remaining provisions of this Employment shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision
which comes closest to the intent of the parties.
18. PREVAILING PARTY'S ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Employment Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any provision of this Employment Agreement, the successful
or prevailing party shall be entitled to recover reasonable attorneys, fees,
sales and use taxes, court costs and all reasonable expenses, even if not
taxable as court costs (including, without limitation, all such fees, taxes,
costs and expenses incident to arbitration, appellate, bankruptcy, and post-
judgment proceedings) incurred in that action or proceeding, in addition to
any other relief to which such party may be entitled. Attorneys' fees shall
include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes, and all other charges billed by
the attorney to the prevailing party.
19. GOOD FAITH DEALINGS. The parties acknowledge and accept their duties to
deal with each other in good faith in applying the provisions of this
Employment Agreement, including but not limited to those dealing with
termination.
20. IN WITNESS WHEREOF, and intending to be legally bound hereby, Company
and Executive have executed and delivered this Employment Agreement as of
the date and year first above written.
EKomart.com,inc.
By: /s/Stan J.H. Lee/s/
Its : President
Date: November 30, 1999
Han S. Shin
By: /s/Han Shin/S/
Its : President
Date:
EMPLOYMENT AGREEMENT
This employment agreement, dated as of November 30, 1999, by and between
eKomart.com, Inc., a Florida corporation, ("Company") business headquarters at
71 Stony Hill Rd. 2nd Fl. (Rte 6) Bethel, CT 06801 and Han S. Shin)
residing at 10623 E. Jewell Apt C219 Aurora, CO 80012 as President & CEO,
Erica Kim of Erica KL & Co. LLC ( 7884 Silverweed Way, Littleton CO) as
Director of PR, Sonia Kim of Sonia KL & Co. LLC (7884 Silverweed Way
Littleton, CO) as Director of Marketing and Jae Hee Woo ( 210-19 41st Avenue,
2nd Fl. Bayside, NY 11361) as Director of Construction and Design to be
effective March 1, 2000, (the "Employment Agreement").
The executive and directors being employed will be collectively called"
Executive"
RECITALS:
A. Company is a publicly traded entity which seeks to employ Executive.
B. The Executive is willing to be employed by the Company and has made
and is expected to continue to make major contributions to the profitability,
growth and financial strength of the Business to be conducted by the Company.
C. The Executive is willing to accept such employment.
D. The Board of Directors of the Company has authorized this Agreement
with the Executive, and has approved all of the terms, conditions and
undertakings hereof, all of which the board of the Company has found to be
reasonable, proper and in the best interest of the Company.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained, the parties agree as follows:
1.EMPLOYMENT. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to accept employment with the
Company in accordance with the terms and conditions set forth in this
Employment Agreement.
2. TERM. The term of this Employment Agreement shall begin as of the date
hereof and continue until February 28, 2002. (The "Initial Term"). The Company
hereby employs the Executive, and the Executive hereby accepts such employment
by the Company, for the Initial Term, subject to earlier termination pursuant
to the provision of Section 7 hereof. The Executive's term of employment,
including Renewal Terms, shall hereinafter be referred to as the "Employment
Term".
AUTOMATIC RENEWAL. If this Employment Agreement is still in full force
and effect at the end of the Initial Term, it shall be automatically
extended and continued from year to year unless terminated by the Executive
or the Company at any time following the Initial Term upon the giving of not
less than sixty (60) days notice of termination, or in the case of
termination by the Company, any combination of notice and termination pay
totaling a sixty (60) day period (each such one (1) year period referred to
as a "Renewal Term"). Except as otherwise provided herein, each Renewal
Term shall be on the same terms and conditions as the Initial Term under
this Employment Agreement. The Initial Term and any Renewal Terms are herein
collectively referred to as the "Term".
3. COMPENSATION. For all services to be rendered by the Executive in any
capacity during the Employment Term, including, without limitation, services
as an executive officer, director or member of any committee of Company or
any Related Entity, the Executive shall receive the following compensation:
A. Base Salary. During the Employment Term, the Company shall pay the
Executive an annual salary equal to 10% of the net profit of the ATA Sushi
& Teriyaki, LLC and prorated based on the # of shares issued to the
individuals at the time of purchase for the first 2 years hereof, and
thereafter a salary to be negotiated in good faith by the parties hereto.
Executive have received a signing bonus of 115,000 shares (33,750 shares
to SHIN, 33,750 to ERICA KIM, 40,000 to SONIA KIM and 7,500 to WOO)
for executive management and operation of ATA Sushi & Teriyaki in Denver
CO and developmental period not lasting more than one year each commencing
from the effective date of leasing signing for each and every site of future
Nationwide project for the management and operation of ATA Sushi & Teriyaki
chain during its developmental period not lasting more than one year
commencing from the effective in the Common Stock of the Company, said shares
to be restricted and subject to Rule 144 of the Securities and Exchange
Commission.
B. Annual Performance Bonus. The Executive shall be considered for an annual
performance bonus based upon his performance during the applicable fiscal year
and shall participate with other employees of Company in any executive
compensation plan established by the Board of Directors of the Company.
C. Expenses. The Company will reimburse or advance funds to Executive for all
reasonable business, travel, entertainment and miscellaneous expenses incurred
in connection with the performance of his duties under this Employment
Agreement, in accordance with and subject to the Company's standard practices
for reimbursement of employee expenses.
D. Vacation. At such reasonable time as the Company shall in its discretion
permit, the Executive shall be entitled, without loss of pay, to absent himself
voluntarily from the performance of his employment under this Employment
Agreement, all such voluntary absences to count as vacation time, provided that
it complies with the Paid Day off ("PDO") package (which includes sick time)
available to all employees, but in no event less than three (3) weeks per year
(the ("Paid Vacation Time"). The Executive, at the Executive's option, shall
be allowed to accrue and carry over from one year to the next any unused Paid
Vacation Time due under the terms of the Employment Agreement (including Paid
Vacation Time accrued and unused since the date of the Executive's employment
through the date of the Employment Agreement.)
E. Insurance.
i) During the Employment Term, the Executive shall be entitled to participate
in any and all group insurance, medical benefit, disability insurance,
retirement or other employee benefit plans in effect from time to time and
made generally available to employees of the Company of similar position,
rank and seniority as the Executive, or any successor Company to which this
Employment Agreement may be assigned.
ii) At the end of the Employment Term, the Executive shall have the option to
purchase any life insurance policy obtained by the Company and covering his
life for the case surrender value of such policy, if such purchase is
permitted under the terms of the policy obtained by the Company.
F. Professional Memberships. During the Employment Term, the Executive
shall be entitled to professional and other membership dues and fees.
G. Continuing Education. During the Employment Term, the Executive shall be
entitled to payment for all costs, including reasonable travel, meals and hotel
accommodations, for attending seminars for continuing education credit hours
required to maintain any license. If Executive determines to seek other
certification, such education credits necessary to meet such requirements shall
be paid. All continuing education courses to be selected by Executive.
H. Option Plan. Executive shall be deemed a Key Management Employee and be
entitled to all employee and executive stock option plans.
I. Incentive Compensation. Executive will be an eligible employee for
Incentive Compensation and shall be a member of any Incentive Compensation
Committee established to determine the distribution of any Performance
Distribution payable.
4. DUTIES OF EXECUTIVE
A. The Executive hereby agrees to serve as President and CEO and in such other
additional executive positions as shall be assigned to the Executive. The
Executive agrees to perform such services customary to such offices as shall
from time to time be assigned to the Executive by the Company, and, in the
absence of such assignment, such services customary to such office as are
necessary to the operations of the Company, (the "Executive's Services"). The
Executive shall devote all of his business time and effort to advance the
business objectives of the Company. During the Employment Term, the Executive
shall use his best efforts to discharge his duties under this Employment
Agreement in compliance with applicable federal, state and local laws.
B. The Executive understands and agrees that the Company may from time to time
require Executive to perform services for the related entities, in which event,
the Executive shall perform his obligations under this Employment Agreement as
if such related entities were a party to this Employment Agreement.
Specifically, but without limitation of the foregoing, the provisions of
Section 7 shall apply not only with respect to the Company but also with
respect to the Related Entities for whom the Executive renders services.
5. WORKING FACILITIES. The Company, at its own cost, shall furnish the
Executive with office facilities, technical and secretarial personnel,
supplies, equipment and other facilities and services appropriate to his
position and adequate for the performance of his duties hereunder.
6. TERMINATION. Notwithstanding anything to the contrary herein, this
Employment agreement may be terminated at any time during the Term hereof upon
the earlier occurrence of any of the following events:
A. Mutual written agreement between the Company and the Executive.
B. At the Company's option on thirty (30) days' written notice in the event of
the Executive's Disability, as defined under any disability insurance policy
on the Executive, if the Company carries such insurance, or otherwise meaning
the Executive's inability to continuously perform the Executive's Services
for the Company for a continuous period of ninety (90) days as a result of
adverse health or physical condition as reported by a physician acceptable
to the Executive and the Company, the acceptability of whom shall not be
unreasonably withheld by either party.
C. Upon the death of the Executive.
D. By the Board of Directors for "cause", which shall mean:
i) the Executive has been indicted, criminally charged or deemed guilty by the
Board of Directors of:
(a) fraud, stealing, embezzlement or misappropriation of funds;
(b) a material violation of the provisions hereof;
(c) continuing failure to perform the Executive's duties; or
(d) excessive unexcused absenteeism from work other than for the Executive's
Disability covered in Paragraph 7.B above; or
ii) the conviction of the Executive of
any criminal felony.
E. The Company shall give Executive reasonable written notice and opportunity
to cure any termination for cause based on Paragraph 7.D(1)(b), 7.D.(1)(c)
or 7.D.(1)(d) above.
F. Upon termination of the Executive's employment for cause under Paragraph
7.D.(1)(a) or 7.D.(2) above, the Executive shall be entitled to receive
only the compensation accrued, unpaid and payable as of the date of
termination, and shall not be entitled to additional compensation, bonuses
or benefits, except as otherwise expressly provided herein or required by
law. Upon termination of the Executive's employment for cause for any reason
other than stated in Paragraph 7.D.(1)(a) or 7.D(2) above, the Executive
shall be entitled to receive his Base Salary, exclusive of any bonus
compensation which could be earned for such period, for the Term as if the
Employment agreement were not terminated.
7. EXECUTIVE'S TERMINATION. If the Executive terminated his employment with
the Company, the Executive shall be entitled to receive only such Base Salary
and Paid Vacation Time as has accrued and is payable to the Executive as of
the date of such termination, but no other amounts otherwise payable to the
Executive.
8. CONFIDENTIALITY. The Executive shall execute the Company's standard
employee confidentiality and non-compete agreements required of all employees
of the Company (the "Non-Compete Agreement"). Upon termination of the
Executive's employment for cause for any reason other than stated in
Paragraph 7.A, 7.D.(1)(a) or 7.D.(2) above, the Executive shall be released
from the provisions of the Non-Compete Agreement.
9. FEDERAL INCOME TAX WITHHOLDING. The Company shall withhold from any
benefits payable under this Employment Agreement, or arrange for the payment
of, any federal, state, local or other taxes, as shall be required pursuant
to any law or governmental regulation or ruling.
10. WAIVER. No term or condition of this Employment Agreement shall be deemed
to have been waived, nor shall there be any estoppel against the enforcement of
any provision of this Employment Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such
waiver shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future or as to any
act other than that specifically waived.
11. GOVERNING LAW. This Employment Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without
reference to the conflicts or laws or principals thereof.
12. RELATIONSHIP OF PARTIES. The relationship between the Company and the
Executive shall be that of employer and employee.
13. NOTICES. Any notice required or permitted to be given under this Agreement
shall be effective upon delivery in person or mailing by certified mail, return
receipt requested, to the parties at the addresses below:
TO COMPANY: 71 Stony Hill Rd 2nd Fl (Rte 6) Bethel, CT 06801
TO EXECUTIVE: 71 Stony Hill Rd 2nd Fl (Rte 6) Bethel, CT 06801
or to such other address as either party shall direct by
notice to the other party.
14. ASSIGNMENT. This Employment Agreement and all of Executive's rights, duties
and obligations hereunder are personal in nature and shall not be assignable by
Executive. Any purported assignment thereof shall not be valid or binding on
the Company. This Employment Agreement shall be assignable by the Company
without the prior written consent of Executive. This Employment Agreement
shall inure to the benefit of and shall be legally binding upon all
permitted successors or assigns of the Company.
15. COUNTERPARTS. This Employment Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Employment Agreement
by signing any such counterpart.
16. ENTIRE AGREEMENT. This Employment Agreement, along with any documents
executed contemporaneously with the execution of this Employment Agreement,
constitutes the entire understanding of the parties and supersedes any and all
prior discussions, negotiations, employment agreements and understandings,
whether oral or written, with respect to the subject matter hereof. This
Employment Agreement can be modified only by a written instrument properly
executed by the Executive and the Company.
17. SEVERABILITY. In the event any one or more provisions of this Employment
Agreement shall, for any reasons, be held invalid, illegal or unenforceable,
the remaining provisions of this Employment shall be unimpaired, and the
invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision which comes closest to the
intent of the parties.
18. PREVAILING PARTY'S ATTORNEYS' FEES. If any legal action or other proceeding
is brought for the enforcement of this Employment Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provision of this Employment Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees, sales and use taxes,
court costs and all reasonable expenses, even if not taxable as court costs
(including, without limitation, all such fees, taxes, costs and expenses
incident to arbitration, appellate, bankruptcy, and post-judgment proceedings)
incurred in that action or proceeding, in addition to any other relief to which
such party may be entitled. Attorneys' fees shall include, without limitation,
paralegal fees, investigative fees, administrative costs, sales and use taxes,
and all other charges billed by the attorney to the prevailing party.
19. GOOD FAITH DEALINGS. The parties acknowledge and accept their duties to
deal with each other in good faith in applying the provisions of this
Employment Agreement, including but not limited to those dealing with
termination.
20. IN WITNESS WHEREOF, and intending to be legally bound hereby, Company and
Executive have executed and delivered this Employment Agreement as of the date
and year first above written.
EKomart.com,inc.
By: /s/Stan J.H.Lee/s/
Its : President
Date: ________________________________
/S/ Han S. Shin, Erica Kim, Sonia Kim, Jae Hee Woo
By: _________________________________
Its : _________________________________
Date: _________________________________
(SEAL)
State of Florida
Department of State
I certify from the records of this office that eKomart,
INC. is a corporation organized under the laws of the State of
Florida, filed on February 11, 1997.
The document number of this corporation is P97000013637.
I further certify that said corporation has paid all fees and penalties due
this office through December 31, 2000, and its status is active.
I further certify that said corporation has not filed Articles of Dissolution.
I further certify that this is an electronically transmitted certificate
authorized by section 15.16, Florida Statutes, and authenticated by the code,
100A00050775-092700-P97000013637-l/1, noted below.
Given under my hand and the Great Seal of the State of Florida, at
Tallahassee, the Capital, this the Twelfth day of February, 1997
Authentication Code: 100A00050775-092700-P97000013637-l/1
(SEAL) /s/Katherine Harris/s/
Secretary of State
Amended and Restated
Articles of Incorporation
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
These Amended and Restated Articles of Incorporation were
adopted effective by the Corporation's Board of Directors and shareholders
pursuant to section 607.1007, Florida Statutes. Each amendment set forth in
these Amended and Restated Articles of Incorporation was approved by the
shareholders by a vote sufficient for approval of the amendment. These
Amended and Restated Articles of Incorporation supersede the original
Articles of Incorporation, as amended.
Article I Name
If no old name is listed below, the name of this Florida corporation has not
been changed. If the current/new name listed below differs from the old name,
the current/new name will become effective upon the filing of this document.
Current/New Name: eKomart, Inc.
Old Name: eKomart.com, Inc.
Article II. Address
The mailing address of the Corporation is:
eKomart, Inc.
71 Stony Hill Road, 2nd Floor
Bethel CT 06801
Article III. Board of Directors
The name of each member of the Corporation's Board of Directors is:
Stan J. H. Lee
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the
fullest extent permitted by applicable law.
Article IV Capital Stock
The Corporation shall have the authority to issue 40,000,000 shares of
common stock, par value $.001 per share. In addition, the Corporation shall
have the authority to issue 20,000,000 shares of preferred stock, par value
$.001 per share, which may be divided into series and with the preferences,
limitations and relative rights determined by the Board of Directors.
Article V. Registered Agent
The name and address of the registered agent of the Corporation is:
Corporate Creations International Inc.
941 Fourth Street #200
Miami Beach FL 33139
(305) 672-0686
Article VI. Corporate Existence
The corporate existence of the Corporation will begin effective upon the
filing date of the original Articles of Incorporation.
The undersigned executed these Amended and Restated Articles of
Incorporation on the date shown below.
eKomart.com, Inc., eKomart, Inc.
By: /s/Stan J. H. Lee/s/
Name: Stan J. H. Lee
Title: President
Date: September 26, 2000
CERTIFICATE OF DESIGNATION
REGISTERED AGENT AND REGISTERED OFFICE
CORPORATION:
eKomart, Inc.
REGISTERED AGENT:
Corporate Creations Enterprises, Inc.
941 Fourth Street #200
Miami Beach FL 33139
I agree to act as registered agent to accept service of process for the
corporation named above at the place designated in this Certificate. I agree
to comply with the provisions of all statutes relating to the proper and
complete performance of the registered agent duties. I am familiar with and
accept the obligations of the registered agent position.
/s/Roger A. Reyes/s/, Vice President
Corporate Creations Enterprises, Inc.
Date: September 26, 2000
Exhibit 27
Financial Data Schedule
[ARTICLE] 5
<C >
[PERIOD-TYPE] 9-MOS YEAR YEAR
[FISCAL-YEAR-END] DEC-31-2000 DEC-31-1999 DEC-31-1998
[PERIOD-END] SEP-30-2000 DEC-31-1999 DEC-31-1998
[CASH] 31,936 40,556 105
[SECURITIES] 1,250,000 0 0
[RECEIVABLES] 231,675 229,508 0
[ALLOWANCES] 0 0 0
[INVENTORY] 475,319 45,105 0
[CURRENT-ASSETS] 1,998,930 315,169 105
[PP&E] 1,554,675 1,552,718 0
[DEPRECIATION] (55,645) (5,678) 0
[TOTAL-ASSETS] 5,349,515 3,770,627 105
<CURRENT-
LIABILITIES> 124,950 41,020 0
[BONDS] 0 0 0
[PREFERRED-MANDATORY] 0 0 0
[PREFERRED] 1,250,000 0 300
[COMMON] 9,060 9,060 1,500
[OTHER-SE] 3,007,583 3,052,972 199,200
<TOTAL-LIABILITY
- -AND-EQUITY> 5,349,515 3,770,627 105
[SALES] 1,899,509 957,937 0
[TOTAL-REVENUES] 1,889,509 957,937 0
[CGS] (1,006,740) (634,657) 0
[TOTAL-COSTS] 747,091 269,744 50,197
[OTHER-EXPENSES] 0 0 (150,000)
[LOSS-PROVISION] 0 0 0
[INTEREST-EXPENSE] 0 0 0
[INCOME-PRETAX] 146,678 53,536 (200,197)
[INCOME-TAX] (68,469) (19,043) 0
[INCOME-CONTINUING] 0 0 0
[DISCONTINUED] 0 0 0
[EXTRAORDINARY] 0 0 0
[CHANGES] 0 0 0
[NET-INCOME] 144,828 53,231 (200,197)
[EPS-BASIC] .016 .006 (.118)
[EPS-DILUTED] .016 .006 (.118)
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