-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HE6sB5rhoF843XrY4dcs143Yrki00pkywwwAHttuCTAVl8gj9b6ALFe2RTgI7b5F Uw4eY42AKmMU8Z6F9xQqbw== 0000891020-97-000953.txt : 19970701 0000891020-97-000953.hdr.sgml : 19970701 ACCESSION NUMBER: 0000891020-97-000953 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970630 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMAZON NATURAL TREASURES INC CENTRAL INDEX KEY: 0000844055 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 870460880 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-26109 FILM NUMBER: 97632660 BUSINESS ADDRESS: STREET 1: 4011 WEST OQUENDO ROAD STREET 2: UNIT C CITY: LAS VEGAS STATE: NV ZIP: 89118 BUSINESS PHONE: (702) 795-4333 MAIL ADDRESS: STREET 1: 6020 SOUTH SPENCER ST STREET 2: STE B7 CITY: LAS VEGAS STATE: NV ZIP: 89119 FORMER COMPANY: FORMER CONFORMED NAME: CONCORD CAPITAL INC /UT/ DATE OF NAME CHANGE: 19960306 FORMER COMPANY: FORMER CONFORMED NAME: MULTIMEDIA FACTORY INC DATE OF NAME CHANGE: 19930825 FORMER COMPANY: FORMER CONFORMED NAME: CONCORD CAPITAL INC DATE OF NAME CHANGE: 19920703 10KSB 1 FORM 10KSB 1 FORM 10-KSB SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended - December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission file number 33-26109 AMAZON NATURAL TREASURES, INC. (Exact name of registrant as specified in its charter) UTAH 87-0460880 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 4011 West Oquendo Avenue Suite C Las Vegas, Nevada 89118 (Address of principal executive offices, including zip code.) (702) 795-4333 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) YES [ ] NO [ X ] (2) YES [ X ] NO [ ] Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is contained herein, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy 2 or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] State Issuer's revenues for its most recent fiscal year. December 31, 1996 - $34,975. State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and ask prices of such stock, as of a specified date within the past 60 days. May 31, 1997 - $12,093,347.25. There are approximately 5,374,821 shares of common voting stock of the Registrant held by non-affiliates. During the past five years, there has been non "public market" for the shares of Common Stock of the Registrant, so the Registrant has arbitrarily valued these shares on the basis of par value per share. Issuers involved in Bankruptcy Proceedings during the past Five Years. Not Applicable. State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: May 31, 1997 - 26,237,934 ----------------------- Documents Incorporated by Reference 1. Form S-18 Registration Statement filed with the Securities and Exchange Commission on or about December 13, 1988, and all exhibits thereto. 2. Form S-8 Registration Statement, filed with the Securities and Exchange Commission, which became effective by operation of law on April 1, 1996 and any amendments thereto. 3. Form 8-K dated June 10, 1993 and filed with the Securities and Exchange Commission on August 20, 1993, and all exhibits thereto. 4. Form 8-K-A-1 dated June 10, 1993 and filed with the Securities and Exchange Commission together with all exhibits thereto. 5. Form 8-K filed with the Securities and Exchange Commission and dated April 10, 1996. 6. Form 8-K filed with the Securities and Exchange Commission and dated August 29, 1996. 7. Form 8-K/A filed with the Securities and Exchange Commission on September 6, 1996. 8. Form 10-Q for the period ending March 31, 1996 and any amendments thereto. 9. Form 10-Q for the period ending June 30, 1996 and any amendments thereto. 10. Form 10-Q for the period ending September 31, 1996 and any 3 amendments thereto. Transitional Small Business Issuer Format YES [ x ] NO [ ] TABLE OF CONTENTS Item 1. Description of Business Item 2. Description of Property Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders Item 5. Market for Common Equity and Related Stockholder Matters Item 6. Management's Discussion and Analysis or Plan of Operation Item 7. Financial Statements Item 8. Changes in and Disagreements with Accounting and Financial Disclosure Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) Of the Exchange Act Item 10. Executive Compensation Item 11. Security Ownership of Certain Beneficial Owners and Management Item 12. Certain Relationships and Related Transactions Item 13. Exhibits and Reports on Form 8-K 4 PART I ITEM 1. BUSINESS. Background Amazon Natural Treasures, Inc. (the "Company") was incorporated under the laws of the state of Utah on November 23, 1988, as Concord Capital, Inc., to acquire or merge with an existing business. On March 28, 1996, the Company acquired all of the issued and outstanding shares of common stock of Amazon Natural Treasures, Inc., a Nevada corporation and changed its business purpose to that of importing, developing, manufacturing and selling products derived from plants grown in the Brazilian Amazon Rain Forest. General The Company is engaged in the business of importing phytogenic products for processing and selling in the United States. The products are developed from plants which grow in the Amazon Rain Forest of Brazil. Acquiring the Plants The Company acquires its plants from Amazon Natural Treasures Commercial Importadora Exportadora LTDA ("ANTCIE"), a Brazilian corporation which is owned by Michael Sylver, the Company's President; Rocque Pucci, the Company's Vice President; Rudine Borgato, the Company's Brazilian Counsel; and, Carlos Franco. The transactions between the Company and ANTCIE are more favorable to the Company than can be obtained from independent third parties. ANTCIE acquires its plants from Brazilian Indians who gather the same in the Brazilian Rain Forest where the plants grow wild or from Brazilian plantations where specific plants are grown. ANTCIE is a Brazilian corporation formed for the purpose of transacting business in Brazil. Under Brazilian law, only Brazilian corporations can export or import products from Brazil. Because of the 5 complicated nature of the laws in Brazil, it was expeditious for the Company to have individual shareholders for ANTCIE rather than incorporating ANTCIE as a wholly owned subsidiary of the Company. No fees or compensation are paid to ANTCIE for transacting business in Brazil on behalf of the Company. The Company only reimburses ANTCIE for its out-of-pocket expenses. The Company also acquires semi-processed products through ANTCIE from Indian Coboclos and finished products from third party manufacturers. In the case of the finished products, independent manufacturers are contracted to produce a finished product specifically formulated for use by the Company. Some formulas for types of products (in pill or tea form) have been developed and are owned by Dr. Lorrichio who is the Chairman of the Board of Directors of the Company. Dr. Loricchio has granted a license to the Company to manufacture and sell the Products. There are no patents for the formulas and the same are considered proprietary trade secrets. The Company and Dr. Lorrichio have executed an agreement which prohibits the divulgence of the formulas for the products. In the event that the formulas are released to the public, such action could have an adverse impact upon the financial development of the Company in that third parties would be able to manufacture the pills and teas, subject to acquiring plants from Brazil. Importing and Manufacturing After the plants are acquired by ANTCIE, they are crushed, sterilized and shipped to the Company's Las Vegas clean room. Once in the clean room, the plants and semi-processed products are processed into the final form, such as, tablets, capsules, globules, caps and teas. The contracted finished products are inventoried and stored until sold. The Company processes its own products on site at its facilities in Las Vegas, Nevada. After completion of the foregoing, the products are sold on a retail and a wholesale basis. Retail Distribution The products are to be bottled, boxed and shrink wrapped at the facilities is Las Vegas, Nevada. The products are then shipped to customers in corrugated boxes with bubble wrap to protect the contents. Products and Regulation The Company currently manufactures, distributes and/or formulates a total of seventy-one (71) different phytogenic products. The Company claims that its products are 100% pure (no fillers are added). The products are designed for human consumption. There is no scientific evidence to establish that the products are safe or beneficial for human consumption. The formulation, manufacturing, packaging, storing, labeling, advertising, distribution and sale of the Company's products are 6 subject to regulation by one or more governmental agency, including the Food and Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety Commission ("CPSC"), the United States Department of Agriculture ("USDA"), the Environmental Protection Agency ("EPA") and the United States Postal Service. The Company's activities are also regulated by various agencies of the states, localities and foreign countries in which the Company's products are manufactured, distributed and sold. The government regulations require the Company and its suppliers to meet relevant good manufacturing practice ("GMP") regulations for the preparation, packing and storage of these products. GMP for dietary supplements have yet to be promulgated but are expected to be proposed. The 1994 Dietary Supplement Health and Education Act ("DSHEA") revises the provisions of the Federal Food, Drug and Cosmetic Act ("FFDCA") concerning composition and labeling of dietary supplements and, the Company believes, generally favorable to the dietary supplement industry. The legislation created a new statutory class of "dietary supplements." This new class includes vitamins, minerals, herbs, amino acids and other dietary substances for human use to supplement the diet, and the legislation grandfathers, with certain limitations, dietary ingredients that were on the market before October 15, 1994. A dietary supplement which contains a new dietary ingredient (i.e., not on the market before October 15, 1994) will require evidence of a historical use or other evidence of safety establishing that it is reasonably expected to be safe. Manufacturers of dietary supplements which make a "statement of nutritional support" must have substantiation that the statement is truthful and not misleading. As a marketer of dietary supplements and other products that are ingested by consumers, the Company is subject to the risk that one or more of the ingredients in its products may become the subject of adverse regulatory action. Certain products sold by the Company may be labeled as over-the-counter ("OTC") drugs as opposed to dietary supplements, conventional foods and personal care items. Many OTC drug products do not require pre-approval by the FDA, but must comply with applicable OTC monographs, which prescribe ingredients and appropriate labeling language. In addition, the Company must register and file annual drug listing information with the FDA. Because the FDA could take the position that claims made with respect to any product of the Company fall within an OTC monograph, the regulatory status of some of the Company's products is or could become unclear. If any enforcement were undertaken, the Company could be required to relabel or reformulate such products, which the Company believes could have a material adverse effect on the Company and the sale of such products. The FTC, which exercises jurisdiction over the advertising of all the Company's products, has in the past several years instituted enforcement actions against several dietary supplement companies for false and misleading advertising of certain products. These 7 enforcement actions have resulted in consent decrees and monetary payments by the companies involved. In addition, the FTC has increased its scrutiny of the use of testimonials, which are utilized by the Company. While the Company has not been the target of FTC enforcement action for the advertising of its products, there can be no assurance that the FTC will not question the Company's advertising or other operations in the future. The Company is unable to predict the nature of any future laws, regulations, interpretations or applications, nor can it predict what effect additional governmental regulations or administrative order, when and if promulgated would have on its business in the future. They could, however, require the reformulation of certain products which the Company may not be able to reformulate, imposition of additional record keeping requirements, expanded documentation of the properties of certain products, expanded or different labeling and scientific substantiation regarding product ingredients, safety or usefulness. Any or all of these requirements would have a material adverse effect on the Company's results of operations and financial condition. Product Liability The Company maintains product liability insurance. Because the Company's products are ingested and are/or applied to the customer's body, the potential for injury exists. Compliance Procedures The Company has no compliance procedures. Marketing The Company's marketing plan will include the sale of its products through health magazines. The magazines will furnish the Company with a lists of their subscribers which will allow the Company to personally contact the foregoing individuals. The Company will also market its products through its own catalog. From March 28, 1996 to December 31, 1996, the Company has revenues of $34,975.00. Competition The Company competes with other health and food providers, many of which have greater resources than the Company. Material Contracts On May 28, 1996, the Company entered into a licensing agreement, as amended, wherein, Lorepar, LTD and its controlling persons, Domingos Loricchio, the Company's Chairman of the Board of Directors, Irena Loricchio, his wife, Domingos Loricchio, Jr., his son and Denise Loricchio, his daughter granted an exclusive license to the Company to 8 use certain formulas to manufacture the products being sold by the Company. The license was issued in consideration of 5,610,000 shares of "restricted" common stock and $8,000 per month for a period of five (5) years. As of the date hereof, the Company has paid $29,000.00 On October 4, 1996, the Company entered into an Agreement For Consulting Services with Domingos Loricchio on one hand and RPD, LCC, ("RPD") a California Limited Liability Company owned and controlled by one Dick Dubrule, on the other hand, wherein RPD would be compensated with $200,000 or 10% of the gross monies paid to the Company which ever is greater if RPD raised money for the Company in excess of $1,000,000. Further, RPD would receive 15% of the gross receipts paid to the Company as a result of RPD locating buyers for the products. Further, in the event that the Company seeks assistance from RPD, for any reason, the Company will pay RPD $2,000 per day for such services. Further, the Company agreed to sell 500,000 shares of common stock to RPD at a purchase price of $0.05 per share. RPD assigned it rights to the sale of stock to Dubrule and James Palecek ("Palecek"), an attorney representing Dubrule. Dubrule and Palecek paid the $25,000 and the Company issued 250,000 shares each to Dubrule and Palecek. On October 31, 1996, the Company entered into an employment agreement with Rudine Borgato ("Borgato") wherein Borgato was employed by the Company commencing on November 1, 1996 and ending October 31, 1998. Under the terms of the employment contract, Borgato would be paid a salary of $36,400.00 per year as Vice President of International Affairs. As of the date hereof, the Company has paid Mr. Borgato the sum of $19,000.00. On December 28, 1996, Mr. Borgato was terminated as Vice President of International Affairs. Mr. Borgato continues to furnish services to the Company. On December 10, 1996, the Company entered into an agreement with Dr. Randall W. Robirds, Chiropractic Physician and d/b/a Applied Health Dynamics ("Robirds") wherein the Company agreed to sell products to Robirds at 20% below its suggested retail price. By the terms of the agreement, Robirds cannot resell the products below the Company's suggested retail price. On May 5, 1997, the Company entered into a five year agreement with C.A. Gama Franco ("Franco") wherein Franco was retained by the Company to open an office and/or lab in Manaus, Brazil; obtain all necessary certificates and act as the Company's representative in Manaus, Brazil; hire and supervise all necessary employees; administer operational funds provided by the Company; be responsible the exportation of the Company's products to Las Vegas, Nevada; and, inform the Company of his activities in Brazil. In consideration of the foregoing, the Company agreed to pay Franco the sum of $4,000.00 per month; issued Franco 9,000 "restricted" shares of common stock; pay additional compensation as the Company deems appropriate; issue two round trip airfare tickets between the city of Manaus and Sao Paulo, Brazil; and, pay all of Franco's preapproved expenses. As of the date hereof, the Company has paid Franco $8,000.00. 9 Offices The Company's Las Vegas warehouse, laboratory and offices are located at 4011 West Oquendo Avenue, Suite C, Las Vegas, Nevada 89118 which are leased from David Sawyer for three years, beginning September 24, 1996, pursuant to a written lease. The monthly rental payments are $2,835.00. The Company's leases additional warehouse, laboratory and offices at 3977 West Oquendo Avenue, Suite C, Las Vegas, Nevada 89118 which are leased from Henry Sanchez for three years, beginning September 24, 1996, pursuant to a written lease. The monthly rental payments are $1,860.00. ANTCIE's maintains a Manaus warehouse, laboratory and office at Rua Belem, 1036 Facing Rue Recife, Adrianoplis Manaus, Brazil, which are leased from Lucio Sampaio de Souza for one year with a ten year option pursuant to a written lease. The monthly rental payments are US$800.00. The Company also maintains an office at 470 No. Rivermeade Dr., Unit #7, Concord, Ontario, Canada L4K 3R8. The Company has leased the foregoing premises from Les Freedman in consideration of 15,250 shares of common stock. The lease is oral and is for a period of sixty months. Employees In addition to the Company's officers, the Company employees four full-time employees and one part-time employee. The Company intends to add additional employees as needed. Risk Factors 1. Lack of Compliance with Federal Laws and Regulations. The Company believes that its products may be exempt from many of the regulations of one or more governmental agency, including the Food and Drug Administration ("FDA"), the Federal Trade Commission, the Consumer Product Safety Commission, the United States Department of Agriculture, the Environmental Protection Agency, United States Department of Customs and the United States Postal Service. The Company's further believes it does not have to comply with some, but not all of the regulations of various agencies of the states, localities and foreign countries in which the Company's products are manufactured, distributed and sold. The FDA, in particular may regulate the formulation, manufacture and labeling of foods and dietary supplements, such as those distributed by the Company if applicable unless exempted pursuant to the Dietary Supplement Health and Education Act of 1944 (DSHEA). The Company's legal basis for such is the DSHEA and accordingly, if the Company is incorrect in its position, the Company could be subjected to civil suits, which could result in the termination of the Company's operations. 10 2. Going Concern Qualification. The auditors of the consolidated financial statements of the Company have stated that the financial statements have been prepared on a going-concern basis for the year ended December 31, 1996. That basis of accounting contemplates the realization of assets and the satisfaction of liabilities in the normal course of conducting business operations. As shown in the consolidated financial statements, operations for the year ended December 31, 1995 resulted in a net loss of $238,687, and as of that date the Company had a shareholders' deficit of $2,935. The Company's future is dependent on its ability to continue to obtain additional capital or adequate financing in order to achieve a level of sales adequate to support its operations. 3. No Patents. The Company has not applied for a patent for any of its products. Even if it does however, there can be no assurance that the patent application will be issued as a patent, or the issued patent will provide the Company with significant competitive advantages, or that challenges will not be instituted against the validity or enforceability of any patents owned by the Company or, if instituted, that such challenges will not be successful. See "Item 1. Business." 4. Additional Financing will be Necessary. The adequacy of funds will depend upon (a) the ability of the Company to successfully market its products, (b) the ability of the Company to attain profitable operations, and (c) additional capital needs that may arise to satisfy product demand. There can be no assurance that the Company will be successful in obtaining any additional required financing or that, if such financing is obtained, its terms and conditions will be favorable. 5. Dependence Upon Management. The success of the Company is dependent upon the efforts of the Company's directors and executive officers. The Company has not obtained key-man life insurance coverage on any of its officers or employees. The Company's business could be adversely affected if Dr. Lorrichio, Mr. Sylver or Mr. Pucci, the Chairman of the Board, President and Vice President, respectively, became unable or unwilling to continue to serve in their respective capacities. See "Management" and "Conflicts of Interest." 6. No Dividends Anticipated. At the present time the Company does not anticipate paying dividends, cash or otherwise, on its shares of Common Stock in the foreseeable future. Future dividends will depend on earnings, if any, of the Company, its financial requirements and other factors. 7. Conflicts of Interest. The Directors are associated with Amazon Natural Treasures Commercial Importadora Exportadora LTDA ("ANTCIE"), a Brazilian corporation which is owned by Michael Sylver, the Company's President; Rocque Pucci, the Company's Vice President; Rudine Borgato and Carlos Franco. Further, Domingos Loricchio and Michael Sylver are associated with Abracel USA Ltd. Which has loaned money to the Company. See "Item 1. Business." 11 8. Suitability Standards. The Company recommends that its shares of Common Stock be purchased only by persons who have the knowledge, experience and capacity to evaluate the merits of such a purchase, and who can afford the loss of their entire investment in the shares of Common Stock. 9. Limited of Public Market for Securities. At present, only a limited public market exists for the Company's securities and there is no assurance that a regular trading market will develop. A Shareholder may, therefore, be unable to resell the shares of Common Stock should he or she desire to do so. Furthermore, it is unlikely that a lending institution will accept the Company's shares of Common Stock as pledged collateral for loans unless a regular trading market develops. 10. No Cumulative Voting and Preemptive Rights and Control. There are no preemptive rights in connection with the Company's shares of Common Stock. Shareholders may be further diluted in their percentage ownership of the Company's shares of Common Stock in the event additional shares are issued by the Company in the future. Cumulative voting in the election of Directors is not allowed. Accordingly, the holders of a majority of the shares of Common Stock, present in person or by proxy, will be able to elect all of the Company's Board of Directors. 11. Possible Contingent Liability for Prior Securities Sales of Unregistered Securities. The shares of Common Stock sold to certain of the Company's present shareholders were not registered under the Act or any state securities' laws. The Company believes that such sales did not involve a public offering within the meaning of Section 4(2) of the Act. In the event that an exemption for such sales is later determined not to be available to the Company or that such offerings should be integrated with the public offering, the Company may be required to rescind such sales as are not entitled to any exemption or take such other steps as may be necessary to comply with federal and state securities laws for such sales. The Company does not intend to rescind such sales. 12. Control by Management. Management of the Company controls 79.62% of the Company's outstanding shares of Common Stock and accordingly, will be able to elect all of the directors and thereby direct the policies of the Company. See "Principal Shareholders." ITEM 2. DESCRIPTION OF PROPERTIES. The Company owns no real property. It leases its office space, warehouse space and laboratory facilities from third parties at 4011 West Oquendo Avenue and 3977 West Oquendo Avenue, Las Vegas, Nevada 89118. The Company also leases office space at 470 No. Rivermeade Dr., Unit #7, Concord, Ontario, Canada L4K 3R8. The Company owns the equipment which it uses to manufacture, 12 package and ship products. ITEM 3. LEGAL PROCEEDINGS. The Company is not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against the Company by any federal, state or local governmental agency. Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. One matter was submitted to a vote of shareholders on April 9, 1996, wherein shareholders of the Company approved an amendment to the Company's Articles of Incorporation changing the name of the Company from Concord Capital, Inc. to Amazon Natural Treasures, Inc. The Company intends to re-domicile as a corporation in the State of Nevada. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS. (a) Market Information. The Registrant's securities are traded over-the-counter on the Bulletin Board operated by the National Association of Securities Dealers, Inc. under the symbol AZNT. The table shows the high and low bid of Registrant's Common Stock during the last two fiscal years. Quotations reflect interdealer prices without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. The Registrant's securities began trading actively in April 1996. Since the foregoing date, the high bid has been $2.75 and the low bid has been $2.125.
Bid Quarter Ended High Low March 31, 1997 $2.50 $1.875 December 31, 1996 $1.00 $0.625 September 30, 1996 $1.00 $0.625 June 30, 1996 $1.50 $1.375 March 31, 1996 $-0- $-0- December 31, 1995 $-0- $-0- September 30, 1995 $-0- $-0- June 30, 1995 $-0- $-0- March 31, 1995 $-0- $-0-
13 (b) Holders. As of May 31, 1997, there were approximately 205 holders of the Registrant's Common Stock. This number does not include those beneficial owners whose securities are held in street name. (c) Dividends. The Registrant has never paid a cash dividend on its Common Stock and has no present intention to declare or pay cash dividends on the Common Stock in the foreseeable future. The Registrant intends to retain any earnings which it may realize in the foreseeable future to finance its operations. Future dividends, if any, will depend on earnings, financing requirements and other factors. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. General The Company acquired all of the issued and outstanding shares of common stock of Amazon Natural Treasures, Inc., a Nevada corporation, on March 28, 1996 in exchange for 6,100,000 shares of the Company's common stock. The acquisition effectively changed the Company's operation from a blank check entity to a corporation engaged in the business of importing, developing, manufacturing and selling products derived from plants grown in the Brazilian Amazon Rain Forest. Liquidity and Capital Resources. For the year ended December 31, 1996, operating and financing activities provided(used) $(156,844) and $159,268, respectively. Working capital decreased to $(27,589) primarily due to the lack of adequate revenues generated from the sale of the Company's products. During the 1996 fiscal year, the Company borrowed $109,245 from its officers, directors and others and repaid $67,302 through the issuance of common stock, with a balance of $41,943 remains unpaid. The Company intends to raise additional capital which is needed through the sale of common stock. There can be no assurance that the Company will be successful in the sale of its common stock. In the event that the Company does not generate sufficient sales or raise additional capital, it will have to curtail operations. The Company has no outside line of credit available and is dependent on cash from operations (which it anticipates to be negative for the coming year), contributions by officers and directors, and other financing arrangements to meet its obligations; however, there is no assurance such financing will be available when needed. As of December 31, 1996, the Company did not have any commitments for significant capital expenditures. 14 Results of Operations The Company was a dormant blank check entity on December 31, 1995, and accordingly had limited revenues from brief operations. The Company began operations on March 28, 1996. The Company had a net operation loss in 1996 of $220,710. The major factors contributing to the foregoing loss were: 1) Insufficient revenues; 2) Substantial operation expenses; 3) Cost of goods sold; and, 4) Lack of adequate sales and marketing. Revenues were $34,975 and cost of good sold were $16,727 and operating expenses were $239,052 accounting for a loss from operations of $220,804. Cost of goods sold was $16,727 which was approximately 50% of revenues. Total operating expenses were $239,052 consisting of amortization of existing assets was $1,740; consulting fees $68,950; depreciation $22,475; rent $31,364; travel $41,594; and administrative and general operating expenses $72,929. In order to break even for the calendar year ending December 31, 1997, the Company believes that it will have to increase sales to $1,490,788. The foregoing is only an estimate and is subject to market conditions. The Company does anticipate achieving the foregoing sales. Further, the Company believes that it will have to start paying salaries to existing officers who have to date, worked without receiving compensation. Comparison of year ended December 31, 1995. As stated previously, the Company was a dormant blank check entity for the year ending December 31, 1995, however, earlier in the calendar year 1995, the Company did generate revenues of $6,060 from sample sales. Cost of goods sold was $2,883 and total operation expenses were $21,154 with a loss from operations of $17,977. The foregoing figures should not be used as a comparison with existing figures. ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Financial Statements and Supplementary Data begin on the following page. 15 Amazon Natural Treasures, Inc. (A Development Stage Company) Financial Statements December 31, 1996 & 1995 16 Independent Auditors Report Board of Directors Amazon Natural Treasures, Inc. (A Development Stage Company) I have audited the accompanying balance sheets of Amazon Natural Treasures, Inc., as of December 31, 1996 and 1995, and the related statements of operations, stockholders' equity, and cash flows for the accumulated period June 27, 1995 to December 31, 1996 and the period June 27, 1995 to December 31, 1995, and the year ended December 31, 1996. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 the significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #12 to the financial statements, the Company has an accumulated deficit and a negative net worth at December 31, 1996. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note #12. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In my opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Amazon Natural Treasures, Inc., as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the accumulated period June 27, 1995 to December 31, 1996 and the period June 27, 1995 to December 31, 1995, and the year ended December 31, 1996, in conformity with generally accepted accounting principles. Salt Lake City, Utah April 26, 1997 F-1 17 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) BALANCE SHEETS December 31, 1996 and 1995 ASSETS
1996 1995 Current Assets Cash In Bank $ 1,390 $ 8,122 Stock Subscription Receivable 2,000 -0- Inventory 38,149 7,681 --------- --------- Total Current Assets 41,539 15,803 Property & Equipment Furniture & Equipment 69,435 61,222 Less Accumulated Depreciation (22,475) -0- --------- --------- Total Property & Equipment 46,960 61,222 Other Assets Deposits 5,670 1,694 Organization Costs 7,024 7,844 License & Trademarks 5,000 -0- Deferred Debit -0- 9,521 --------- --------- Total Other Assets 17,694 19,059 --------- --------- Total Assets $ 106,193 $ 96,084 ========= =========
The accompanying notes are an integral part of these financial statements F-2 18 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) BALANCE SHEETS -CONTINUED- December 31, 1996 and 1995 LIABILITIES & STOCKHOLDERS' EQUITY
1996 1995 Current Liabilities Accounts Payable $ 59,549 $ 13,211 Accrued Expenses 1,475 -0- Payroll Taxes 1,161 -0- Customer Deposits 5,000 -0- Short Term Notes Payable 1,943 -0- --------- --------- Total Current Liabilities 69,128 13,211 Long Term Liabilities 40,000 -0- --------- --------- Total Liabilities 109,128 13,211 Stockholders Equity 500,000,000 Common Shares Authorized at $0.001 Par Value 24,664,300 Shares and Shares Issued and Outstanding 24,664 6,400 Paid In Capital 211,088 94,450 Accumulated Deficit in the Development Stage (238,687) (17,977) --------- --------- Total Stockholders' Equity (Deficit) (2,935) 82,873 --------- --------- Total Liabilities & Stockholders' Equity $ 106,193 $ 96,084 ========= =========
The accompanying notes are an integral part of these financial statements F-3 19 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS Accumulated from June 27, 1995 (Inception) to December 31, 1996 and the Year Ended December 31, 1996 and the Period June 27, 1995 to December 31, 1995
Accumulated 1996 1995 Revenues Sales $ 41,035 $ 34,975 $ 6,060 Cost of Goods Sold Beginning Inventory $ -0- $ 7,689 $ -0- Purchases 57,759 47,187 10,572 Ending Inventory 38,149 38,149 7,689 ----------- ----------- ----------- Total Costs of Goods Sold 19,610 16,727 2,883 Operating Expenses Amortization 3,598 1,740 1,827 Consulting Fees 68,950 68,950 -0- Depreciation 22,475 22,475 -0- Rent 36,471 31,364 5,107 Travel 47,727 41,594 6,133 Administrative & General Operating Expenses 80,985 72,929 8,087 ----------- ----------- ----------- Total Operating Expenses 260,206 239,052 21,154 ----------- ----------- ----------- Loss from Operations (238,781) (220,804) (17,977) Other Income Interest Income 94 94 -0- Net Loss $ (238,687) $ (220,710) $ (17,977) =========== =========== =========== Loss Per Share $ (.03) $ (.00) Weighted Average Shares Outstanding 7,583,410 6,400,000
The accompanying notes are an integral part of these financial statements F-4 20 AMAZON NATURAL TREASURES, INC. STATEMENTS OF STOCKHOLDERS' EQUITY (A Development Stage Company) From June 27, 1995 (Inception) to December 31, 1996
Common Stock Paid In Accumulated Shares Amount Capital Deficit Balance, June 27, 1994 97,151 97 71,743 (82,800) Shares Issued for Accounts Payable 1,760 2 48 Capital Contributed by Shareholders 626 Net Loss for Year Ended December 31, 1995 (16,337) Shares Issued for Cash Retro- Actively Restated 116,161 116 16,384 Shares Issued for Services Retro- Actively Restated 10,913 11 299 Shares Issued for Rescission Agreement Retro-Actively Restated 21,121 21 579 Shares Issued for Consulting Fees Retro-Actively Restated 52,894 53 1,450 Shares Issued to Effect Reverse Acquisition of Amazon Natural Treasures, Inc. 6,100,000 6,100 99,850 (17,977) Reverse Purchase Acquisition Note #10 (96,529) 99,137 ---------- ---------- ---------- ---------- Balance, December 31, 1995 6,400,000 6,400 94,450 (17,977) Shares Issued for Cash at $.05 Per Share 500,000 500 24,500
The accompanying notes are an integral part of these financial statements. F-5 21 AMAZON NATURAL TREASURES, INC. STATEMENTS OF STOCKHOLDERS' EQUITY -Continued- (A Development Stage Company) From June 27, 1995 (Inception) to December 31, 1996
Common Stock Paid In Accumulated Shares Amount Capital Deficit Shares Issued for Cash at $0.50 per Share 54,000 54 26,946 Shares Issued to Acquire License & Trademarks 5,000,000 5,000 -0- Shares Issued in Satisfaction of Debt 1,260,360 1,260 5,042 Shares Issued in Satisfaction of Debt 800,000 800 7,200 Shares Issued in Satisfaction of Debt 10,000,000 10,000 43,000 Shares Issued for Services 600,000 600 Shares Issued for Services 50,000 50 9,950 Net Loss for Year Ended December 31, 1996 (220,710) ----------- ----------- ----------- ----------- Balance, December 31, 1996 24,664,360 $ 24,664 $ 211,088 $ (238,687) =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements F-6 22 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS Accumulated from June 27, 1995 (Inception) to December 31, 1996 and the Year Ended December 31, 1996 and the Period June 27, 1995 to December 31, 1995
Accumulated 1996 1995 Cash Flows from Operating Activities Net Loss $(238,687) $(220,710) $ (17,977) Adjustments to Reconcile Net Loss To Cash Used by Operating Activities: Amortization 3,598 1,740 1,827 Depreciation 22,475 22,475 -0- Services Paid for by Issuing Stock in Lieu of Cash 13,013 10,600 2,413 Write Off - Deferred Debt 9,521 9,521 -0- Changes in Operating Assets& Liabilities Increase in Inventory (38,149) (30,468) (7,681) Increase - Accounts Payable 59,549 46,338 13,211 Increase - Accrued Expenses 1,475 1,475 -0- Increase in Payroll Taxes 1,161 1,161 -0- Increase in Customer Deposits 5,000 5,000 -0- Increase in Deposit (5,670) (3,976) (1,694) --------- --------- --------- Net Cash Used by Operating Activities (166,776) (156,844) (9,901) Cash Flows from Investing Activities Organization Costs (10,484) (943) (9,564) Purchase of Equipment (69,435) (8,213) (61,222) --------- --------- --------- Net Cash (Used) Provided by Investing Activities (79,919) (9,156) (70,786)
The accompanying notes are an integral part of these financial statements F-7 23 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS -Continued- Accumulated from June 27, 1995 (Inception) to December 31, 1996 and the Year Ended December 31, 1996 and the Period June 27, 1995 to December 31, 1995
Accumulated 1996 1995 Cash Flows from Financing Activities Increase - Stock Investment (2,000) (2,000) -0- Increase - Long Term Debt 40,000 40,000 -0- Increase in Short Term Notes Payable 1,943 1,943 -0- Sales of Common Stock 140,817 52,000 88,809 Cash From Notes Payable Paid with Stock in Lieu of Cash 67,302 67,302 -0- Shares Adjusted for Rounding 23 23 -0- --------- --------- ------- Net Cash (Used) Provided by Financing Activities 248,085 159,268 88,809 --------- --------- ------- Increase (Decrease) in Cash 1,390 (6,732) 8,122 Cash at Beginning of Period -0- 8,122 -0- --------- --------- ------- Cash at End of Period $ 1,390 $ 1,390 $ 8,122 ========= ========= ======= Disclosures from Operating Activities: Interest $ 1,475 $ 1,475 $ -0- Taxes -0- -0- -0- Significant Non Cash Disclosures Issued 6,100,000 Shares of Common Stock in Exchange for Amazon Natural Treasures, Inc. Issued 5,000,000 Shares of Common Stock for License & Trademarks 5,000 5,000 -0- Issued 12,060,360 Shares of Common Stock In Satisfaction of Debt
The accompanying notes are an integral part of these financial statements F-8 24 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENT NOTE #1 - Corporate History The Company was organized under the laws of the state of Nevada on June 27, 1995, using the name Amazon Natural Treasures, Inc. The Articles of Incorporation authorize the Company to engage in any lawful activity. The Company is currently engaged in the Homeopathic Medicine and Phototherapy Natural Supplements from sources within the Amazon Rain Forest. In March 1996, the Company exchanged all of its issued and outstanding shares for shares of a public company known as Concord Capital, Inc., a Utah Corporation. The exchange was accounted for using the purchase method of accounting. The Stockholders' of Amazon Natural Treasures, Inc., controlled the entity after the purchase. Concord Capital, Inc., was incorporated in 1988, in the state of Utah and was a public entity reporting to the Securities and Exchange Commission. In December 1996, the Company amended its Articles of Incorporation in the State of Nevada. The Company is in the early stages of planned business operations and has not produced revenues deemed to be significant and therefore remains a development stage company. NOTE #2 - Significant Accounting Policies (A) The Company uses the accrual method of accounting. (B) Revenues and directly related expenses are recognized in the period when the goods are shipped to the customer. (C) The Company considers all short term, highly liquid investments that are readily convertible, within three months, to known amounts as cash equivalents. The Company currently has no cash equivalents. (D) Primary Earnings Per Share amounts are based on the weighted average number of shares outstanding at the dates of the financial statements. Fully Diluted Earnings Per Shares shall be shown on stock options and other convertible issues that may be exercised within ten years of the financial statement dates. (E) Inventories: Inventories are stated at the lower of cost, determined by the FIFO method or market. (F) Depreciation: The cost of property and equipment is depreciated over the estimated useful lives of the related assets. The cost of leasehold improvements is depreciated (amortized) over the lesser of the length of the related assets or the estimated lives of the assets. Depreciation is computed on the straight line method for reporting purposes and for tax purposes. (I) Estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. F-9 25 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENT - Continued- NOTE #3 - Income Taxes & Net Operating Loss Carryforwards for Income Tax Purposes The Company has incurred losses that can be carried forward to offset future earnings if conditions of the Internal revenue Codes are met. These losses are as follows:
Year Expiration of Loss Amount Date 1995 $ 17,977 2010 1996 220,804 2011
The Company has adopted FASB 109 to account for income taxes. The Company currently has no issues that create timing differences that would mandate deferred tax expense. Net operating losses would create possible tax assets in future years. Due to the uncertainty as to the utilization of net operating loss carryforwards an evaluation allowance has been made to the extent of any tax benefit that net operating losses may generate.
1996 1995 Current Tax Asset Value of Net Operating Loss Carryforwards at Current Prevailing Federal Tax Rate $ 81,154 $ 2,697 Evaluation Allowance (81,154) (2,697) -------- ------- Net Tax Asset -0- -0- Current Income Tax Expense -0- -0- Deferred Income Tax Benefit -0- -0-
NOTE #4 - Depreciation The Company capitalized the purchase of equipment and fixtures for major purchases in excess of $1,000 per item. Capitalized amounts are depreciated over the useful life of the assets using the straight-line method of depreciation. Scheduled below are the assets, costs, lives, and accumulated depreciations at December 31, 1996 and 1995.
December 31, Depreciation Accumulated 1996 1995 Expenses Depreciation Assets Cost Cost Life 1996 1995 1996 1995 Equipment $17,800 $17,500 5 $ 8,485 $ -0- $ 8,485 $ -0- Clean Room 51,635 43,722 7 13,990 -0- 13,990 -0- ------- ------- ------- ------- ----- ------- ----- Total $ 69,435 $61,222 $22,475 $ -0- $22,475 $ -0-
F-10 26 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENT -Continued- NOTE #5 - Lease Commitments On September 24, 1996, the Company leased an office in Las Vegas, Nevada. The lease requires a security deposit of $5,670, monthly payments of $2,835 and expires on September 30, 1999. Lease payments for the term of the lease are scheduled below.
Year Amount 1996 $ 8,505 1997 34,446 1998 36,168 1999 28,125 --------- Total Obligations $ 107,244 =========
NOTE #6 - Employment Agreement and Consultant Agreement Employment Agreement The Company has an Employment Agreement for the period November 1, 1996, to October 31, 1998. The employee will function as Vice-President of International Affairs. The Agreement obligates the Company for a salary of $36,400 annually and commits the Company to provide the Employee health insurance. The Employee has signed an Agreement of Confidentiality and a Non-Complete Agreement with the Company. Consultant Agreement In May of 1996, the Company issued 5,000,000 shares of its common stock, restricted, to a Nevada Corporation for a license to market and manufacture homeopathic medicine and pythotherapy natural supplements. The Agreement requires an annual payment of $96,000 for five years. Employment and Consultant Agreement obligations are scheduled below.
Year Amount 1996 $ 62,068 1997 132,400 1998 126,362 1999 96,000 2000 96,000 2001 40,000 --------- Total Obligations $ 552,830 =========
F-11 27 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENT -Continued- NOTE #7 - Notes Payable - Related Party Long Term Notes The Company has ten individual long term notes, totaling $40,000, each bearing interest at 8% and maturing between April 1, 1998 to October 1, 1998. The notes are payable to a Corporation controlled by Company Officers. Short Term Notes The Company has notes to three related parties for short terms, or due on demand of $1,943. NOTE #8 - Customer Deposits In November 1996, the Company received a deposit with a Letter of Intent from a Canadian Corporation who seeks to purchase a distributor license from the Company. The total of the license sale is $1,000,000 to be paid in four installments of $250,000 each within one year after the agreement is finalized. The Distributor shall have exclusive rights to Canada and the Caribbean Countries. The Letter of Intent may be finalized at any time within one year of its original date. NOTE #9 - License Agreement The Company has a License to use the trademarks and technologies owned by Lorepar, LTD., a closely held Private Nevada Corporation. The License grants the Company an exclusive license, without the right to sub license, the unique products, licensed patents, and all know how, in the manufacture and sell of all products internationally. The Company issued Lorepar, LTD., and its Officers 5,000,000 shares of its common stock valued at $5,000 (par value of the shares issued). In addition the Company will pay $8,000 monthly for Consultant Fees in Compensation with the products to be manufactured and sold. NOTE #10 - Business Combination In March 1996, the shareholders of Amazon Natural Treasures, Inc. (Amazon), exchanged 100% of the issued an outstanding common stock for 6,100,000 shares of common of Concord Capital, Inc. (Concord), a publicly held Utah Corporation. The exchange gave the shareholders of Amazon 95.31% control of Concord. Concord was incorporated in November 23, 1988 and was a development stage company. Concord had had no operations but during the term of its existence it had expended $99,137.00 in various attempts to find a business operation in which to engage. Because Amazon is the surviving entity after the stock exchange the exchange has been accounted for as a "Reverse Purchase Acquisition." F-12 28 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENT -Continued- NOTE #10 - Business Combination -Continued- Concord had no assets or liabilities immediately prior to the acquisition using the purchase method of accounting the accumulated deficit and paid in capital have been offset and removed from the balance sheets of Amazon. To present fairly the operations of Amazon the financial statements for 1995 have been presented giving retro-active presentation of the acquisition. NOTE #11 - Stock Transaction The Company has issued shares of its common stock for the following business purposes. (A) Issued 600,000 Shares of Restricted Common Stock, to an Officer for services valued at $600 ($.001 per share). (B) Issued 50,000 Shares of Tradeable Stock to Legal Counsel for services valued at $10,000 ($.20 per share). (C) Issued 5,000,000 Shares of Restricted Common Stock to a privately held Nevada Corporation to obtain license and trademarks for products produced from materials found in the Amazon Rain Forest ($.001 per share). (D) Issued 1,260,360 Shares of Restricted Stock to an Officer in satisfaction of $6,302 in debt ($.005 per share). (E) Issued 800,000 Shares of Restricted Common Stock to an Officer in satisfaction of debt of $8,000 ($.01 per share). (F) Issued 10,000,000 Shares of Restricted Common Stock to an Officer in satisfaction of $53,000 in debt ($.0053 per share). (G) Issued 500,000 Shares of Restricted Common Stock for cash of $25,000 ($.05 per share). (H) Issued 54,000 shares of its Restricted Common Stock to an Officer for cash of $27,000 ($.50 per share). NOTE #12 - Going Concern The Company has sustained losses of $238,687 in the term of its existence and currently has a deficit stockholders' equity. The Company currently seeks additional investment capital to provide working capital to fund its planned operations. The Company believes it is not required to comply with regulations promulgated by the Food & Drug Administration and other U.S. Government agencies, that regulate food products, their sale and distribution. It the Company's position is not correct such non compliance could seriously effect the Company's ability to continue as a going concern. F-13 29 AMAZON NATURAL TREASURES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENT -Continued- NOTE #13 - Related Party Transactions Officers of the Company are also officers in a Brazilian Corporation. The Company acquires plants and plant products from the Brazilian Corporation are more favorable to the Company than could be obtained from independent third parties. NOTE #14 - Possible Contingent Liability for Prior Securities Sales of Unregistered Securities The shares of common stock sold to certain of the Company's present shareholders were not registered under the Act of any state securities' laws. The Company believes that such sales did not involve a public offering within the meaning of Section 4(2) of the Act. In the event that an exemption for such sales is later determined not to be available to the Company or that such offerings should be integrated with the public offering, the Company may be required to rescind such sales as are not entitled to any exemption or take such other steps as may be necessary to comply with federal and state securities laws for such sales. The Company doe snot intend to rescind such sales, but if required to rescind, the Company will be required to refund $714,914 in cash in certain of its present shareholders. F-14 30 AMAZON NATURAL TREASURES, INC. SUPPLEMENTAL INFORMATION For the Years Ended December 31, 1996 and 1995 FS-1 31 ACCOUNTANT'S OPINION ON SUPPLEMENTARY INFORMATION My audit of the basic financial statements presented in the preceding section of this report was made primarily to form an opinion on such financial statements taken as a whole. Supplementary information, contained in the following page, is not considered essential for the fair presentation of the financial position of the Company, the results of its operations or the statements of cash flows in conformity with generally accepted accounting principles. However, the following data was subjected to the audit procedures applied in the examination of the basic financial statements, and, in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Schvaneveldt & Company Schvaneveldt & Company April 26, 1997 FS-2 32 AMAZON NATURAL TREASURES, INC. SCHEDULE OF ADMINISTRATIVE & GENERAL EXPENSES For the Years Ended December 31, 1996 and 1995
1996 1995 Accounting & Legal $16,592 $ -0- Advertising 2,622 2,732 Auto Expenses 3,634 -0- Bank Charges 1,792 -0- Contract Labor 5,389 -0- Dues & Subscriptions 650 -0- Entertainment 5,748 -0- Interest Expenses 1,475 -0- Insurance 828 -0- Office Expenses 7,637 -0- Postage 1,454 -0- Repairs & Maintenance 4,100 -0- Wages 5,000 -0- Taxes - Payroll 573 -0- Telephone 12,997 3,768 Utilities 1,053 -0- Miscellaneous 1,385 1,587 ------- ------- Total Administrative & General Expenses $72,929 $ 8,087 ======= =======
FS-4 33 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None; not applicable. ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Identification of Directors and Executive Officers. The following table sets forth the names and nature of all positions and offices held by all directors and executive officers of the Company for the calendar year ending December 31, 1996, and tot he date hereof, and the period or periods during which each such director or executive officer served in his or her respective positions.
Date of Date of Position Election of Termination Name Held Designation or Resignation Sam Bono President 11/94 3/96 Director 11/94 3/96 Treasurer 8/95 3/96 Sam Hagopin Vice President 8/95 1/96 Corporate Development Director 8/95 1/96 Sheryl Ross Secretary/Treasurer 11/94 8/95 Director 11/94 8/95
34 Carol Novick Secretary 8/95 3/96 Director 11/94 3/96 Domingos Lorrichio Chairman of Board 3/96 1 Vice President 3/96 1 Michael Sylver Presidnet 3/96 1 CEO 3/96 1 Director 3/96 1 Robert Qualey Secretary/Treasurer 3/96 1 CFO & Director 3/96 1 Domingos Lorrichio II Vice President 3/96 1 Rocque Pucci Vice President 3/96 1 Rudine Borgato Vice President 11/96 12/96
[1] These person presently serve in the capacities indicated opposite their respective names. Term of Office The terms of office of the current directors continue until the annual meeting of stockholders, which the Bylaws provide shall be held on the third Friday of November of each year; officers are elected at the annual meeting of the board of directors, which immediately follows the annual meeting of stockholders. Business Experience Domingos Loricchio - Chairman of the Board of Directors. Mr. Loricchio has been Chairman of the Board of Directors of the Company since March 1996. Since 1975, Mr. Loricchio has been the President of ABRACEL INDUSTRIA E COMERCIO, LTDA, in Sao Paulo, Brazil. Prior to 1975, Mr. Loricchio was employed by Carborundum Company, in research and development in their San Paulo plant. Mr. Loricchio holds a degree in chemistry from the Sorbonne - University of Paris. Michael A. Sylver - President, Chief Executive Officer and a member of the Board of Directors Mr. Sylver has over 20 years of executive level management, having formed and operated several innovative management companies in the United States and Canada. His management expertise created and development Energy Management Corporation into, what was at one time, the largest independent company in Nevada. 35 Robert S. Qualey - Secretary/Treasurer, Chief Financial Officer and a member of the Board of Directors. Mr. Qualey has been Secretary/Treasurer, Chief Financial Officer and a member of the Board of Directors since March 28, 1996. Since September 1988, Mr. Qualey has been practicing attorney, licensed to practice in the state of Nevada. Since May 1992, Mr. Qualey has served as a Judge Pro Tem in Las Vegas, Nevada. Mr. Qualey holds a Masters degree in Business Administration from the University of Nevada at Las Vegas (1985) and the degree of Juris Doctor from Pepperdine University (1988). Domingos Loricchio II - Senior Executive Vice President In March 1996, Mr. Loricchio became the Senior Executive Vice President of the Company. Since July 1985, Mr. Loricchio has been the manager of Abracel, Ltd. of Brazil. Abracel manufactures products primarily designed for road surface applications. Mr. Loricchio graduated from the University of San Paulo, Brazil with a degree in Chemical Engineering. Rocque Pucci - Executive Vice President. Mr. Pucci served a combination of seven years in the United States Army and Army Reserve, rising from private to captain after earning an appointment to Officer Candidate School; his duty assignments included a tour in Vietnam. Mr. Pucci has eighteen years of bank and financial management experience in addition to over three years of business consulting background. He graduated magna cum laude from St. Joseph's College, Philadelphia, Pennsylvania, where he earned a Bachelor of Science in Business Administration. Family Relationships There are currently no family relationships between any directors or executive officers of the Company, either by blood or happenstance of marriage, other than Domingos Lorrichio, the Company's Chairman of the Board of Directors, who is the father of Domingos Lorrichio, II, the Company's Senior Executive Vice President. Involvement in Certain Legal Proceedings During the past five years, no present or former director, executive officer or person nominated to become a director or an executive officer of the Company has been the subject matter of any legal proceedings, including bankruptcy, criminal proceedings, or civil proceedings. Further, no legal proceedings are known to be contemplated by governmental authorities against any director, executive officer and person nominated to become a director. Compliance with Section 16(a) of the Exchange Act. 36 No securities of the Company are registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, and the Company files reports under Section 15(d) of the Securities Exchange Act of 1934; accordingly, directors, executive officers and ten percent stockholders are not required to make filings under Section 16 of the Securities Exchange Act of 1934. ITEM 10. EXECUTIVE COMPENSATION. The following table sets forth the aggregate compensation paid by the Company for services rendered during the period indicated: SUMMARY COMPENSATION TABLE
Long Term Compensation Compensation Annual Compensation Awards Payouts (a) (b) (c) (d) (e) (f) (g) (h) (i) Other Name Annual LTIP and Stock Restricted Other All Principal $ $ Compen Awards Options/ Payouts Compen- Position Year Salary Bonus sation($) $ SAR's(#) ($) sation $ December 31 Sam Bono 1996 $ -0- $0 $0 $ 0 0 $0 $0 President 1995 $ -0- $0 $0 $ 0 0 $0 $0 Treasurer & 1994 $ -0- $0 $0 $ 0 0 $0 $0 Director [1] Sam December 31 Hagopian 1996 $ -0- $0 $0 $ 0 0 $0 $0 VP & 1995 $ -0- $0 $0 $ 0 0 $0 $0 Director 1994 $ -0- $0 $0 $ 0 0 $0 $0 [1] December 31 Sheryl Ross 1996 $ -0- $0 $0 $ 0 0 $0 $0 Sec/Treas 1995 $ -0- $0 $0 $ 0 0 $0 $0 Director 1994 $ -0- $0 $0 $ 0 0 $0 $0 [1] Carol December 31 Novick 1996 $ -0- $0 $0 $ 0 0 $0 $0 Director 1995 $ -0- $0 $0 $ 0 0 $0 $0 [1] 1994 $ -0- $0 $0 $ 0 0 $0 $0 Domingos December 31 Lorrichio 1996 $ -0- $0 $0 $ 0 0 $0 $0 Chairman & VP Michael December 31 Sylver 1996 $ -0- $0 $0 $ 0 0 $0 $0 President CEO & Director Robert December 31 Qualey 1996 $ -0- $0 $0 $ 0 0 $0 $0
37 Sec/Treas & Director Domingos December 31 Lorrichio II 1996 $ -0- $0 $0 $ 0 0 $0 $0 Vice President Rocque December 31 Pucci 1996 $ -0- $0 $0 $ 0 0 $0 $0 Vice President Rudine December 31 Borgato 1996 $5,000 $0 $0 $ 0 0 $0 $0 VP [1] Named Executive Officers None n/a $5,000 n/a n/a n/a n/a n/a n/a
[1] These officers and directors have resigned. Cash Compensation. No cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to the Company's management during the calendar years ended December 31, 1996, 1995 or 1994, or the period ending on the date of this Report. Further, no member of the Company's management has been granted any option or stock appreciation right; accordingly, no tables relating to such items have been included within this Item. See the "Summary Compensation Table" of this Item. Compensation of Directors. The Company's Board of Directors unanimously resolved that directors receive no compensation for their services; however, they are reimbursed for travel expenses incurred in serving on the Board of Directors. No additional amounts are payable to the Company's directors for committee participation or special assignments. Termination of Employment and Change of Control Arrangements. There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in the Summary Compensation Table set out above which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of such person's employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person's responsibilities following a change in control of the Company. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 38 Security Ownership of Certain Beneficial Owners The following table sets forth the shareholdings of those persons who own more than five percent of the Company's Common Stock as of December 31, 1994, 1995 and 1996:
Name and address of owner 12/31/94 [1] 12/31/95 [1] 12/31/96 [2] Falcon Group[3] 3,600,000 - 53.3% 200,000 - 2.9% [4] c/o Bnorman Watt 2031 Quincy Avenue Gloucester, Ontario Canada K1J 6B2 Sam Hagopian 225,000 - 3.3% 1,554,820 - 22.0% [4] 815 Sugar Crk Blvd Sugar Land, TX Rockport Trading 42,000 - 0.62% 463,172 - 6.6% [4] P. O. Box 2097 Grand Cayman, B.W.I. Domingos Loricchio -0- -0- 2,610,000 - 9.95% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Michael Sylver -0- -0- 12,164,813 - 46.36% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Robert Qualey -0- -0- 1,220,000 - 4.65% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Domingos Loricchio II -0- -0- 1,500,000 - 5.72% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Rocque Pucci -0- -0- 1,868,300 - 7.12% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Gary Sylver -0- -0- 2,039,000 - 7.77% P. O. Box 96083 Las Vegas, NV 89183 Denise Loricchio -0- -0- 1,500,000 - 5.72% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 TOTAL 3,867,000 - 57.3% 2,217,992 - 57.3% 22,902,113 - 87.29%
39 [1] Does not reflect 1 for 28.4087 reverse stock split which occurred on March 27, 1996. [2] Reflects 1 for 28.4087 reverse stock split which occurred on March 27, 1996. [3] The number and percentage of ownership for the year ended December 31, 1995, assumes that the Falcon Plan had been rescinded pursuant to the Rescission Agreement; that all shares to be issued or cancelled pursuant to the Recession Agreement had been issued or cancelled, with an additional 600,000 "unregistered" and "restricted" shares being required to be issued under the Rescission Agreement being deemed to be outstanding; that 3,300,000 "unregistered" and "restricted" shares had been issued pursuant to a private placement; and that 310,000 "unregistered" and "restricted" shares had been issued to directors and executive officers, for a total outstanding of 7,019,933. See Item 1 of Form 10-KSB, for the year ending December 31, 1995, filed with the Commission which is incorporated herein be reference. [4] No longer owner of 5% or more of the shares of Common Stock. Security Ownership of Management The following table sets forth the shareholdings of the Company's directors and executive officer as of December 31, 1994, 1995 and 1996.
Number and Percentage of Shares Beneficially Owned Name & address 12/31/94 [1] 12/31/95 [1] 12/31/96 [2] Sam Bono -0- 100,000 - 1.4% [4] 11949 FM 3005 Suite 403 Galveston, TX 77554 Brent Burningham -0- -0- [4] 1752 E. Sunrise Park Circle Salt Lake City, UT 84093 Sharleen Burningham -0- -0- [4] 1752 E. Sunrise Park Circle Salt Lake City, UT 84093 William Cooper 9,138 - 0.01% 9,138 - 0.01% [4] 1752 E. Sunrise Park Circle Salt Lake City, UT 84093 Sam Hagopian 225,000 - 3.3% 1,554,820 - 22.0% [4] 815 Sugar Crk Blvd Sugar Land, TX 77478
40 Carol Novick -0- 100,000 - 1.4% [4] 12633 Memorial Dr Suite 123 Houston, TX 77024 Sheryl Ross -0- 100,000 - 1.4% [4] 455 E. 500 South Suite 205 Salt Lake City, UT 84111 Domingos Loricchio -0- -0- 2,610,000 - 9.95% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Michael Sylver -0- -0- 12,164,813 - 46.35% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Robert Qualey -0- -0- 1,220,000 - 4.65% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Domingos Loricchio II -0- -0- 1,500,000 - 5.72% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Rocque Pucci -0- -0- 1,868,300 - 7.12% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 Rudine Borgato -0- -0- 1,000 - 6.00% 4011 W. Oquendo Ave. Suite C Las Vegas, NV 89118 TOTALS 234,138 - 3.5% 1,863,958 - 27.0% 19,364,113 - 73.72%
[1] Does not reflect 1 for 28.4087 reverse stock split which occurred on March 27, 1996. [2] Reflects 1 for 28.4087 reverse stock split which occurred on March 27, 1996. [3] The number and percentage of ownership for the year ended December 31, 1995, assumes that the Falcon Plan had been rescinded pursuant to the Rescission Agreement; that all shares to be issued or cancelled pursuant to the Recession Agreement had been issued or cancelled, with an additional 600,000 "unregistered" and "restricted" shares being required to be issued under the Rescission Agreement being deemed to be outstanding; that 3,300,000 "unregistered" and "restricted" shares had been issued 41 pursuant to a private placement; and that 310,000 "unregistered" and "restricted" shares had been issued to directors and executive officers, for a total outstanding of 7,019,933. See Item 1 of Form 10-KSB, for the year ending December 31, 1995, filed with the Commission which is incorporated herein be reference [4] No longer current management. Changes in Control To the knowledge of management, there are no present arrangements or pledges of securities of the Company which may result in a change in control of the Company. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Registrant has engaged in no transactions with management or others in which the amount involved exceeds $60,000 other than the following: a. On March 28, 1996, the Company issued 6,100,000 shares of "restricted" common stock to thirteen (13) persons in exchange for all of the issued and outstanding shares of common stock (40,000,000) of Amazon Natural Treasures, Inc., a Nevada corporation. Domingos Loricchio, the Company's Chairman of the Board of Directors received 4,000,000 shares thereof; Michael Sylver, the Company's President was issued 13,967,110 shares thereof; and, Robert Qualey, the Company's secretary received 8,000,000 shares thereof. b. On March 29, 1996, Rocque Pucci purchased 54,000 "restricted" shares of the Company's common stock in consideration of $27,000. c. On March 29, 1996, the Company issued 1,260,360 shares of "restricted" common stock to Rocque Pucci as full payment of a debt owed by the Company to Mr. Pucci. The debt owed to Mr. Pucci was $6,302 and the debt was incurred as a result of a loan to the Company. d. On April 1, 1996, the Company filed a Form S-8 registration statement with the Securities and Exchange Commission (the "Commission") which became effective by operation of law on the same date. The Form S-8 registered a non-qualified incentive stock option plan. On April 1, 1996, the Company granted Gary Sylver, the father of Michael Sylver, the Company's President, an option to acquire 400,000 shares of common stock at an exercise price of $0.0001 per share. Mr. Sylver's options were issued in connection with his consulting agreement wherein Mr. Sylver, a U.S. Customs Agent, renders advice to the Company regarding compliance with U.S. customs laws. Gary Sylver has exercised all of the options and has been issued 400,000 shares of common stock without restrictions. e. On May 28, 1996, the Company issued 5,000,000 "restricted" shares of common stock to Domingos Lorrichio, the Company's Chairman of 42 the Board of Directors in consideration of the acquisition of the certain formulas relating to the Company's products. Dr. Loricchio transferred 1,500,000 shares thereof to Domingos Loricchio II, a Vice President of the Company; and 1,500,000 shares to Denise Loricchio. f. On December 6, 1996, the Company issued to Conrad C. Lysiak, an option to purchase 50,000 shares of the Company's common stock at an exercise price of $0.001 per share. The foregoing option was granted to Mr. Lysiak in consideration of legal services rendered to the Company valued at $10,000. Mr. Lysiak exercised the option and was issued 50,000 shares of common stock. g. On December 10, 1996, the Company issued 10,000,000 "restricted" shares of common stock to Michael Sylver, the Company's President, in payment of a debt owed by the Company to Mr. Sylver. The amount of the debt was $53,000 and the debt was incurred as a result of a loan by Michael Sylver to the Company. h. On December 10, 1996, the Company issued 250,000 "restricted" shares of common stock to Dick Dubrule and 250,000 "restricted" shares of common stock to James Palecek as partial performance of an agreement between the Company, Dr. Domingos Loricchio and RPD, LLC, a California Limited Partnership. See "Item 1 - Business." i. On April 21, 1997, the Company issued 600,000 "restricted" shares of common stock to Gary Sylver in payment of a debt owed by the Company to Gary Sylver. The amount of the debt was $6,000.00 as a result of a loan by Gary Sylver to the Company. j. From April 1996 through October 1996, Abracel USA Ltd., a corporation owned and controlled by Domingos Loricchio and Michael Sylver, loaned the Company $39,000.00. PART IV ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K. Reports on Form 8-K No reports on Form 8-K have been filed during the last quarter of the period covered by this report. Exhibits
Exhibit No. Description 3.1 Articles of Incorporation of the Company (incorporated by reference to Exhibit 1.1 to the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No. 33-26109).
43 3.2 Bylaws of the Company (incorporated by reference to Exhibit 1.1 to the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No. 33-26109). 4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 1.1 to the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No. 33-26109). 10.1 Agreement and Plan of Reorganization (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K, dated April 10, 1996). 10.2 Lease Contract between David L. Sawyer and Sally Sawyer and the Company, dated September 24, 1996. 10.3 Lease Contract between Lucio Sampaio de Souza and Amazon Natural Treasures Commercial Importadora Exportadora LTDA, dated September 20, 1996. 10.4 Lease Contract between Henry and Shirley Sanchez and the Company, dated January 8, 1997. 10.5 Agreement between C.A. GAMA FRANCO and the Company, dated May 5, 1996. 10.6 Agreement between Loripar, Ltd. and the Company, dated May 28, 1996. 10.7 Amendment to Agreement between Loripar, Ltd. and the Company, dated May 28, 1996. 10.8 Consulting Agreement between the Company and Dr. Domingos Loricchio, dated September 16, 1996. 10.9 Employment Agreement between the Company and Rudine Borgato, dated November 1, 1998. 10.10 Retail Merchandise Purchase and Sales Agreement between the Company and Dr. Randall W. Robirds, dated December 10, 1996. 24.1 Consent of Independent Auditor 27 Financial Data Schedule
44 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this ____ day of June, 1997. AMAZON NATURAL TREASURES, INC. (Registrant) BY:_____________________________________ President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on this _____ day of June, 1997. SIGNATURES TITLE - ----------------------------- Chairman of the Board of Domingos Loricchio Directors. - ----------------------------- President, Chief Executive Michael A. Sylver Officer and a member of the Board of Directors - ----------------------------- Secretary/Treasurer, Chief Robert S. Qualey Financial Officer and a member of the Board of Directors. - ----------------------------- Senior Executive Vice President Domingos Loricchio II 45 - ----------------------------- Executive Vice President. Rocque Pucci SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT. No annual report material has been forwarded to securities holders of the Registrant during the period covered by this report or for the previous five calendar years ended December 31; however, if any annual report or proxy material is furnished to security holders in connection with the annual meeting stockholders to be held in 1997, a copy of any such annual report or proxy materials shall be forwarded to the Commission when it is forwarded to security holders. 46 EXHIBIT INDEX
Exhibit Number Description Page 3.2 Bylaws of the Company (incorporated by reference to Exhibit 1.1 to the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No. 33-26109). 4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 1.1 to the Registrant's Registration Statement on S-18 and Form 10-KSB, SEC File No. 33-26109). 10.1 Agreement and Plan of Reorganization (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K, dated April 10, 1996). 10.2 Lease Contract between David L. Sawyer and Sally Sawyer and the Company, dated September 24, 1996. 10.3 Lease Contract between Lucio Sampaio de Souza and Amazon Natural Treasures Commercial Importadora Exportadora LTDA, dated September 20, 1996. 10.4 Lease Contract between Henry and Shirley Sanchez and the Company, dated January 8, 1997. 10.5 Agreement between C.A. GAMA FRANCO and the Company, dated May 5, 1996. 10.6 Agreement between Loripar, Ltd. and the Company, dated May 28, 1996. 10.7 Amendment to Agreement between Loripar, Ltd. and the Company, dated May 28, 1996. 10.8 Consulting Agreement between the Company and Dr. Domingos Loricchio, dated September 16, 1996. 10.9 Employment Agreement between the Company and Rudine Borgato, dated November 1, 1998. 10.10 Retail Merchandise Purchase and Sales Agreement between the Company and Dr. Randall W. Robirds, dated December 10, 1996. 24.1 Consent of Independent Auditor 27 Financial Data Schedule
EX-10.2 2 LEASE CONTRACT BETWEEN DAVID AND SALLY SAWYER 1 EXHIBIT 10.2 INDUSTRIAL REAL ESTATE LEASE ARTICLE ONE: BASIC TERMS This Article One contains the Basic Terms of this Lease between the Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the Lease referred to in this Article One explain and define the Basic Terms and are to be read in conjunction with the Basic Terms. Section 1.01. Date of Lease: September 24, 1996 Section 1.02. Landlord (include legal entity): David L. Sawyer and Sally A. Sawyer Address of Landlord: 3272 Crystal Palm Court, Las Vegas, Nevada 89117 Section 1.03. Tenant(include legal entity): Amazon Natural Treasures, Inc. Address of Tenant: 4011 W. Oquendo Road Unit C. Las Vegas, Nevada Section 1.04. Property: The Property is part of Landlord's multi-tenant real property development known as Oquendo Center and described or depicted in Exhibit "A" (the "Project"). The Project includes the land, the buildings and all other improvements located on the land, and the common areas described in Paragraph 4.05(a). The Property is (include street address, approximate square footage and description) 4011 W. Oquendo Road is a + 15,746 square foot multi tenant industrial complex. Suite C consists of 5,154 sq. ft. of space with 1,596 sq. ft. of finished office. Section 1.05. Lease Term: -3- years -0- months beginning on October 1, 1996 or such other date as is specified in this Lease, and ending on September 30, 1999. Section 1.06. Permitted Uses: (See Article Five) Sales, storage and distribution of vitamin products. Section 1.07. Tenant's Guarantor: (If none, so state) None Section 1.08. See Duties Owed By A Nevada Real Estate Licensee Section 1.09. Commission Payable to Landlord's Broker: (See Article Fourteen) Per separate agreement dated May 6, 1996. Section 1.10. Initial Security Deposit: (See Section 3.03) $5,670.00. 2 2 Section 1.11. Vehicle Parking Spaces Allocated to Tenant: (See Section 4.05) ten (10). Section 1.12. Rent and Other Charges Payable by Tenant: (a) BASE RENT: Two Thousand Eight Hundred Thirty-Five and no/100 Dollars ($2,835.00) per month for the first twelve months, as provided in Section 3.01, and shall be increased on the first day of the month(s) after the Commencement Date, either (i) as provided in Section 3.02, or (ii) 13th - 24th month rent: $2.977.00 25th - 36th month rent: $3,125.00 (If (ii) is completed, then (i)and Section 3.02 are inapplicable.) (b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes above the "Base Real Property Taxes" (See Section 4.02); (ii) Utilities (See Section 4.03); (iii) Increased Insurance Premiums above "Base Premiums" (See Section 4.04); (iv) Tenant's Initial Pro Rata Share of Common Area Expenses .33 % (See Section 4.05); (v) Impounds for Tenant's Share of Insurance Premiums and Property Taxes (See Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article Six). Section 1.13. Costs and Charges Payable by Landlord: (a) Base Real Property Taxes (See Section 4.02); (b) Base Insurance Premiums (See Section 4.04(c)); (c) Maintenance and Repair (See Article Six). Section 1.14. Landlord's Share of Profit on Assignment or Sublease: (See Section 9.05) One Hundred Percent (100%) of the Profit (the "Landlord's Share"). Section 1.15. Riders: The following Riders are attached to and made a part of this Lease: (If none, so state). ARTICLE TWO: LEASE TERM Section 2.01. Lease of Property For Lease Term. Landlord leases the Property to Tenant and Tenant leases the Property from Landlord for the Lease Term. The Lease Term is for the period stated in Section 1.05 above and shall begin and end on the dates specified in Section 1.05 above, unless the beginning or end of the Lease Term is changed under any provision of this Lease. The "Commencement Date" shall be the date specified in Section 1.05 above for the beginning of the Lease Term, unless advanced or delayed under any provision of this Lease. Section 2.02. Delay in Commencement. Landlord shall not be liable to Tenant if Landlord does not deliver possession of the Property to Tenant on the Commencement Date. Landlord's non-delivery of the Property to Tenant on that date shall not affect this Lease or the obligations of Tenant under this Lease except that the Commencement Date shall be delayed until Landlord 3 3 delivers possession of the Property to Tenant and the Lease Term shall be extended for a period equal to the delay in delivery of possession of the Property to Tenant, plus the number of days necessary to end the Lease Term on the last day of a month. If Landlord does not deliver possession of the Property to Tenant within sixty (60) days after the Commencement Date, Tenant may elect to cancel this Lease by giving written notice to Landlord within ten (10) days after the sixty (60) -day period ends. If Tenant gives such notice, the Lease shall be cancelled and neither Landlord nor Tenant shall have any further obligations to the other. If Tenant does not give such notice, Tenant's right to cancel the Lease shall expire and the Lease Term shall commence upon the delivery of possession of the Property to Tenant. If delivery of possession of the Property to Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to this Lease setting forth the actual Commencement Date and expiration date of the Lease. Failure to execute such amendment shall not affect the actual Commencement Date and expiration date of the Lease. Section 2.03. Early Occupancy. If Tenant occupies the Property prior to the Commencement Date, Tenant's occupancy of the Property shall be subject to all of the provisions of this Lease. Early occupancy of the Property shall not advance the expiration date of this Lease. Tenant shall pay Base Rent and all other charges specified in this Lease for the early occupancy period. Section 2.04. Holding Over. Tenant shall vacate the Property upon the expiration or earlier termination of this Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages which Landlord incurs from Tenant's delay in vacating the Property. If Tenant does not vacate the Property upon the expiration or earlier termination of the Lease and Landlord thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall be a "month-to-month" tenancy, subject to all of the terms of this Lease applicable to a month-to-month tenancy, except that the Base Rent then in effect shall be increased by twenty-five percent (25%). ARTICLE THREE: BASE RENT Section 3.01. Time and Manner of Payment. Upon execution of this Lease, Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph 1.12(a) above for the first month of the Lease Term. On the first day of the second month of the Lease Term and each month thereafter, Tenant shall pay Landlord the Base Rent, in advance, without offset, deduction or prior demand. The Base Rent shall be payable at Landlord's address or at such other place as Landlord may designate in writing. 4 4 Section 3.02. Cost of Living Increases. The Base Rent shall be increased on each date (the "Rental Adjustment Date") stated in Paragraph 1.12(a) above in accordance with the increase in the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (all items for the geographical Statistical Area in which the Property is located on the basis of 1982-1984 = 100) (the "Index") as follows: (a) The Base Rent (the "Comparison Base Rent") in effect immediately before each Rental Adjustment Date shall be increased by the percentage that the Index has increased from the date (the "Comparison Date") on which payment of the Comparison Base Rent began through the month in which the applicable Rental Adjustment Date occurs. The Base Rent shall not be reduced by reason of such computation. Landlord shall notify Tenant of each increase by a written statement which shall include the Index for the applicable Comparison Date, the Index for the applicable Rental Adjustment Date, the percentage increase between those two Indices, and the new Base Rent. Any increase in the Base Rent provided for in this Section 3.02 shall be subject to any minimum or maximum increase, if provided for in Paragraph 1.12(a). (b) Tenant shall pay the new Base Rent from the applicable Rental Adjustment Date until the next Rental Adjustment Date. Landlord's notice may be given after the applicable Rental Adjustment Date of the increase, and Tenant shall pay Landlord the accrued rental adjustment for the months elapsed between the effective date of the increase and Landlord's notice of such increase within ten (10) days after Landlord's notice. If the format or components of the Index are materially changed after the Commencement Date, Landlord shall substitute an index which is published by the Bureau of Labor Statistics or similar agency and which is most nearly equivalent to the Index in effect on the Commencement Date. The substitute index shall be used to calculate the increase in the Base Rent unless Tenant objects to such index in writing within fifteen (15) days after receipt of Landlord's notice. If Tenant objects, Landlord and Tenant shall submit the selection of the substitute index for binding arbitration in accordance with the rules and regulations of the American Arbitration Association at its office closest to the Property. The costs of arbitration shall be borne equally by Landlord and Tenant. Section 3.03. Security Deposit; Increases. (a) Upon the execution of this Lease, Tenant shall deposit with Landlord a cash Security Deposit in the amount set forth in Section 1.10 above. Landlord may apply all or part of the Security Deposit to any unpaid rent or other charges due from Tenant or to cure any other defaults of Tenant. If Landlord uses any part of the Security Deposit, Tenant shall restore the Security Deposit to its full amount within ten (10) days after 5 5 Landlord's written request. Tenant's failure to do so shall be a material default under this Lease. No interest shall be paid on the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts and no trust relationship is created with respect to the Security Deposit. (b) Each time the Base Rent is increased, Tenant shall deposit additional funds with Landlord sufficient to increase the Security Deposit to an amount which bears the same relationship to the adjusted Base Rent as the initial Security Deposit bore to the initial Base Rent. Section 3.04. Termination; Advance Payments. Upon termination of this Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation) or any other termination not resulting from Tenant's default, and after Tenant has vacated the Property in the manner required by this Lease, Landlord shall refund or credit to Tenant (or Tenant's successor) the unused portion of the Security Deposit, any advance rent or other advance payments made by Tenant to Landlord, and any amounts paid for real property taxes and other reserves which apply to any time periods after termination of the Lease. ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT Section 4.01. Additional Rent. All charges payable by Tenant other than Base Rent are called "Additional Rent". Unless this Lease provides otherwise, Tenant shall pay all Additional Rent then due with the next monthly installment of Base Rent. The term "rent" shall mean Base Rent and Additional Rent. Section 4.02. Property Taxes. (a) Real Property Taxes. Landlord shall pay the "Base Real Property Taxes" on the Property during the Lease Term. Base Real Property Taxes are real property taxes applicable to the Property as shown on the tax bill for the most recent tax fiscal year ending prior to the Commencement Date. However, if the structures on the Property are not completed by the tax lien date of such tax fiscal year, the Base Real Property Taxes are the taxes shown on the first tax bill showing the full assessed value of the Property after completion of the structures. Tenant shall pay Landlord the amount, if any, by which the real property taxes during the Lease Term exceed the Base Real Property Taxes. Subject to Paragraph 4.02(c), Tenant shall make such payments within fifteen (15) days after receipt of Landlord's statement showing the amount and computation of such increase. Landlord shall reimburse Tenant for any real property taxes paid by Tenant covering any period of time prior to or after the Lease Term. 6 6 (b) Definition of "Real Property Tax." "Real property tax" means: (i) any fee, license fee, license tax, business license fee, commercial rental tax, levy, charge, assessment, penalty or tax imposed by any taxing authority against the Property; (ii) any tax on the Landlord's right to receive, or the receipt of, rent or income from the Property or against Landlord's business of leasing the Property; (iii) any tax or charge for fire protection, streets, sidewalks, road maintenance, refuse or other services provided to the Property by any governmental agency; (iv) any tax imposed upon this transaction or based upon a re-assessment of the Property due to a change of ownership, as defined by applicable law, or other transfer of all or part of Landlord's interest in the Property; and (v) any charge or fee replacing any tax previously included within the definition of real property tax. "Real property tax" does not, however, include Landlord's federal or state income, franchise, inheritance or estate taxes. (c) Joint Assessment. If the Property is not separately assessed, Landlord shall reasonably determine Tenant's share of the real property tax payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or other reasonably available information. Tenant shall pay such share to Landlord within fifteen (15) days after receipt of Landlord's written statement. (d) Personal Property Taxes. (i) Tenant shall pay all taxes charged against trade fixtures, furnishings, equipment or any other personal property belonging to Tenant. Tenant shall try to have personal property taxed separately from the Property. (ii) If any of Tenant's personal property is taxed with the Property, Tenant shall pay Landlord the taxes for the personal property within fifteen (15) days after Tenant receives a written statement from Landlord for such personal property taxes. Section 4.03. Utilities. Tenant shall pay, directly to the appropriate supplier, the cost of all natural gas, heat, light, power, sewer service, telephone, water, refuse disposal and other utilities and services supplied to the Property. However, if any services or utilities are jointly metered with other property, Landlord shall make a reasonable determination of Tenant's proportionate share of the cost of such utilities and services and Tenant shall pay such share to Landlord within fifteen (15) days after receipt of Landlord's written statement. 7 7 Section 4.04. Insurance Policies. (a) Liability Insurance. During the Lease Term, Tenant shall maintain a policy of commercial general liability insurance (sometimes known as broad form comprehensive general liability insurance) insuring Tenant against liability for bodily injury, property damage (including loss of use of property) and personal injury arising out of the operation, use or occupancy of the Property. Tenant shall name Landlord as an additional insured under such policy. The initial amount of such insurance shall be One Million Dollars ($1,000,000) per occurrence and shall be subject to periodic increase based upon inflation, increased liability awards, recommendation of Landlord's professional insurance advisers and other relevant factors. The liability insurance obtained by Tenant under this Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii) contain cross-liability endorsements; and (iii) insure Landlord against Tenant's performance under Section 5.05, if the matters giving rise to the indemnity under Section 5.05 result from the negligence of Tenant. The amount and coverage of such insurance shall not limit Tenant's liability nor relieve Tenant of any other obligation under this Lease. Landlord may also obtain comprehensive public liability insurance in an amount and with coverage determined by Landlord insuring Landlord against liability arising out of ownership, operation, use or occupancy of the Property. The policy obtained by Landlord shall not be contributory and shall not provide primary insurance. (b) Property and Rental Income Insurance. During the Lease Term, Landlord shall maintain policies of insurance covering loss of or damage to the Property in the full amount of its replacement value. Such policy shall contain an Inflation Guard Endorsement and shall provide protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk), sprinkler leakage and any other perils which Landlord deems reasonably necessary. Landlord shall have the right to obtain flood and earthquake insurance if required by lender holding a security interest in the Property. Landlord shall not obtain insurance for Tenant's fixtures or equipment or building improvements installed by Tenant on the Property. During the Lease Term, Landlord shall also maintain a rental income insurance policy, with loss payable to Landlord, in an amount equal to one year's Base Rent, plus estimated real property taxes and insurance premiums. Tenant shall be liable for the payment of any deductible amount under Landlord's or Tenant's insurance policies maintained pursuant to this Section 4.04, in an amount not to exceed Ten Thousand Dollars ($10,000.00). Tenant shall not do or permit anything to be done which invalidates any such insurance policies. 8 8 (c) Payment of Premiums. (i) Landlord shall pay the "Base Premiums" for the insurance policies maintained by Landlord under Paragraph 4.04(b). If the Property has been previously fully occupied, the "Base Premiums" are the insurance premiums paid during or applicable to the last twelve (12) months of such prior occupancy. If the Property has not been previously fully occupied or has been occupied for less than twelve (12) months, the Base Premiums are the lowest annual premiums reasonably obtainable for the required insurance for the Property as of the Commencement Date. (ii) Tenant shall pay Landlord the amount, if any, by which the insurance premiums for all policies maintained by Landlord under Paragraph 4.04(b) have increased over the Base Premiums, whether such increases result from the nature of Tenant's occupancy, any act or omission of Tenant, the requirement of any lender referred to in Article Eleven (Protection of Lenders), the increased value of the Property or general rate increases. However, if Landlord substantially increases the amount of insurance carried or the percentage of insured value after the period during which the Base Premiums were calculated, Tenant shall only pay Landlord the amount of increased premiums which would have been charged by the insurance carrier if the amount of insurance or percentage of insured value had not been substantially increased by Landlord. This adjustment in the amount due from Tenant shall be made only once during the Lease Term. Thereafter, Tenant shall be obligated to pay the full amount of any additional increases in the insurance premiums, including increases resulting from any further increases in the amount of insurance or percentage of insured value. Subject to Section 4.05, Tenant shall pay Landlord the increases over the Base Premiums within fifteen (15) days after receipt by Tenant of a copy of the premium statement or other evidence of the amount due. If the insurance policies maintained by Landlord cover improvements or real property other than the Property, Landlord shall also deliver to Tenant a statement of the amount of the premiums applicable to the Property showing, in reasonable detail, how such amount was computed. If the Lease Term expires before the expiration of the insurance period, Tenant's liability shall be pro rated on an annual basis. (d) General Insurance Provisions. (i) Any insurance which Tenant is required to maintain under this Lease shall include a provision which requires the insurance carrier to give Landlord not less than thirty (30) days' written notice prior to any cancellation or modification of such coverage. 9 9 (ii) If Tenant fails to deliver any policy, certificate or renewal to Landlord required under this Lease within the prescribed time period or if any such policy is cancelled or modified during the Lease Term without Landlord's consent, Landlord may obtain such insurance, in which case Tenant shall reimburse Landlord for the cost of such insurance within fifteen (15) days after receipt of a statement that indicates the cost of such insurance. (iii) Tenant shall maintain all insurance required under this Lease with companies holding a "General Policy Rating" of A-12 or better, as set forth in the most current issue of "Best Key Rating Guide". Landlord and Tenant acknowledge the insurance markets are rapidly changing and that insurance in the form and amounts described in this Section 4.04 may not be available in the future. Tenant acknowledges that the insurance described in this Section 4.04 is for the primary benefit of Landlord. If at any time during the Lease Term, Tenant is unable to maintain the insurance required under the Lease, Tenant shall nevertheless maintain insurance coverage which is customary and commercially reasonable in the insurance industry for Tenant's type of business, as that coverage may change from time to time. Landlord makes no representation as to the adequacy of such insurance to protect Landlord's or Tenant's interests. Therefore, Tenant shall obtain any such additional property or liability insurance which Tenant deems necessary to protect Landlord and Tenant. (iv) Unless prohibited under any applicable insurance policies maintained, Landlord and Tenant each hereby waive any and all rights of recovery against the other, or against the officers, employees, agents or representatives of the other, for loss of or damage to its property or the property of others under its control, if such loss or damage is covered by any insurance policy in force (whether or not described in this Lease) at the time of such loss or damage. Upon obtaining the required policies of insurance, Landlord and Tenant shall give notice to the insurance carriers of this mutual waiver of subrogation. Section 4.05. Common Areas; Use, Maintenance and Costs. (a) Common Areas. As used in this Lease, "Common Areas" shall mean all areas within the Project which are available for the common use of tenants of the Project and which are not leased or held for the exclusive use of Tenant or other tenants, including, but not limited to, parking areas, driveways, sidewalks, loading areas, access roads, corridors, landscaping and planted areas. Landlord, from time to time, may change the size, location, nature and use of any of the Common Areas, convert Common Areas into leasable areas, construct additional parking facilities (including parking structures) in the Common Areas, and increase or decrease Common Area land and/or 10 10 facilities. Tenant acknowledges that such activities may result in inconvenience to Tenant. Such activities and changes are permitted if they do not materially affect Tenant's use of the Property. (b) Use of Common Areas. Tenant shall have the nonexclusive right (in common with other tenants and all others to whom Landlord has granted or may grant such rights) to use the Common Areas for the purposes intended, subject to such reasonable rules and regulations as Landlord may establish from time to time. Tenant shall abide by such rules and regulations and shall use its best effort to cause others who use the Common Areas with Tenant's express or implied permission to abide by Landlord's rules and regulations. At any time, Landlord may close any Common Areas to perform any acts in the Common Areas as, in Landlord's judgment, are desirable to improve the Project. Tenant shall not interfere with the rights of Landlord, other tenants or any other person entitled to use the Common Areas. (c) Specific Provision re: Vehicle Parking. Tenant shall be entitled to use the number of vehicle parking spaces in the Project allocated to Tenant in Section 1.11 of the Lease without paying shall not be reserved and shall be limited to vehicles no larger than standard size automobiles or pickup utility vehicles. Tenant shall not cause large trucks or other large vehicles to be parked within the Project or on the adjacent public streets. Temporary parking of large delivery vehicles in the Project may be permitted by the rules and regulations established by Landlord. Vehicles shall be parked only in striped parking spaces and not in driveways, loading areas or other locations not specifically designated for parking. Handicapped spaces shall only be used by those legally permitted to use them. If Tenant parks more vehicles in the parking area than the number set forth in Section 1.11 of this Lease, such conduct shall be a material breach of this Lease. In addition to Landlord's other remedies under the Lease, Tenant shall pay a daily charge determined by Landlord for each additional vehicle. (d) Maintenance of Common Areas. Landlord shall maintain the Common Areas in good order, condition and repair and shall operate the Project, in Landlord's sole discretion, as a first-class industrial/commercial real property development. Tenant shall pay Tenant's pro rata share (as determined below) of all costs incurred by Landlord for the operation and maintenance of the Common Areas. Common Area costs include, but are not limited to, costs and expenses for the following: gardening and landscaping; utilities, water and sewage charges; maintenance of signs (other than tenants' signs); premiums for liability, property damage, fire and other types of casualty insurance on the Common Areas and worker's compensation insurance; all property taxes and assessments levied on or attributable to the Common Areas and all Common Area improvements; all personal 11 11 property taxes levied on or attributable to personal property used in connection with the Common Areas; straight-line depreciation on personal property owned by Landlord which is consumed in the operation or maintenance of the Common Areas; rental or lease payments paid by Landlord for rented or leased personal property used in the operation or maintenance of the Common Areas; fees for required licenses and permits; repairing, resurfacing, repaving, maintaining, painting, lighting, cleaning, refuse removal, security and similar items; reserves for roof replacement and exterior painting and other appropriate reserves; and a reasonable allowance to Landlord for Landlord's supervision of the Common Areas (not to exceed five percent (5%) of the gross rents of the Project for the calendar year). Landlord may cause any or all of such services to be provided by third parties and the cost of such services shall be included in Common Area costs. Common Area costs shall not include depreciation of real property which forms part of the Common Areas. (e) Tenant's Share and Payment. Tenant shall pay Tenant's annual pro rata share of all Common Area costs (prorated for any fractional month) upon written notice from Landlord that such costs are due and payable, and in any event prior to delinquency. Tenant's pro rata share shall be calculated by dividing the square foot area of the Property, as set forth in Section 1.04 of the Lease, by the aggregate square foot area of the Project which is leased or held for lease by tenants, as of the date on which the computation is made. Tenant's initial pro rata share is set out in Paragraph 1.12(b). Any changes in the Common Area costs and/or the aggregate area of the Project leased or held for lease during the Lease Term shall be effective on the first day of the month after such change occurs. Landlord may, at Landlord's election, estimate in advance and charge to Tenant as Common Area costs, all real property taxes for which Tenant is liable under Section 4.02 of the Lease, all insurance premiums for which Tenant is liable under Section 4.04 of the Lease, all maintenance and repair costs for which Tenant is liable under Section 6.04 of the Lease, and all other Common Area costs payable by Tenant hereunder. At Landlord's election, such statements of estimated Common Area costs shall be delivered monthly, quarterly or at any other periodic intervals to be designated by Landlord. Landlord may adjust such estimates at any time based upon Landlord's experience and reasonable anticipation of costs. Such adjustments shall be effective as of the next rent payment date after notice to Tenant. Within sixty (60) days after the end of each calendar year of the Lease Term, Landlord shall deliver to Tenant a statement prepared in accordance with generally accepted accounting principles setting forth, in reasonable detail, the Common Area costs paid or incurred by Landlord during the preceding calendar year and Tenant's pro rata share. Upon receipt of such statement, there shall be an adjustment between Landlord and Tenant, with payment to or credit given by Landlord (as the case may be) so that Landlord shall receive the entire amount of Tenant's share of such costs and expenses for such period. 12 12 Section 4.06. Late Charges. Tenant's failure to pay rent promptly may cause Landlord to incur unanticipated costs. The exact amount of such costs are impractical or extremely difficult to ascertain. Such costs may include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord by any ground lease, mortgage or trust deed encumbering the Property. Therefore, if Landlord does not receive any rent payment within ten (10) days after it becomes due, Tenant shall pay Landlord a late charge equal to ten percent (10%) of the overdue amount. The parties agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of such late payment. Section 4.07. Interest on Past Due Obligations. Any amount owed by Tenant to Landlord which is not paid when due shall bear interest at the rate of fifteen percent (15%) per annum from the due date of such amount. However, interest shall not be payable on late charges to be paid by Tenant under this Lease. The payment of interest on such amounts shall not excuse or cure any default by Tenant under this Lease. If the interest rate specified in this Lease is higher than the rate permitted by law, the interest rate is hereby decreased to the maximum legal interest rate permitted by law. Section 4.08. Impounds for Insurance Premiums and Real Property Taxes. If requested by any ground lessor or lender to whom Landlord has granted a security interest in the Property, or if Tenant is more than ten (10) days late in the payment of rent more than once in any consecutive twelve (12)-month period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the annual real property taxes and insurance premiums payable by Tenant under this Lease, together with each payment of Base Rent. Landlord shall hold such payments in a non- interest bearing impound account. If unknown, Landlord shall reasonably estimate the amount of real property taxes and insurance premiums when due. Tenant shall pay any deficiency of funds in the impound account to Landlord upon written request. If Tenant defaults under this Lease, Landlord may apply any funds in the impound account to any obligation then due under this Lease. ARTICLE FIVE: USE OF PROPERTY Section 5.01. Permitted Uses. Tenant may use the Property only for the Permitted Uses set forth in Section 1.06 above. Section 5.02. Manner of Use. Tenant shall not cause or permit the Property to be used in any way which constitutes a violation of any law, ordinance, or governmental regulation or order, which annoys or interferes with the rights of tenants of the Project, or which constitutes a nuisance or waste. Tenant shall obtain and pay for all permits, including a Certificate of Occupancy, required for Tenant's occupancy of the Property and 13 13 shall promptly take all actions necessary to comply with all applicable statutes, ordinances, rules, regulations, orders and requirements regulating the use by Tenant of the Property, including the Occupational Safety and Health Act. Section 5.03. Hazardous Materials. As used in this Lease, the term "Hazardous Material" means any flammable items, explosives, radioactive materials, hazardous or toxic substances, material or waste or related materials, including any substances defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", or "toxic substances" now or subsequently regulated under any applicable federal, state or local laws or regulations, including without limitation petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia compounds and other chemical products, asbestos, PCBs and similar compounds, and including any different products and materials which are subsequently found to have adverse effects on the environment or the health and safety of persons. Tenant shall not cause or permit any Hazardous Material to be generated, produced, brought upon, used, stored, treated or disposed of in or about the Property by Tenant, its agents, employees, contractors, sublessees or invitees without the prior written consent of Landlord. Landlord shall be entitled to take into account such other factors or facts as Landlord may reasonably determine to be relevant in determining whether to grant or withhold consent to Tenant's proposed activity with respect to Hazardous Material. In no event, however, shall Landlord be required to consent to the installation or use of any storage tanks on the Property. Section 5.04. Signs and Auctions. Tenant shall not place any signs on the Property without Landlord's prior written consent. Tenant shall not conduct or permit any auctions or sheriff's sales at the Property. Section 5.05. Indemnity. Tenant shall indemnify Landlord against and hold Landlord harmless from any and all costs, claims or liability arising from: (a) Tenant's use of the Property; (b) the conduct of Tenant's business or anything else done or permitted by Tenant to be done in or about the Property, including any contamination of the Property or any other property resulting from the presence or use of Hazardous Material caused or permitted by Tenant; (c) any breach or default in the performance of Tenant's obligations under this Lease; (d) any misrepresentation or breach of warranty by Tenant under this Lease; or (e) other acts or omissions of Tenant. Tenant shall defend Landlord against any such cost, claim or liability at Tenant's expense with counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any legal fees or costs incurred by Landlord in connection with any such claim. As a material part of the consideration to Landlord, Tenant assumes all risk of damage to property or injury 14 14 to persons in or about the Property arising from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, except for any claim arising out of Landlord's gross negligence or willful misconduct. As used in this Section, the term "Tenant" shall include Tenant's employees, agents, contractors and invitees, if applicable. Section 5.06. Landlord's Access. Landlord or its agents may enter the Property at all reasonable times to show the Property to potential buyers, investors or tenants or other parties; to do any other act or to inspect and conduct tests in order to monitor Tenant's compliance with all applicable environmental laws and all laws governing the presence and use of Hazardous Material; or for any other purpose Landlord deems necessary. Landlord shall give Tenant prior notice of such entry, except in the case of an emergency. Landlord may place customary "For Sale" or "For Lease" signs on the Property. Section 5.07. Quiet Possession. If Tenant pays the rent and complies with all other terms of this Lease, Tenant may occupy and enjoy the Property for the full Lease Term, subject to the provisions of this Lease. ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS Section 6.01. Existing Conditions. Tenant accepts the Property in its condition as of the execution of the Lease, subject to all recorded matters, laws, ordinances, and governmental regulations and orders. Except as provided herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation as to the condition of the Property or the suitability of the Property for Tenant's intended use. Tenant represents and warrants that Tenant has made its own inspection of and inquiry regarding the condition of the Property and is not relying on any representations of Landlord or any Broker with respect thereto. If Landlord or Landlord's Broker has provided a Property Information Sheet or other Disclosure Statement regarding the Property, a copy is attached as an exhibit to the Lease. Section 6.02. Exemption of Landlord from Liability. Landlord shall not be liable for any damage or injury to the person, business (or any loss of income therefrom), goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers or any other person in or about the Property, whether such damage or injury is caused by or results from: (a) fire, steam, electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or any other cause; (c) conditions arising in or about the Property or upon other portions of the Project, or from other 15 15 sources or places; or (d) any act or omission of any other tenant of the Project. Landlord shall not be liable for any such damage or injury even though the cause of or the means of repairing such damage or injury are not accessible to Tenant. The provisions of this Section 6.02 shall not, however, exempt Landlord from liability for Landlord's gross negligence or willful misconduct. Section 6.03. Landlord's Obligations. Subject to the provisions of Article Seven (Damage or Destruction) and Article Eight (Condemnation), and except for damage caused by any act or omission of Tenant, or Tenant's employees, agents, contractors or invitees, Landlord shall keep the foundation, roof and structural portions of exterior walls of the improvements on the Property in good order, condition and repair. However, Landlord shall not be obligated to maintain or repair windows, doors, plate glass or the surfaces of walls. Landlord shall not be obligated to make any repairs under this Section 6.03 until a reasonable time after receipt of a written notice from Tenant of the need for such repairs. Tenant waives the benefit of any present or future law which might give Tenant the right to repair the Property at Landlord's expense or to terminate the Lease because of the condition of the Property. Section 6.04. Tenant's Obligations. (a) Except as provided in Section 6.03, Article Seven (Damage or Destruction) and Article Eight (Condemnation), Tenant shall keep all portions of the Property (including structural, nonstructural, interior, systems and equipment) in good order, condition and repair (including interior repainting and refinishing, as needed). If any portion of the Property or any system or equipment in the Property which Tenant is obligated to repair cannot be fully repaired or restored, Tenant shall promptly replace such portion of the Property or system or equipment in the Property, regardless of whether the benefit of such replacement extends beyond the Lease Term; but if the benefit or useful life of such replacement extends beyond the Lease Term (as such term may be extended by exercise of any options), the useful life of such replacement shall be prorated over the remaining Lease Term (as extended). Tenant shall maintain a preventive maintenance contract providing for the regular inspection and maintenance of the heating and air conditioning system by a licensed heating and air conditioning contractor. Landlord shall have the right, upon written notice to Tenant, to undertake the responsibility for preventive maintenance of the heating and air conditioning system at Tenant's expense. In addition, Tenant shall, at Tenant's expense, repair any damage to the roof, foundation or structural portions of walls caused by Tenant's acts or omissions. It is the intention of Landlord and Tenant that, at all times during the Lease Term, Tenant shall maintain the Property in an attractive, first-class and fully operative condition. 16 16 (b) Tenant shall fulfill all of Tenant's obligations under this Section 6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or replace the Property as required by this Section 6.04, Landlord may, upon ten (10) days' prior notice to Tenant (except that no notice shall be required in the case of an emergency), enter the Property and perform such maintenance or repair (including replacement, as needed) on behalf of Tenant. In such case, Tenant shall reimburse Landlord for all costs incurred in performing such maintenance or repair immediately upon demand. Section 6.05. Alterations, Additions, and Improvements. (a) Tenant shall not make any alterations, additions, or improvements to the Property without Landlord's prior written consent, except for non-structural alterations which do not exceed Ten Thousand Dollars ($10,000) in cost cumulatively over the Lease Term and which are not visible from the outside of any building of which the Property is part. Landlord may require Tenant to provide demolition and/or lien and completion bonds in form and amount satisfactory to Landlord. Tenant shall promptly remove any alterations, additions, or improvements constructed in violation of this Paragraph 6.05(a) upon Landlord's written request. All alterations, additions, and improvements shall be done in a good and workmanlike manner, in conformity with all applicable laws and regulations, and by a contractor approved by Landlord. Upon completion of any such work, Tenant shall provide Landlord with "as built" plans, copies of all construction contracts, and proof of payment for all labor and materials. (b) Tenant shall pay when due all claims for labor and material furnished to the Property. Tenant shall give Landlord at least twenty (20) days' prior written notice of the commencement of any work on the Property, regardless of whether Landlord's consent to such work is required. Landlord may elect to record and post notices of non-responsibility on the Property. Section 6.06. Condition upon Termination. Upon the termination of the Lease, Tenant shall surrender the Property to Landlord, broom clean and in the same condition as received except for ordinary wear and tear which Tenant was not otherwise obligated to remedy under any provision of this Lease. However, Tenant shall not be obligated to repair any damage which Landlord is required to repair under Article Seven (Damage or Destruction). In addition, Landlord may require Tenant to remove any alterations, additions or improvements (whether or not made with Landlord's consent) prior to the expiration of the Lease and to restore the Property to its prior condition, all at Tenant's expense. All alterations, additions and improvements which Landlord has not required Tenant to remove shall become Landlord's property and shall be surrendered to Landlord upon the expiration or earlier termination of the Lease, except that Tenant may remove any of Tenant's machinery or equipment which 17 17 can be removed without material damage to the Property. Tenant shall repair, at Tenant's expense, any damage to the Property caused by the removal of any such machinery or equipment. In no event, however, shall Tenant remove any of the following materials or equipment (which shall be deemed Landlord's property) without Landlord's prior written consent: any power wiring or power panels; lighting or lighting fixtures; wall coverings; drapes, blinds or other window coverings; carpets or other floor coverings; heaters, air conditioners or any other heating or air conditioning equipment; fencing or security gates; or other similar building operating equipment and decorations. ARTICLE SEVEN: DAMAGE OR DESTRUCTION Section 7.01. Partial Damage to Property. (a) Tenant shall notify Landlord in writing immediately upon the occurrence of any damage to the Property. If the Property is only partially damaged (i.e., less than fifty percent (50%) of the Property is untenantable as a result of such damage or less than fifty percent (50%) of Tenant's operations are materially impaired) and if the proceeds received by Landlord from the insurance policies described in Paragraph 4.04(b) are sufficient to pay for the necessary repairs, this Lease shall remain in effect and Landlord shall repair the damage as soon as reasonably possible. Landlord may elect (but is not required) to repair any damage to Tenant's fixtures, equipment, or improvements. (b) If the insurance proceeds received by Landlord are not sufficient to pay the entire cost of repair, or if the cause of the damage is not covered by the insurance policies which Landlord maintains under Paragraph 4.04(b), Landlord may elect either to (i) repair the damage as soon as reasonably possible, in which case this Lease shall remain in full force and effect, or (ii) terminate this Lease as of the date the damage occurred. Landlord shall notify Tenant within thirty (30) days after receipt of notice of the occurrence of the damage whether Landlord elects to repair the damage or terminate the Lease. If Landlord elects to repair the damage, Tenant shall pay Landlord the "deductible amount" (if any) under Landlord's insurance policies and, if the damage was due to an act or omission of Tenant, or Tenant's employees, agents, contractors or invitees, the difference between the actual cost of repair and any insurance proceeds received by Landlord. If Landlord elects to terminate the Lease, Tenant may elect to continue this Lease in full force and effect, in which case Tenant shall repair any damage to the Property and any building in which the Property is located. Tenant shall pay the cost of such repairs, except that upon satisfactory completion of such repairs, Landlord shall deliver to Tenant any insurance proceeds received by Landlord for the damage repaired by Tenant. Tenant shall give Landlord written notice of such election within ten (10) days after receiving Landlord's termination notice. 18 18 (c) If the damage to the Property occurs during the last six (6) months of the Lease Term and such damage will require more than thirty (30) days to repair, either Landlord or Tenant may elect to terminate this Lease as of the date the damage occurred, regardless of the sufficiency of any insurance proceeds. The party electing to terminate this Lease shall give written notification to the other party of such election within thirty (30) days after Tenant's notice to Landlord of the occurrence of the damage. Section 7.02. Substantial or Total Destruction. If the Property is substantially or totally destroyed by any cause whatsoever (i.e., the damage to the Property is greater than partial damage as described in Section 7.01), and regardless of whether Landlord receives any insurance proceeds, this Lease shall terminate as of the date the destruction occurred. Notwithstanding the preceding sentence, if the Property can be rebuilt within six (6) months after the date of destruction, Landlord may elect to rebuild the Property at Landlord's own expense, in which case this Lease shall remain in full force and effect. Landlord shall notify Tenant of such election within thirty (30) days after Tenant's notice of the occurrence of total or substantial destruction. If Landlord so elects, Landlord shall rebuild the Property at Landlord's sole expense, except that if the destruction was caused by an act or omission of Tenant, Tenant shall pay Landlord the difference between the actual cost of rebuilding and any insurance proceeds received by Landlord. Section 7.03. Temporary Reduction of Rent. If the Property is destroyed or damaged and Landlord or Tenant repairs or restores the Property pursuant to the provisions of this Article Seven, any rent payable during the period of such damage, repair and/or restoration shall be reduced according to the degree, if any, to which Tenant's use of the Property is impaired. However, the reduction shall not exceed the sum of one year's payment of Base Rent, insurance premiums and real property taxes. Except for such possible reduction in Base Rent, insurance premiums and real property taxes, Tenant shall not be entitled to any compensation, reduction, or reimbursement from Landlord as a result of any damage, destruction, repair, or restoration of or to the Property. Section 7.04. Waiver. Tenant waives the protection of any statute, code or judicial decision which grants a tenant the right to terminate a lease in the event of the substantial or total destruction of the leased property. Tenant agrees that the provisions of Section 7.02 above shall govern the rights and obligations of Landlord and Tenant in the event of any substantial or total destruction to the Property. 19 19 ARTICLE EIGHT: CONDEMNATION If all or any portion of the Property is taken under the power of eminent domain or sold under the threat of that power (all of which are called "Condemnation"), this Lease shall terminate as to the part taken or sold on the date the condemning authority takes title or possession, whichever occurs first. If more than twenty percent (20%) of the floor area of the building in which the Property is located, or which is located on the Property, is taken, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes title or possession, by delivering written notice to the other within ten (10) days after receipt of written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority takes title or possession). If neither Landlord nor Tenant terminates this Lease, this Lease shall remain in effect as to the portion of the Property not taken, except that the Base Rent and Additional Rent shall be reduced in proportion to the reduction in the floor area of the Property. Any Condemnation award or payment shall be distributed in the following order: (a) first, to any ground lessor, mortgagee or beneficiary under a deed of trust encumbering the Property, the amount of its interest in the Property; (b) second, to Tenant, only the amount of any award specifically designated for loss of or damage to Tenant's trade fixtures or removable personal property; and (c) third, to Landlord, the remainder of such award, whether as compensation for reduction in the value of the leasehold, the taking of the fee, or otherwise. If this Lease is not terminated, Landlord shall repair any damage to the Property caused by the Condemnation, except that Landlord shall not be obligated to repair any damage for which Tenant has been reimbursed by the condemning authority. If the severance damages received by Landlord are not sufficient to pay for such repair, Landlord shall have the right to either terminate this Lease or make such repair at Landlord's expense. ARTICLE NINE: ASSIGNMENT AND SUBLETTING Section 9.01. Landlord's Consent Required. No portion of the Property or of Tenant's interest in this Lease may be acquired by any other person or entity, whether by sale, assignment, mortgage, sublease, transfer, operation of law, or act of Tenant, without Landlord's prior written consent, except as provided in Section 9.02 below. Landlord has the right to grant or withhold its consent as provided in Section 9.05 below. Any attempted transfer without consent shall be void and shall constitute a non-curable breach of this Lease. If Tenant is a partnership, any cumulative transfer of more than twenty percent (20%) of the partnership interests shall require Landlord's consent. If Tenant is a corporation, any change in the ownership of a controlling interest of the voting stock of the corporation shall require Landlord's consent. 20 20 Section 9.02. Tenant Affiliate. Tenant may assign this Lease or sublease the Property, without Landlord's consent, to any corporation which controls, is controlled by or is under common control with Tenant, or to any corporation resulting from the merger of or consolidation with Tenant ("Tenant's Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all of Tenant's obligations under this Lease. Section 9.03. No Release of Tenant. No transfer permitted by this Article Nine, whether with or without Landlord's consent, shall release Tenant or change Tenant's primary liability to pay the rent and to perform all other obligations of Tenant under this Lease. Landlord's acceptance of rent from any other person is not a waiver of any provision of this Article Nine. Consent to one transfer is not a consent to any subsequent transfer. If Tenant's transferee defaults under this Lease, Landlord may proceed directly against Tenant without pursuing remedies against the transferee. Landlord may consent to subsequent assignments or modifications of this Lease by Tenant's transferee, without notifying Tenant or obtaining its consent. Such action shall not relieve Tenant's liability under this Lease. Section 9.04. Offer to Terminate. If Tenant desires to assign the Lease or sublease the Property, Tenant shall have the right to offer, in writing, to terminate the Lease as of a date specified in the offer. If Landlord elects in writing to accept the offer to terminate within twenty (20) days after notice of the offer, the Lease shall terminate as of the date specified and all the terms and provisions of the Lease governing termination shall apply. If Landlord does not so elect, the Lease shall continue in effect until otherwise terminated and the provisions of Section 9.05 with respect to any proposed transfer shall continue to apply. Section 9.05. Landlord's Consent. (a) Tenant's request for consent to any transfer described in Section 9.01 shall set forth in writing the details of the proposed transfer, including the name, business and financial condition of the prospective transferee, financial details of the proposed transfer (e.g., the term of and the rent and security deposit payable under any proposed assignment or sublease), and any other information Landlord deems relevant. Landlord shall have the right to withhold consent, if reasonable, or to grant consent, based on the following factors: (i) the business of the proposed assignee or subtenant and the proposed use of the Property; (ii) the net worth and financial reputation of the proposed assignee or subtenant: (iii) Tenant's compliance with all of its obligations under the Lease; and (iv) such other factors as Landlord may reasonably deem relevant. If Landlord objects to a proposed assignment solely because of the net worth and/or financial reputation of the proposed assignee, Tenant may 21 21 nonetheless sublease (but not assign), all or a portion of the Property to the proposed transferee, but only on the other terms of the proposed transfer. (b) If Tenant assigns or subleases, the following shall apply: (i) Tenant shall pay to Landlord as Additional Rent under the Lease the Landlord's Share (stated in Section 1.14) of the Profit (defined below) on such transaction as and when received by Tenant, unless Landlord gives written notice to Tenant and the assignee or subtenant that Landlord's Share shall be paid by the assignee or subtenant to Landlord directly. The "Profit" means (A) all amounts paid to Tenant for such assignment or sublease, including "key" money, monthly rent in excess of the monthly rent payable under the Lease, and all fees and other consideration paid for the assignment or sublease, including fees under any collateral agreements, less (B) costs and expenses directly incurred by Tenant in connection with the execution and performance of such assignment or sublease for real estate broker's commissions and costs of renovation or construction of tenant improvements required under such assignment or sublease. Tenant is entitled to recover such costs and expenses before Tenant is obligated to pay the Landlord's Share to Landlord. The Profit in the case of a sublease of less than all the Property is the rent allocable to the subleased space as a percentage on a square footage basis. (ii) Tenant shall provide Landlord a written statement certifying all amounts to be paid from any assignment or sublease of the Property within thirty (30) days after the transaction documentation is signed, and Landlord may inspect Tenant's books and records to verify the accuracy of such statement. On written request, Tenant shall promptly furnish to Landlord copies of all the transaction documentation, all of which shall be certified by Tenant to be complete, true and correct. Landlord's receipt of Landlord's Share shall not be a consent to any further assignment or subletting. The breach of Tenant's obligation under this Paragraph 9.05(b) shall be a material default of the Lease. Section 9.06. No Merger. No merger shall result from Tenant's sublease of the Property under this Article Nine, Tenant's surrender of this Lease or the termination of this Lease in any other manner. In any such event, Landlord may terminate any or all subtenancies or succeed to the interest of Tenant as sublandlord under any or all subtenancies. 22 22 ARTICLE TEN: DEFAULTS; REMEDIES Section 10.01. Covenants and Conditions. Tenant's performance of each of Tenant's obligations under this Lease is a condition as well as a covenant. Tenant's right to continue in possession of the Property is conditioned upon such performance. Time is of the essence in the performance of all covenants and conditions. Section 10.02. Defaults. Tenant shall be in material default under this Lease: (a) If Tenant abandons the Property or if Tenant's vacation of the Property results in the cancellation of any insurance described in Section 4.04; (b) If Tenant fails to pay rent or any other charge when due; (c) If Tenant fails to perform any of Tenant's non-monetary obligations under this Lease for a period of thirty (30) days after written notice from Landlord; provided that if more than thirty (30) days are required to complete such performance, Tenant shall not be in default if Tenant commences such performance within the thirty (30)-day period and thereafter diligently pursues its completion. However, Landlord shall not be required to give such notice if Tenant's failure to perform constitutes a non-curable breach of this Lease. The notice required by this Paragraph is intended to satisfy any and all notice requirements imposed by law on Landlord and is not in addition to any such requirement. (d) (i) If Tenant makes a general assignment or general arrangement for the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed by or against Tenant and is not dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed to take possession of substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease and possession is not restored to Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease is subjected to attachment, execution or other judicial seizure which is not discharged within thirty (30) days. If a court of competent jurisdiction determines that any of the acts described in this subparagraph (d) is not a default under this Lease, and a trustee is appointed to take possession (or if Tenant remains a debtor in possession) and such trustee or Tenant transfers Tenant's interest hereunder, then Landlord shall receive, as Additional Rent, the excess, if any, of the rent (or any other consideration) paid in connection with such assignment or sublease over the rent payable by Tenant under this Lease. 23 23 (e) If any guarantor of the Lease revokes or otherwise terminates, or purports to revoke or otherwise terminate, any guaranty of all or any portion of Tenant's obligations under the Lease. Unless otherwise expressly provided, no guaranty of the Lease is revocable. Section 10.03. Remedies. On the occurrence of any material default by Tenant, Landlord may, at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have: (a) Terminate Tenant's right to possession of the Property by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Property to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including (i) the worth at the time of the award of the unpaid Base Rent, Additional Rent and other charges which Landlord had earned at the time of the termination; (ii) the worth at the time of the award of the amount by which the unpaid Base Rent, Additional Rent and other charges which Landlord would have earned after termination until the time of the award exceeds the amount of such rental loss that Tenant proves Landlord could have reasonably avoided; (iii) the worth at the time of the award of the amount by which the unpaid Base Rent, Additional Rent and other charges which Tenant would have paid for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves Landlord could have reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, any costs or expenses Landlord incurs in maintaining or preserving the Property after such default, the cost of recovering possession of the Property, expenses of reletting, including necessary renovation or alteration of the Property, Landlord's reasonable attorneys' fees incurred in connection therewith, and any real estate commission paid or payable. As used in subparts (i) and (ii) above, the "worth at the time of the award" is computed by allowing interest on unpaid amounts at the rate of fifteen percent (15%) per annum, or such lesser amount as may then be the maximum lawful rate. As used in subpart (iii) above, the "worth at the time of the award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%). If Tenant has abandoned the Property, Landlord shall have the option of (i) retaking possession of the Property and recovering from Tenant the amount specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph 10.03(b); 24 24 (b) Maintain Tenant's right to possession, in which case this Lease shall come in effect whether or not Tenant has abandoned the Property. In such event, Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent as it becomes due; (c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Property is located. Section 10.04. Repayment of "Free" Rent. If this Lease provides for a postponement of any monthly rental payments, a period of "free" rent or other rent concession, such postponed rent or "free" rent is called the "Abated Rent". Tenant shall be credited with having paid all of the Abated Rent on the expiration of the Lease Term only if Tenant has fully, faithfully, and punctually performed all of Tenant's obligations hereunder, including the payment of all rent (other than the Abated Rent) and all other monetary obligations and the surrender of the Property in the physical condition required by this Lease. Tenant acknowledges that its right to receive credit for the Abated Rent is absolutely conditioned upon Tenant's full, faithful and punctual performance of its obligations under this Lease. If Tenant defaults and does not cure within any applicable grace period, the Abated Rent shall immediately become due and payable in full and this Lease shall be enforced as if there were no such rent abatement or other rent concession. In such case Abated Rent shall be calculated based on the full initial rent payable under this Lease. Section 10.05. Automatic Termination. Notwithstanding any other term or provision hereof to the contrary, the Lease shall terminate on the occurrence of any act which affirms the Landlord's intention to terminate the Lease as provided in Section 10.03 hereof, including the filing of an unlawful detainer action against Tenant. On such termination, Landlord's damages for default shall include all costs and fees, including reasonable attorneys' fees that Landlord incurs in connection with the filing, commencement, pursuing and/or defending of any action in any bankruptcy court or other court with respect to the Lease; the obtaining of relief from any stay in bankruptcy restraining any action to evict Tenant; or the pursuing of any action with respect to Landlord's right to possession of the Property. All such damages suffered (apart from Base Rent and other rent payable hereunder) shall constitute pecuniary damages which must be reimbursed to Landlord prior to assumption of the Lease by Tenant or any successor to Tenant in any bankruptcy or other proceeding. Section 10.06. Cumulative Remedies. Landlord's exercise of any right or remedy shall not prevent it from exercising any other right or remedy. 25 25 ARTICLE ELEVEN: PROTECTION OF LENDERS Section 11.01. Subordination. Landlord shall have the right to subordinate this Lease to any ground lease, deed of trust or mortgage encumbering the Property, any advances made on the security thereof and any renewals, modifications, consolidations, replacements or extensions thereof, whenever made or recorded. Tenant shall cooperate with Landlord and any lender which is acquiring a security interest in the Property or the Lease. Tenant shall execute such further documents and assurances as such lender may require, provided that Tenant's obligations under this Lease shall not be increased in any material way (the performance of ministerial acts shall not be deemed material), and Tenant shall not be deprived of its rights under this Lease. Tenant's right to quiet possession of the Property during the Lease Term shall not be disturbed if Tenant pays the rent and performs all of Tenant's obligations under this Lease and is not otherwise in default. If any ground lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of its ground lease, deed of trust or mortgage and gives written notice thereof to Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or mortgage whether this Lease is dated prior or subsequent to the date of said ground lease, deed of trust or mortgage or the date of recording thereof. Section 11.02. Attornment. If Landlord's interest in the Property is acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or successor to Landlord's interest in the Property and recognize such transferee or successor as Landlord under this Lease. Tenant waives the protection of any statute or rule of law which gives or purports to give Tenant any right to terminate this Lease or surrender possession of the Property upon the transfer of Landlord's interest. Section 11.03. Signing of Documents. Tenant shall sign and deliver any instrument or documents necessary or appropriate to evidence any such attornment or subordination or agreement to do so. If Tenant fails to do so within ten (10) days after written request, Tenant hereby makes, constitutes and irrevocably appoints Landlord, or any transferee or successor of Landlord, the attorney-in-fact of Tenant to execute and deliver any such instrument or document. Section 11.04. Estoppel Certificates. (a) Upon Landlord's written request, Tenant shall execute, acknowledge and deliver to Landlord a written statement certifying: (i) that none of the terms or provisions of this Lease have been changed (or if they have been changed, stating how they have been changed); (ii) that this Lease has not been 26 26 cancelled or terminated; (iii) the last date of payment of the Base Rent and other charges and the time period covered by such payment; (iv) that Landlord is not in default under this Lease (or, if Landlord is claimed to be in default, stating why); and (v) such other representations or information with respect to Tenant or the Lease as Landlord may reasonably request or which any prospective purchaser or encumbrancer of the Property may require. Tenant shall deliver such statement to Landlord within ten (10) days after Landlord's request. Landlord may give any such statement by Tenant to any prospective purchaser or encumbrancer of the Property. Such purchaser or encumbrancer may rely conclusively upon such statement as true and correct. (b) If Tenant does not deliver such statement to Landlord within such ten (10)-day period, and any prospective purchaser or encumbrancer, may conclusively presume and rely upon the following facts: (i) that the terms and provisions of this Lease have not been changed except as otherwise represented by Landlord; (ii) that this Lease has not been cancelled or terminated except as otherwise represented by Landlord; (iii) that not more than one month's Base Rent or other charges have been paid in advance; and (iv) that Landlord is not in default under the Lease. In such event, Tenant shall be estopped from denying the truth of such facts. Section 11.05. Tenant's Financial Condition. Within ten (10) days after written request from Landlord, Tenant shall deliver to Landlord such financial statements as Landlord reasonably requires to verify the net worth of Tenant or any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall deliver to any lender designated by Landlord any financial statements required by such lender to facilitate the financing or refinancing of the Property. Tenant represents and warrants to Landlord that each such financial statement is a true and accurate statement as of the date of such statement. All financial statements shall be confidential and shall be used only for the purposes set forth in this Lease. ARTICLE TWELVE: LEGAL COSTS Section 12.01. Legal Proceedings. If Tenant or Landlord shall be in breach or default under this Lease, such party (the "Defaulting Party") shall reimburse the other party (the "Nondefaulting Party") upon demand for any costs or expenses that the Nondefaulting Party incurs in connection with any breach or default of the Defaulting Party under this Lease, whether or not suit is commenced or judgment entered. Such costs shall include legal fees and costs incurred for the negotiation of a settlement, enforcement of rights or otherwise. Furthermore, if any action for breach of or to enforce the provisions of this Lease is commenced, the court in such action shall award to the party in whose favor a judgment is entered, a reasonable sum as 27 27 attorneys' fees and costs. The losing party in such action shall pay such attorneys' fees and costs. Tenant shall also indemnify Landlord against and hold Landlord harmless from all costs, expenses, demands and liability Landlord may incur if Landlord becomes or is made a party to any claim or action (a) instituted by Tenant against any third party, or by any third party against Tenant, or by or against any person holding any interest under or using the Property by license of or agreement with Tenant; (b) for foreclosure of any lien for labor or material furnished to or for Tenant or such other person; (c) otherwise arising out of or resulting from any act or transaction of Tenant or such other person; or (d) necessary to protect Landlord's interest under this Lease in a bankruptcy proceeding, or other proceeding under Title 11 of the United States Code, as amended. Tenant shall defend Landlord against any such claim or action at Tenant's expense with counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any legal fees or costs Landlord incurs in any such claim or action. Section 12.02. Landlord's Consent. Tenant shall pay Landlord's reasonable attorneys' fees incurred in connection with Tenant's request for Landlord's consent under Article Nine (Assignment and Subletting), or in connection with any other act which Tenant proposes to do and which requires Landlord's consent. ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS Section 13.01. Non-Discrimination. Tenant promises, and it is a condition to the continuance of this Lease, that there will be no discrimination against, or segregation of, any person or group of persons on the basis of race, color, sex, creed, national origin or ancestry in the leasing, subleasing, transferring, occupancy, tenure or use of the Property or any portion thereof. Section 13.02. Landlord's Liability; Certain Duties. (a) As used in this Lease, the term "Landlord" means only the current owner or owners of the fee title to the Property or Project or the leasehold estate under a ground lease of the Property or Project at the time in question. Each Landlord is obligated to perform the obligations of Landlord under this Lease only during the time such Landlord owns such interest or title. Any Landlord who transfers its title or interest is relieved of all liability with respect to the obligations of Landlord under this Lease to be performed on or after the date of transfer. However, each Landlord shall deliver to its transferee all funds that Tenant previously paid if such funds have not yet been applied under the terms of this Lease. 28 28 (b) Tenant shall give written notice of any failure by Landlord to perform any of its obligations under this Lease to Landlord and to any ground lessor, mortgagee or beneficiary under any deed of trust encumbering the Property whose name and address have been furnished to Tenant in writing. Landlord shall not be in default under this Lease unless Landlord (or such ground lessor, mortgagee or beneficiary) fails to cure such non-performance within thirty (30) days after receipt of Tenant's notice. However, if such non-performance reasonably requires more than thirty (30) days to cure, Landlord shall not be in default if such cure is commenced within such thirty (30) -day period and thereafter diligently pursued to completion. (c) Notwithstanding any term or provision herein to the contrary, the liability of Landlord for the performance of its duties and obligations under this Lease is limited to Landlord's interest in the Property and the Project, and neither the Landlord nor its partners, shareholders, officers or other principals shall have any personal liability under this Lease. Section 13.03. Severability. A determination by a court of competent jurisdiction that any provision of this Lease or any part thereof is illegal or unenforceable shall not cancel or invalidate the remainder of such provision or this Lease, which shall remain in full force and effect. Section 13.04. Interpretation. The captions of the Articles or Sections of this Lease are to assist the parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular shall include the plural and the plural shall include the singular. The masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts or omissions of Tenant, the term "Tenant" shall include Tenant's agents, employees, contractors, invitees, successors or others using the Property with Tenant's expressed or implied permission. Section 13.05. Incorporation of Prior Agreements; Modifications. This Lease is the only agreement between the parties pertaining to the lease of the Property and no other agreements are effective. All amendments to this Lease shall be in writing and signed by all parties. Any other attempted amendment shall be void. Section 13.06. Notices. All notices required or permitted under this Lease shall be in writing and shall be personally delivered or sent by certified mail, return receipt requested, postage prepaid. Notices to Tenant shall be delivered to the address specified in Section 1.03 above, except that upon Tenant's taking possession of the Property, the Property shall be Tenant's address for notice purposes. Notices to Landlord shall 29 29 be delivered to the address specified in Section 1.02 above. All notices shall be effective upon, delivery. Either party may change its notice address upon written notice to the other Party. Section 13.07. Waivers. All waivers must be in writing and signed by the waiving party. Landlord's failure to enforce any provision of this Lease or its acceptance of rent shall not be a waiver and shall not prevent Landlord from enforcing that provision or any other provision of this Lease in the future. No statement on a payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check without being bound to the conditions of such statement. Section 13.08. No Recordation. Tenant shall not record this Lease without prior written consent from Landlord. However, either Landlord or Tenant may require that a "Short Form" memorandum of this Lease executed by both parties be recorded. The party requiring such recording shall pay all transfer taxes and recording fees. Section 13.09. Binding Effect; Choice of Law. This Lease binds any party who legally acquires any rights or interest in this Lease from Landlord or Tenant. However, Landlord shall have no obligation to Tenant's successor unless the rights or interests of Tenant's successor are acquired in accordance with the terms of this Lease. The laws of the state in which the Property is located shall govern this Lease. Section 13.10. Corporate Authority; Partnership Authority. If Tenant is a corporation, each person signing this Lease on behalf of Tenant represents and warrants that he has full authority to do so and that this Lease binds the corporation. Within thirty (30) days after this Lease is signed, Tenant shall deliver to Landlord a certified copy of a resolution of Tenant's Board of Directors authorizing the execution of this Lease or other evidence of such authority reasonably acceptable to Landlord. If Tenant is a partnership, each person or entity signing this Lease for Tenant represents and warrants that he or it is a general partner of the partnership, that he or it has full authority to sign for the partnership and that this Lease binds the partnership and all general partners of the partnership. Tenant shall give written notice to Landlord of any general partner's withdrawal or addition. Within thirty (30) days after this Lease is signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement of partnership or certificate of limited partnership. Section 13.11. Joint and Several Liability. All parties signing this Lease as Tenant shall be jointly and severally liable for all obligations of Tenant. 30 30 Section 13.12. Force Majeure. If Landlord cannot perform any of its obligations due to events beyond Landlord's control, the time provided for performing such obligations shall be extended by a period of time equal to the duration of such events. Events beyond Landlord's control include, but are not limited to, acts of God, war, civil commotion, labor disputes, strikes, fire, flood or other casualty, shortages of labor or material, government regulation or restriction and weather conditions. Section 13.13. Execution of Lease. This Lease may be executed in counterparts and, when all counterpart documents are executed, the counterparts shall constitute a single binding instrument. Landlord's delivery of this Lease to Tenant shall not be deemed to be an offer to lease and shall not be binding upon either party until executed and delivered by both parties. Section 13.14. Survival. All representations and warranties of Landlord and Tenant shall survive the termination of this Lease. ARTICLE FOURTEEN: BROKERS Section 14.01. Broker's Fee. When this Lease is signed by and delivered to both Landlord and Tenant, Landlord shall pay a real estate commission to Landlord's Broker named in Section 1.08 above, if any, as provided in the written agreement between Landlord and Landlord's Broker, or the sum stated in Section 1.09 above for services rendered to Landlord by Landlord's Broker in this transaction. Landlord shall pay Landlord's Broker a commission if Tenant exercises any option to extend the Lease Term or to buy the Property, or any similar option or right which Landlord may grant to Tenant, or if Landlord's Broker is the procuring cause of any other lease or sale entered into between Landlord and Tenant covering the Property. Such commission shall be the amount set forth in Landlord's Broker's commission schedule in effect as of the execution of this Lease. If a Tenant's Broker is named in Section 1.08 above, Landlord's Broker shall pay an appropriate portion of its commission to Tenant's Broker if so provided in any agreement between Landlord's Broker and Tenant's Broker. Nothing contained in this Lease shall impose any obligation on Landlord to pay a commission or fee to any party other than Landlord's Broker. Section 14.02. Protection of Brokers. If Landlord sells the Property, or assigns Landlord's interest in this Lease, the buyer or assignee shall, by accepting such conveyance of the Property or assignment of the Lease, be conclusively deemed to have agreed to make all payments to Landlord's Broker thereafter required of Landlord under this Article Fourteen. Landlord's Broker shall have the right to bring a legal action to enforce or declare rights under this provision. The prevailing party in such action shall be entitled to reasonable attorneys' fees to be paid by the 31 31 losing party. Such attorneys' fees shall be fixed by the court in such action. This Paragraph is included in this Lease for the benefit of Landlord's Broker. Section 14.03. See attached Duties Owed By A Nevada Rent Estate Licensee. ARTICLE FIFTEEN: COMPLIANCE The parties hereto agree to comply with all applicable federal, state and local laws, regulations, codes, ordinances and administrative orders having jurisdiction over the parties, property or the subject matter of this Agreement, including, but not limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign Investment In Real Property Tax Act, the Comprehensive Environmental Response Compensation and Liability Act, and The Americans With Disabilities Act. ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE DRAW A LINE THROUGH THE SPACE BELOW. Landlord and Tenant have signers Lease at the place and on the dates speed adjacent to their signatures below and have initialled all Riders which are attached to or incorporated by reference in this Lease. "LANDLORD" Signed on September 26, 1996 /s/ David L. Sawyer and at Las Vegas, Nevada ---------------------------------- Sally A. Sawyer ---------------------------------- Owner "TENANT" Amazon Natural Treasures By: /s/ Michael A. Sylver -------------------------------- Its President IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE TANKS. 32 32 THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS, INC.@ ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL. 33 33 ADDENDUM I This is ADDENDUM I to the LEASE by and between DAVID L. SAWYER AND SALLY A. SAWYER as LANDLORD, and AMAZON NATURAL TREASURES, as TENANT dated SEPTEMBER 24, 1996. 1. The Tenant shall be prohibited from installing an asphalt tank inside or outside of the subject property. In the event the Tenant is in default of this, or any provision of this Lease, the Lease will be immediately terminated and the Tenant shall be in default and will forfeit the deposits and required to vacate the suite. 2. If the Tenant is not in default of the Lease and has made timely monthly payments for eighteen (18) months, then an amount equal to one month's rent currently being held as additional security deposit ($2,835.00) shall be refunded to the Tenant. 3. The Tenant shall be required to keep fire extinguishers in the unit. 4. The Tenant acknowledges the existence of office partitions in the upstairs offices of Unit C and that they shall remain for the Tenant's use, but the property of the Landlord. 5. The Tenant shall be required to pay its pro rata share of the trash removal currently estimated at $53.00 per month. 6. Pursuant to Section 6.04 Tenant's Obligations: the Tenant shall be required to reimburse the Landlord for the maintenance contract on the heating and air conditioning systems. LANDLORD: TENANT: David L. Sawyer Amazon Natural Treasures Sally A. Sawyer /s/ David L. Sawyer /s/ Michael Sylver, President /s/ Sally A. Sawyer DATED: September 26, 1996 34 34 THE COMMERCIAL REAL ESTATE GROUP, INC.'S DISCLOSURE STATEMENT This STATEMENT regarding the Lease between David L. Sawyer and Sally A. Sawyer as LANDLORD, and Amazon Natural Treasures as Tenant, dated September 24, 1996 1. HAZARDOUS WASTE: Owner agrees to disclose to Broker and to prospective purchasers/tenants/subtenants any and all information which Owner has regarding present and future zoning and environmental matters affecting the Property and regarding the condition of the Property, including, but not limited to structural, mechanical and soils conditions, the presence and location of asbestos, PCB transformers, other toxic, hazardous or contaminated substances, and underground storage tanks in, on, or about the Property. Broker is authorized to disclose any such information to prospective purchasers/tenants/subtenants. 2. AMERICANS WITH DISABILITIES ACT: Please be advised that an owner or tenant of real property may be subject to the American With Disabilities Act (the ADA), a Federal law codified at 42 USC Section 12101 et seq. Among other requirements of the ADA that could apply to your property, Title III of the ADA requires owners and tenants of "public accommodations" to remove barriers to access by disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons by January 26, 1992. The regulations under Title III of the ADA are codified at 28 CFR Part 36. The parties hereto agree to comply with all applicable federal, state and local laws, regulations, codes, ordinances and administrative orders having jurisdiction over the parties, property or the subject matter of this agreement, including, but not limited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign Investment In Real Property Tax Act, the Comprehensive Environmental Response Compensation and Liability Act and The Americans With Disabilities Act. We recommend that you and your attorney review the ADA and the regulations, and, if appropriate, your proposed lease or purchase agreement to determine if this law would apply to you, and the nature of the requirements. These are legal issues. You are responsible for conducting your own independent investigation of these issues. CB Commercial cannot give you legal advice on these issues. 35 35 SIGNED IN COUNTERPART: This Agreement may be executed in any number of counterparts and any counterpart may be executed by any one or more of the parties hereto as if all had executed the counterpart and each such counterpart so executed shall be deemed to be an original document, but such counterparts shall together constitute but one and the same instrument. THE UNDERSIGNED WARRANT AND REPRESENT THAT THEY ARE AUTHORIZED TO ENTER INTO THIS AGREEMENT. ACCEPTED AND AGREED: LANDLORD: TENANT: David L. Sawyer and Amazon Natural Treasures Sally A. Sawyer, Owners /s/ David L. Sawyer /s/ Michael A. Sylver /s/ Sally A. Sawyer President Dated September 26, 1996 36 36 DUTIES OWED BY A NEVADA REAL ESTATE LICENSEE In Nevada, a real estate licensee can (1) act for only one party to a real estate transaction, (2) act for more than one party to a real estate transaction with written consent of each party, or (3) if licensed as a broker, assign different licensees affiliated with the broker's company to separate parties to a real estate transaction. A licensee, acting as an agent, must act in one of the above capacities in every real estate transaction. LICENSEE(S): The licensee(s) in the real estate transaction is/are Lori A. Ferrario ("Licensee") whose license number(s) is/are 32361. The Licensee is acting for Landlord. BROKER: The broker in the real estate transaction is John W. Records ("Broker"), whose company is CB Commercial Real Estate Group, Inc. ("Company"). A Nevada Real Estate licensee in a real estate transaction shall: 1. Disclose to each party to the real estate transaction as soon as is practicable: a) Any material and relevant facts, data or information which Licensee knows, or which by the exercise of reasonable care and diligence licensee should have known, relating to the property which is the subject of the real estate transaction. b) Each source from which Licensee will receive compensation as a result of the transaction. c) That Licensee is a principal to the transaction or has an interest in a principal to the transaction. d) Any changes in Licensee's relationship to a party to the real estate transaction. 2. Disclose, if applicable, that Licensee is acting for more than one party to the transaction. Upon making such a disclosure the Licensee must obtain the written consent of each party to the transaction for whom Licensee is acting before Licensee may continue to act in Licensee's capacity as an agent. 3. Exercise reasonable skill and care with respect to all parties to the real estate transaction. 4. Provide to each party to the real estate transaction this form. 5. Not disclose, except to the Broker, confidential information relating to a client. 6. Exercise reasonable skill and care to carry out the terms of the brokerage agreement and to carry out Licensee's duties pursuant to the terms of the brokerage agreement. 37 37 7. Not disclose confidential information relating to a client for 1 year after the revocation or termination of the brokerage agreement, unless Licensee is required to do so by order of the court. Confidential information includes, but is not limited to the client's motivation to purchase, sell or trade and other information of a personal nature. 8. Promote the interest of his client by: a) Seeking a sale, lease or property at the price and terms stated in the brokerage agreement or at a price acceptable to the client. b) Presenting all offers made to or by the client as soon as is practicable. c) Disclosing to the client material facts of which the licensee has knowledge concerning the transaction. d) Advising the client to obtain advice from an expert relating to matters which are beyond the expertise of the licensee. e) Accounting for all money and property Licensee receives in which the client may have an interest as soon as is practicable. 9. Not deal with any party to a real estate transaction in a manner which is deceitful, fraudulent or dishonest. 10. Abide by all duties, responsibilities and obligations required of Licensee in chapters 119, 119A, 119B, 645, 645A, and 645C of the NRS. I/We acknowledge receipt of a copy of this list of licensee duties, and have read and understand this disclosure. Seller/Landlord David L. Sawyer Seller/Landlord Sally A. Sawyer Date 09-26-96 Time 1:30 p.m. Buyer/Tenant Amazon Natural Treasures Michael A. Sylver Date 09-25-96 Time 2:35 p.m. *CONFIRMATION REGARDING REAL ESTATE AGENT RELATIONSHIP* Property Address: 4011 W. Oquendo Road, Unit C, Las Vegas, Nevada In the event any party to the real estate transaction is also represented by a licensee who is affiliated with the same Company, the Broker may assign another licensee to act for that party. The above Licensee will continue to act for you. As set forth above, no confidential information will be disclosed. This is [ ] is not [ ] such a transaction. 38 38 I/We confirm the duties of a real estate licensee of which has been presented and explained to me/us. My/our representative's relationship is: Lori A. Ferrario is the AGENT of Seller. Dale Brown is the AGENT of Buyer. * IF LICENSEE IS ACTING FOR MORE THAN ONE PARTY IN THIS TRANSACTION, you will be provided a Consent to Act form for your review, consideration and approval or rejection. A licensee can legally represent both the Seller/Landlord and Buyer/Tenant in a transaction, but ONLY with the knowledge and written consent of BOTH the Seller/Landlord and Buyer/Tenant. * A licensee who is acting for the Seller/Landlord exclusively, is not representing the Buyer/Tenant and has no duty to advocate or negotiate for the Buyer/Landlord. * A licensee who is acting for the Buyer/Tenant exclusively, is not representing the Seller/Landlord and has no duty to advocate or negotiate for the Seller/Tenant. [ ] I wish Representation as specified above or: I am the [ ] Seller/Landlord [ ] Buyer/Tenant and choose to represent myself in this real estate transaction. CB Commercial Real Estate Group, Inc. Seller's Landlord Company Buyer's/Tenant's Company By: License #32361 By: Licensed Real Estate Agent Licensed Real Estate agent Seller/Landlord Buyer/Tenant /s/ David L. Sawyer Dated 09/26/96 Seller/Landlord Buyer/Tenant /s/ Sally A. Sawyer Dated 09/26/96 EX-10.3 3 LEASE CONTRACT 1 EXHIBIT 10.3 1 LEASE CONTRACT LESSOR: LUCIO SAMPAIO DE SOUZA, Brazilian citizen, married, merchant, resident in this city .RG # 728533 SSP/AM, CGC/CPF #001105BB2-20. LESSEE: AMAZON NATURAL TREASURES COMMERCIAL IMPORTADORA EXPORTADORA LTDA. Rua Belem, 1036, facing Rua Recife, Adrianopolis. CGC #01541802/0001-71. GUARANTOR(S): CARLOS AUGUSTO GAMA FRANCO, Brazilian citizen, married, Accountant, resident at Rua Lamartine Delamare, 160, Guara,SP RG #9263482 SSP/SP, CGC/CPF #057893948-76. OBJECT OF CONTRACT: Said building at Belem Street, #1036, facing Recife St., Adrianopolis. The said building Is destined as a commercial lease. LEASE AMOUNT: R$850,00 (Eight hundred and fifty Reais). The monthly lease shall be paid up to the 20th day of the subsequent month, Either at the Lessor's address or his representative's. TERM OF THE CONTRACT: 1 (one year). Beginning 09/20/1996 and Ending 09/19/1997. TAXES AND OTHER FEES: It is the lessee's duty to pay all utilities and homeowners association fees if and when applicable, as well as all taxes excised on the property. GENERAL OBLIGATIONS: The Lessee shall have inspected the property receiving it in perfect state of, therefore obliging it self to; a) Maintain such property in perfect state, so as when returned to the Lessor it is in the same condition. All in accordance with the annexed inspection signed by all parties. 2 2 b) Not install, adapt, alter, or any construction work whatsoever, without prior written permission by the Lessor. c) Not transfer' this Contract, sublease, or lend said building, under any circumstance, as well as alter the intent of this Contract. d) Notify the Lessor of all correspondence, warrants, summons and any other public notices addressed on his behalf. d) In case of any authorized add-one and/or other alterations on the building, restitute it to the "status quo" before returning it to the Lessor. OF PROPERTY TAXES: The parties agree that all property taxes due during the term of this Contract shall be the Lessee's responsibility. TERMINATION OF THE CONTRACT: Any infraction to any and all clauses herewith determined, as well as any other Law, are considered cause to terminate said Contract, with the subsequent eviction and payment of all monies due. Renewals incumbent upon the Lessee to renew said Contract if so it Wishes. The new lease will be increased according to the Federal Government indexes applicable to commercial leases. INDEMNIZATION AND THE RIGHT OF OWNERSHIP: Any and all betterment added to the property once authorized by the owner (Lessor), even if necessary will be incorporated to the property, being denied to the Lessee the right to seek any compensation, repayment or ownership over said betterment. SUBSEQUENT LEGAL ADVANTAGES: This Contract will always be under the rule of the Brazilian Civil Code and the Law #8.245 from 10.18.1991, being assured to the Lessor all rights and advantages of any and all laws subsequently approved and regulator of the matter. OF THE GUARANTEES: To guarantee the faithful fulfillment of said Contract and each of its obligations, specially the payment of the rents, co-sign as Guarantor(s), the said person(s) previously named, which will be co-responsible with the Lessee for said payments. 3 3 The Guarantor(s) will have solidarity with the Lessee's obligation to pay the rents as well as all other clauses hereon established, or that, the Guarantor(s) will renounce to the rights inherent to paragraph 1.491 of the Civil Code, remaining such obligation until the return of the keys of the building to the Lessor. a) the GUARANTOR(S) acknowledge that said responsibilities and solidarity will remain until the return of such keys, renouncing in this matter to paragraphs 1.500 (Civil Code) rights. b) in case of death, bankruptcy or personal bankruptcy of the Guarantor(s), is incumbent upon the Lessee to replace it with another, to be previously approved by the Lessor, within 30 days, failure to do so will be cause for eviction. OF THE RENT DUE DATE: It is established that the Lessee shall make the rent payment until the 20th day of the subsequent month. After such date the Lessor(s) can submit the amount for collection, either through an Attorney or an Agency, in which case the Lessee's will be responsible for all and any fees thereof. a) In case of delayed payment of such rents, the Lessee(s) shall be responsible not only to pay such amount (Clause 5) will also incur into interest of 1% a month applicable on top of any devaluation due to inflation, not withstanding any other penalties and/or fees clue. PENALTY CLAUSE: The Lessor and the Lessee mutually agree to respect and abide by the Clauses of this Contract, if and when however, one of the parties infringe upon any of these Clauses, it shall pay the other a 10% penalty over the entire value of this Contract. Such penalty is due in its totality whatever term of the Contract has been fulfilled. The payment of such penalty does not preclude the party not at fault to terminate the Contract. a) it is agreed between the parties that the amount of the Penalty will be altered every time the rent is changed, within proportion to such alteration, which shall be automatic, notwithstanding such penalty payment, the Lessee is not exempt from rent payment as well as damages incurred by the building. b) the parties elect the jurisdiction of where the building is Noted, whatever their domiciles may be, to solve any and all disputes arising from this Contract. 4 4 By having said Contract just and perfect, the parties sign this Contract in 2 copies with same content in the presence of the undersigned witnesses. Manaus, September 20th 1996. LUCIO SAMPAIO DE SOUZA (LESSOR) AMAZON N.T.COM.IMP.LTDA (LESSEE) CARLOS AUGUSTO GAMA FRANCO (GUARANTOR) EX-10.4 4 LEASE CONTRACT 1 EXHIBIT 10.4 COMMERCIAL LEASE Triple Net This Lease made and entered into this 8th day of January, 1997 by and between Henry and Shirley Sanchez (hereinafter called "Lessor"), and Amazon Natural Treasures, Inc. (hereinafter called Lessee"), the Lesser hereby leases to Lessee and Lessee hereby leases from Lessor, on the terms and conditions hereinafter set forth, that certain premises located in the City of Las Vegas, County of Clark, State of Nevada, commonly known as 3977 W. Oquendo Rd., Las Vegas, NV 89118, Unit C located in that certain building described as follows: H & S Industrial Park 3977 W. Oquendo Rd. Las Vegas, NV 89118 Unit C upon the following forms and conditions: RECEIVED FROM Amazon Natural Treasures, Inc., hereinafter referred to as LESSEE, the sum of One thousand eight hundred & sixty dollars ($1,860.00), evidenced by ____________, as a deposit which, upon acceptance of this leave, shall belong to Lessor and shall be applied as follows:
RECEIVED PAYABLE PRIOR TO OCCUPANCY Rent for the period from: 2/1 to 2/28/97 $860.00 $1,860.00 Security Deposit: $500.00 $ 500.00 Other: last month's rent $______ $1,860.00 TOTAL: $2,360.00 $4,220.00
In the event that this lease is not accepted by the Lessor within n/a days, the total deposit received shall be refunded. 1. TERMS: The term hereof shall commence on 2/1, 1997, and expire on 2/28, 2000, 5% yearly rent increases after the first year. 2. RENT: The total rent shall be $1,860.00, payable as follows: on the first day of each month, $10.00 per day late charge. All rent shall be paid to Owner or his authorized agents, at the following address 10 W. Wyoming, Las Vegas, Nevada or at such other places as may be designed by Owner from time to time. 2 3. USE: The premises are to be used for the operation of Shop and Warehouse, without prior written consent of Lessor. 4. USES PROHIBITED: Lessee shall not use any portion of the promises for purposes other than those specified hereinabove, and no use shall be made or permitted to be made upon the premises, nor acts done, which will increase the exiting rate of insurance upon the property, or cause cancellation of insurance policies covering said property. Lessee shall not conduct or permit any sale by auction on the premises. 5. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this lease or sublet any portion of the premises without prior written consent of the Lesser, which shall not be unreasonably withheld. Any such assignment or sublet without consent shall be void and, at the option of the Lessor, may terminate this lease. 6. ORDINANCES AND STATUES: Lessee shall comply with all statues, ordinances and requirements of all municipal, state and federal authorities now in force, or which may hereafter be in force, pertaining to the premises, occasioned by or affecting the use thereof by Lessee. The commencement or pendency of any state or federal court abatement proceeding affecting the use of the premises shall, at the option of the Lessor, be deemed a breach hereof. 7. MAINTENANCE REPAIRS, ALTERATIONS: Lessee acknowledges that the premises are in good order and repair, unless otherwise indicated herein. Less shall, at his own expense and at all times, maintain the premises in good and safe condition, including plate glass, electrical wiring, plumbing and heating installations and any other system or equipment upon the premises and shall surrender the same, at termination hereof, in as good condition as received, normal wear and tear excepted. Lessee shall be responsible for all repairs required, excepting the roof, exterior walls, structural foundations, and: n/a, which shall be maintained by Lessor. Lessee shall also maintain in good condition such portions adjacent to the premises, such as sidewalks, driveways, lawns and shrubbery, which would otherwise be required to be maintained by Lessor. 3 No improvement or alteration of the premises shall be made without the prior written consent of the Lessor. Prior to the commencement of any substantial repair, improvement, or alteration, Lessee shall give Lesser at least two (2) days written notice in order that Lesser may post appropriate notices to avoid any liability for liens. 4 Lessee shall not commit any waste upon the premises, or any nuisance or act which may disturb the quiet enjoyment of any tenant in the building. 8. ENTRY AND INSPECTION: Lessee shall permit Lessor or Lessor's agents to enter upon the premises at reasonable times and upon reasonable notice, for the purpose of inspecting the same, and will permit Lessor at any time within sixty (60) days prior to the expiration of this lease, to place upon the premises any usual "To Let" or "For Lease" signs, and permit persons desiring to have the same to inspect the premises thereafter. 9. INDEMNIFICATION OF LESSOR: Lesser shall not be liable for any damage or injury to Lessee, or any other person, or to any property, occurring on the demised premises or any part thereof, and Lessee agrees to hold Lessor harmless from any claims for damages, no matter how caused. 10. POSSESSION: If Lessor is unable to deliver possession of the premises at the commencement hereof, Lessor shall not be liable for any damage caused thereby, nor shall this lease be void or voidable, but Lessee shall not be liable for any rent until possession is delivered. Lessee may terminate this lease if possession is not delivered within 30 days of the commencement of the term hereof. 11. INSURANCE: Lessee, at his expense, shall maintain plate glass and public liability insurance including bodily injury and property damage insuring Lessee and Lessor with minimum coverage as follows: $500,000.00 with Henry and Shirley Sanchez shown as loss payee. Lessee shall provide Lessor with a Certificate of Insurance showing Lessor as additional insured. The Certificate shall provide for a ten-day written notice to Lessor in the event of cancellation or material change of coverage. To the maximum extent permitted by insurance policies which may be owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each other, waive any and all rights of subrogation which might otherwise exist. 5 12. UTILITIES: Lessee agrees that he shall be responsible for the payment of all utilities, including water, gas, electricity, heat and other services delivered to the premises. 13. SIGNS: Lessor reserves the exclusive right to the road, side and rear walls of the premises. Lessee shall not construe any projecting sign or owning without the prior written consent of Lessor which consent shall not be unreasonably withhold. 14. ABANDONMENT OF PREMISES: Lessee not vacate or abandon the premises at any time during the term hereof, and if Lessee shall abandon or vacate the premises, or be dispossessed by process of law, or otherwise, any personal property belonging to Lessee left upon the premises shall be deemed to be abandoned, at the option of Lesser. 15. CONDEMNATION: If any par to the premises shall be taken for condemned for public use, and a part thereof remains which is susceptible of occupation hereunder, this lease shall, as to the part taken, terminate as of the date the condemnor acquires possession, and thereafter Lessee shall be required to pay such proportion of the rent for the remaining term as the value of the premises remaining bears to the total value of the premises at the date of condemnation; provided, however, that Lessor may at his option, terminate this lease as of the date condemnor acquires possession. IN the event that the reminder is not susceptible for use hereunder, this lease shall terminate upon the date upon which the condemnor acquires possession. All sums which may be payable on account of any condemnation shall belong to the Lessor, and Lessee shall not be entitled to any part thereof, provided however, that Lessee shall be entitled to retain any amount awarded to him for his trade fixtures or moving expenses. 16. TRADE FEATURES: Any and all improvements made to the premises during the term hereof shall belong to the Lessor, except trade fixtures of the Lessee. Lessee may, upon termination hereof, remove all his trade fixtures, but shall repair or pay for all repairs necessary for damages to the premises occasioned by removal. 6 17. DESTRUCTION OF PREMISES: In the event of a partial destruction of the premises during the term hereof, from any cause, Lessor shall forthwith repair the same, provided that such repairs can be made within sixty (60) days under existing governmental laws and regulations, but such partial destruction shall not terminate this lease, except that Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made, based upon the extent to which the making of such repairs shall interfere with the business of Lessee on the premises. If such repairs cannot be made within said sixty (60) days, Lessor, at his option, may make the same within a reasonable time, this lease continuing in effect with the rent proportionately abated as aforesaid, and in the event that Lessor shall not elect to make such repairs which cannot be made within sixty (60) days, this lease may be terminated at the option of either party. In the event that the building in which the demised premises may be situated is destroyed to an extent of not less than one-third of the replacement costs thereof, Lessor may elect to terminate this lease whether the demised premises be injured or not. A total destruction of the building in which the premises may be situated shall terminate this lease. In the event of any dispute between Lessor and Lessee with respect to the provisions hereof, the matter shall e settled by arbitration in such a manner as the parties may agree upon, or if they cannot agree, in accordance with the rules of the American Arbitration Association. 18. INSOLVENCY: In the event a receiver is appointed to take over the business of Lessee, or in the event Lessee makes a general assignment for the benefit of creditors, or Lessee takes or suffers any action under any insolvency or bankruptcy act, the same shall constitute a breach of this lease by Lessee. 19. REMEDIES OR OWNER ON DEFAULT: In the event of any breach of this lease by Lessee, Lessor may, at his option, terminate the lease and recover from Lessee: (a) the worth at the time of award of the unpaid rent which was owed at the time of termination; (b) the worth at the time of award of the amount by which the unpaid 7 rent which would have been earned after termination unless the time of the award exceeds the amount of such rental less that the Lessee proves could have been reasonably avoided; (c) the worth at the time of award of the amount by which the unpaid rent for the balance of the term offer the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided; and (d) any other amount necessary to compensate Lessor for all detriment proximately caused by Lessee's failure to perform his obligations under the lease or which in the ordinary course of things would be likely to result therefrom. Lessor may, in the alternative continue this lease in effect, as long as Lessor does not terminate Lessee's right to possession, and Lessor may enforce all his rights and remedies under the lease, including the right to recover the rent as it becomes due under the lease. If said breach of lease continues, Lessor may, at any time thereafter, elect to terminate this lease. Nothing contained herein shall be deemed to limit any other rights or remedies which Lessor may have. 20. SECURITY: The security deposit set forth above, if any, shall secure the performance of the Lessee's obligations hereunder. Lessor may, but shall not be obligated to apply all or portions of said deposit on account of Lessee's obligations hereunder. Any balance remaining upon termination shall be returned to Lessee. Lessee shall not have the right to apply the Security Deposit in payment of the last month's rent. 21. ATTORNEY'S FEES: In case suit should be brought for recovery of the premises, or for any sum due hereunder, or because of any act which may arise out of the possession of the premises, by either party, the prevailing party shall be entitled to all costs incurred in connection with such action, including a reasonable attorney's fee. 23. WAIVER: No failure of Lessor to enforce any term hereof shall be deemed to be a waiver. 24. NOTICES: 8 Any notice which either party may or is required to give, shall be given by mailing the same, postage prepaid, to Lessee at the premises, or Lessor at the address shown below, or at such other places as may be designated by the parties from time to time. 9 25. HOLDING OVER: Any holding over after the expiration of this lease, with the consent of Lessor, shall be construed as a month-to-month tenancy at a rental of 5% additional of last year's rent per month, otherwise in accordance with terms hereof, as applicable. 26. TIME: Time is of the essence of this lease. 27. HEIRS, ASSIGNS, SUCCESSORS: This lease is binding upon and inures to the benefit of the heirs, assigns and successors in interest to the parties. 28. TAX INCREASE: In the event there is any increase during any year of the term of this lease in the City, County or State real estate taxes over and above the amount of such taxes assessed for the tax year during which the term of this lease commences, whether because of increased rate or valuation, Lessee shall pay to Lessor upon presentation of paid tax bills an amount equal to 10% of the increase in taxes upon the land and building in which the leased premises are situated. In the event that such taxes are assessed for a tax year extending beyond the term of the lease, the obligation of Lessee shall be proportionate to the portion of the lease term included in such year. 29. COST OF LIVING INCREASE. The rent provide for in paragraph 2 shall be adjusted effective upon the first day of the month immediately following the expiration of 12 months form date of commencement of the term and upon the expiration of each 12 months thereafter in accordance with changes in the U.S. Consumer Price Index for All Urban Consumers (1967=100) hereinafter called the "CPI." The monthly rent shall be increased to an amount equal to the monthly rent set forth in paragraph 2 multiple by a fraction of the numerator of which is the CPI for the second calendar month immediately proceeding the adjustment date and the denominator of which is the CPI for the second calendar month proceeding the commencement of the lease term. Provided, however, in no event shall the monthly rent be less than the amount set forth in paragraph 2. 10 30. OPTION TO RENEW: Provided that Lessee in not in default in the performance of this lease, Lessee shall have the option to renew the lease for an additional term of 36 months commencing at the expiration of the initial lease term. All of the terms and conditions of the lease shall apply during the renewal term except that the monthly rent shall be at the rate of the same rate of the last months rent of the previous lease which shall be adjusted in accordance with the cost of living increase provision set forth in paragraph 29. The option shall be exercised by written notice give to lessor not less than 30 days prior to the expiration of the initial lease term. If notice is not given in the manner provided herein within the time specified, this option shall expire. 31. LESSOR'S LIABILITY: The term "Lessor," as used in this paragraph, shall mean only the owner of the real property or a Lessee's interest in a ground lease of the premises. In the event of any transfer of such title or interest, the Lessor named herein (or the grantor in case of any subsequent transfers) shall be relieved of all liability related to Lessor's obligations to be performed after such transfer. Provided, however, that any funds in the hands of Lessor or Grantor at the time of such transfer shall be delivered to Grantee. Lessor's aforesaid obligations shall be binding upon Lessor's succession and assigns only during their respective periods of ownership. 32. ESTOPPEL CERTIFICATION. (a) Lessee shall at any time upon not less than (10) days' prior written notice from Lessor execute, acknowledge and deliver to Lessor a statement in writing [1] certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect), the amount of any security deposit, and the date to which the rent and other charges are paid in advance, if any, and [2] acknowledging that there are not, to Lessee's knowledge, any uncured defaults on the part of Lessor hereunder, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer to the Premises. 11 (b) At Lessor option, Lessee's failure to deliver such statement within such time shall be a material breach of this Lease or shall be conclusive upon Lessee [1] that this Lease is in full force and effect, without modification except as may be represented by Lessor, [2] that there are no uncured defaults in Lessor's performance, and [3] that not more than one month's rent has been paid in advance or such failure may be considered by Lessor as a default by Lessee under this Lease. (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor such financial statements of Lessee as may be reasonably required by such lender or purchaser. Such statements should include the past three years' financial statements of Lessee. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 33. COMMON AREA EXPENSES: In the event the demised premises are situated in a shopping center or in a commercial building in which there are common areas, Lessee agrees to pay his pro-rata share of maintenance, taxes, and insurance for the common area. 34. ADDENDUM: An addendum, signed by the parties, [ ] is attached, [x] is not attached hereto. 35. ENTIRE AGREEMENT: The foregoing constitutes the entire agreement between the parties and may be modified only by a writing signed by both parties. The following Exhibits, if any, have been made a part of this lease before the parties' execution hereof: n/a The undersigned Lessee hereby acknowledges a copy hereof. DATED: 01/08/97 /s/ Michael Sylver Amazon Natural Treasures, Inc. 4011 W. Oquendo Ave. Ste. C Las Vegas, NV 89118 (702) 795-4333 12 DATED: 01/08/97 /s/ Henry Sanchez 10 W. Wyoming, Las Vegas, NV 89102 (702) 382-3476 EX-10.5 5 AGREEMENT BETWEEN C.A. GAMA FRANCO AND THE CO. 1 EXHIBIT 10.5 AGREEMENT AGREEMENT made this 5th day of May, 1997, between C.A. GAMA FRANCO (hereinafter referred to as "FRANCO"), a resident of Brazil, individually, and AMAZON NATURAL TREASURES, INC., a public corporation organized and existing under the laws of the State of Utah, (hereinafter referred to as "ANT") by its representative MICHAEL A. SYLVER. WITNESSETH: WHEREAS: FRANCO is an individual residing in Manaus, Brazil and desires to represent ANT as its procurator in Brazil, and; ANT is interested in retaining the services of FRANCO, NOW THEREFORE, it is mutually agreed as follows: 1. APPOINTMENT AS PROCURATOR. ANT does hereby appoint and FRANCO does hereby accept the position of PROCURATOR of ANT's operations in Manaus Brazil. 2. DUTIES AS PROCURATOR. (a) FRANCO will open a company office and/or lab in Manaus, Brazil, and be responsible for and administer all acts related to the operation of said office and/or lab. (b) FRANCO will obtain necessary certificates and act as ANT's representative in Manaus, Brazil. (c) FRANCO will hire and supervise all necessary employees, subject to approval by ANT. (d) FRANCO will administer operational funds provided by ANT, make payments, obtain and pay for necessary purchases. (e) FRANCO will be responsible for arranging and ensuring the exportation of ANT's products to the Las Vegas, Nevada, United States of America. (f) FRANCO acknowledges that the ultimate approval for decisions is to be given by ANT; to that end FRANCO agrees to keep ANT's designated representative informed on all subjects involving the ANT operation in Manaus, Brazil and understands that he is ultimately responsible for the successful implementation of those decisions. 2 2 3. CONFIDENTIALITY. FRANCO and ANT mutually recognize the importance of confidentiality at all stages of the relationship established by this Agreement, and agree to take all reasonable measures, including those needed to bind their respective involved employees, to safeguard such confidentiality. FRANCO agrees to extend the same standards of conduct to any third party FRANCO may engage pursuant to this Agreement, including subcontractors, employees, etc., thereof. This undertaking will extend to any related individuals and/or company of FRANCO. 4. REMUNERATION (a) In consideration for FRANCO's acceptance and work as a full-time representative of ANT and as its PROCURATOR and for his contribution to this Agreement, ANT agrees to pay FOUR THOUSAND DOLLARS ($4,000.00) per month payable on or before the 5th day of each month; FRANCO will be responsible for all applicable taxes. (b) FRANCO will be compensated with Nine Thousand (9,000) restricted shares of ANT to be issued prior to December 31, 1997. (c) FRANCO as employee shall be compensated at ANT's discretion by any amount of free trading ANT shares. Such bonus or additional compensation shall be paid at each annual meeting of the Board of Directors and Shareholders of ANT. (d) FRANCO shall be entitled to two (2) round trip airfare tickets between the city of Manaus and Sao Paulo, to be issued upon request to ANT, for each year of service by FRANCO. 5. EXPENSES. (a) FRANCO shall be reimbursed for only those expenses pre-approved by ANT incurred by FRANCO outside the state of Amazonas in his capacity as set forth herein to be reimbursed within THIRTY (30) DAYS of approval of such expenses. (b) Any and all expenses which are not specifically pre-approved by ANT shall be the sole responsibility of FRANCO. 3 3 6. TERM AND TERMINATION. This Agreement shall be effective for a period of five (5) years after which the parties will enter into good faith negotiations to extend this Agreement or enter into another agreement. 7. GENERAL PROVISIONS. (a) Termination of Agreement for any reason, or expiration of this Agreement, will not affect: (i) Obligations, including the payment of any amount provided herein, which have accrued as of the date of termination or expiration; (ii) Obligations which, in the context hereof, are intended to survive termination or expiration of this Agreement. (b) Any waiver by either party of the breach of any term or condition of this Agreement will not be considered as a waiver of any subsequent breach of the same or any other term or condition hereof. (c) Neither party will be in breach hereof by reason of its delay in the performance of or failure to perform any of its obligations hereunder, if that delay or failure is caused by strike, acts of God or the public enemy, riots, incendiaries, interference by civil or military authorities, compliance with governmental priorities for materials, or any fault beyond its control or without its fault or negligence. (d) In the event that any provision of this Agreement or any part hereof is found invalid or unenforceable, the remainder of this Agreement will be binding on the parties hereto, and will be construed as if the invalid or unenforceable provision or part hereof had been deleted from this Agreement. (e) Words denoting the singular will include the plural and vice versa; words denoting any gender will include all genders; words denoting persons will include corporations and vice versa. (f) The paragraph headings are for convenience only and will not be deemed to affect in any way the language of the provisions to which they refer. 4 4 8. ARBITRATION. Any dispute or difference between the parties relating to the interpretation or implementation of this Agreement will be settled by arbitration, as provided by the Nevada Revised Statutes. Such arbitration will be held in the State of Nevada, County of Clark, City of Las Vegas, unless ANT and FRANCO mutually agree in writing that another location would be more appropriate. 10. GOVERNING LAW AND AUTHORITY. (a) This Agreement will be interpreted in accordance with the laws of the United States of America, State of Nevada, County of Clark. IN WITNESS WHEREOF the parties hereto have caused this instrument to be executed on the day and year first above written. Signed, sealed and delivered in the presence of: "ANT" "WITNESS" /s/ Michael Sylver /s/ Rudbie Boryato "FRANCO" "WITNESS" - ----------------------- ------------------------- EX-10.6 6 AGREEMENT BETWEEN LORIPAR LTD AND THE COMPANY 1 EXHIBIT 10.6 AGREEMENT AGREEMENT made this 28th day of Mai 1996, between LORIPAR, LTD., a corporation organized and existing under the laws of the State of Nevada, together with its principals: DOMINGOS LORICCHIO, IRENA AUSMA LORICCHIO, DOMINGOS LORICCHIO Jr. and DENISE LORICCHIO, Residents of Brazil, individually and further on behalf of ABRACEL INDUSTRIA E.COMERCIO Ltd., a Brazilian Corporation (hereinafter collectively referred to as "LORICCHIO") and AMAZON NATURAL TREASURES, INC., a public corporation organized and existing under the laws of the State of Utah, (hereinafter referred to as "ANT") by its representatives MICHAEL A. SYLVER and ROBERT S. QUALEY. WITNESSETH: WHEREAS: LORICCHIO are the proprietors, manufacturers, distributors, and/or inventors/developers of homeopathic medicines and phytotherapy medicines, in Brazil and desires to manufacture and market their products internationally; and USER is interested in jointly, with LICENSOR; acquiring all rights presently possessed by LICENSOR, including, but not limited to: patents, inventions/developments, manufacturing and distribution know-how, rights to obtain all products for sale and the above-referenced technologies to market internationally, NOW THEREFORE, it is mutually agreed as follows: 1. LICENSE GRANT (a) LICENSOR hereby grants USER a exclusive license, without the right to grant any sub-licenses, to use the unique products, licensed patents and all Know-How in the operation and to sale all products internationally. 2. CONFIDENTIALITY LICENSOR and USER mutually recognize the importance of confidentiality at all stages of the project contemplated by this Agreement, and agree to take all reasonable measures, including those needed to bind their respective involved employees, to safeguard such confidentiality. USER agrees to extend the same standards of conduct to any third party engineering contractors USER may engage pursuant to this Agreement, including subcontractors thereof. This undertaking will extend to any related company of LICENSOR and USER. 2 2 3. REMUNERATION (a) In consideration for LICENSOR's contribution to this Agreement, AMAZON NATURAL TREASURES, INC. agrees to provide suitable housing accommodations for the Loricchio Family by obtaining a house or apartment until such time as the Loricchio Family is able to sell their properties in Brazil and/or otherwise obtain housing. (b) Further, a minimum monthly payment of Eight Thousand US($8,000.00) Dollars, to be paid by ABRACEL U.S.A., LIMITED, will be guaranteed by AMAZON NATURAL TREASURES, INC., said amount to be paid by the 10th day of each month, for an initial period of five years, plus extensions, if necessary. (c) Further, LICENSOR shall obtain, in consideration for their contribution to this Agreement, 610,000 shares in AMAZON NATURAL TREASURES, INC. (d) LICENSOR to be provided an automobile for an initial period of five years, plus extensions, if necessary. (e) LICENSOR to be provided health insurance for an initial period of five years, plus extensions, if necessary. (f) LICENSOR to be provided with necessary legal support for an initial period of five years, plus extensions, if necessary. 4. EXPENSES LICENSOR shall receive their related operational costs, i.e., travel, hotels, etc., from the revenues of AMAZON NATURAL TREASURES, INC. 5. REPORTING AND PAYMENT USER will keep complete, true and accurate books of account and records for the purpose of showing the derivation of all amounts payable to LICENSOR under this Agreement. Such books and records will be kept at the Licensed Plant for at least FIVE (5) years following the end of the calendar month to which they pertain, and will be open at all reasonable times to inspection by the representative of LICENSOR for the purpose of verifying USER's royalty statements, or USER's compliance in other respects with this Agreement. The representative will be obliged to treat as confidential all relevant matters and will be acceptable to USER, in the reasonable exercise of USER's discretion. USER can specify that this representative be an independent Certified Public Accountant. 3 3 6. IMPROVEMENTS LICENSOR and USER agree that improvements or modifications developed pursuant to this Agreement, whether or not patentable, shall become part of and subject to the terms of this Agreement. LICENSOR and USER will have a royalty-free license to use any and all of these improvements and modifications. 7. TERM AND TERMINATION (a) This Agreement shall be effective until the expiration of the last of the Licensed Patents or extensions or ninety-nine (99) years, whichever is longer. If, at that time, USER wishes to continue to employ LICENSOR in the operation of the business and have automatic access to further relevant improvements developed by LICENSOR, the parties agree to negotiate, in good faith, mutually acceptable terms under which this Agreement may continue. (b) Either LICENSOR or AMAZON NATURAL TREASURES, INC. shall have the right to terminate this Agreement by purchasing the other parties shares for three times the market-value plus the sum of Twenty-Five Million ($25,000,000) US Dollars or its equivalent amount, in the future, adjusted for inflation utilizing 1996 dollars as year 0, to each of the other parties hereto. (c) The purpose this subsection is deter either party from terminating this Agreement. 8. GENERAL PROVISIONS (a) Termination of Agreement for any reason, or expiration of this Agreement, will not affect: (i) Obligations, including the payment of any royalties, which have accrued as of the date of termination or expiration; and (ii) Obligations which, in the context hereof, are intended to survive termination or expiration of this Agreement. 4 4 (b) Any waiver by either party of the breach of any term or condition of this Agreement will not be considered as a waiver of any subsequent breach of the same or any other term or condition hereof. (c) Neither party will be in breach hereof by reason of its delay in the performance of or failure to perform any of its obligations hereunder, if that delay or failure is caused by strike, acts of God or the public enemy, riots, incendiaries, interference by civil or military authorities, compliance with governmental priorities for materials, or any fault beyond its control or without its fault or negligence. (d) In the event that any provision of this Agreement or any part hereof is found invalid or unenforceable, the remainder of this Agreement will be binding on the parties hereto, and will be construed as if the invalid or unenforceable provision or part hereof had been deleted from this Agreement. (e) Words denoting the singular will include the plural and vice versa; words denoting any gender will include all genders; words denoting persons will include corporations and vice versa. (f) The paragraph headings are for convenience only and will not be deemed to affect in any way the language of the provisions to which they refer. 9. ARBITRATION Any dispute or difference between the parties relating to the interpretation or implementation of this Agreement will be settled by arbitration, as provided by the Nevada Revised Statutes. Such arbitration will be held in the State of Nevada, County of Clark, City of Las Vegas unless LICENSOR and USER mutually agree that another location would be more appropriate. 10. GOVERNING LAW AND AUTHORITY (a) This Agreement will be interpreted in accordance with the laws of the State of Nevada. IN WITNESS WHEREOF the parties hereto have caused this-instrument to be executed on the day and year first above written. Signed, sealed and delivered in the presence of: "LICENSOR" "USER" /s/ Domingos Loricchio /s/ Michael A. Sylver - ---------------------- --------------------- /s/ Irena Ausma Loricchio /s/ Robert S. Qualey - ------------------------- -------------------- /s/ Denise Loricchio - -------------------- /s/ Domingos Loricchio Jr. - ------------------------- /s/ Ilana Sylver ---------------- 5 5 STATE OF NEVADA COUNTY OF CLARK Before me personally appeared ____________________________, to me well known and known to me to be the person described in and who executed the: foregoing instrument, and acknowledged to and before me that he executed said instrument for the purposes therein expressed. WITNESS my hand and official seal this _____ day of ____________, 1996. ----------------------------------- Notary Public (SEAL) State of Nevada My Commission Expires: EX-10.7 7 AMENDMENT TO AGREEMENT 1 EXHIBIT 10.7 AMENDMENT TO AGREEMENT The Agreement made the 28th day of May (Mai) 1996, between LORIPAR, LTD., together with its principals DOMINGOS LORICCHIO, IRENA AUSMA LORICCHIO, DOMINGOS LORICCHIO Jr. and DENISE LORICCHIO, Residents of Brazil, individually and further on behalf of ABRACEL INDUSTRIA E. COMERCIO LTD., a Brazilian corporation (hereinafter collectively referred to as "LORICCHIO") and AMAZON NATURAL TREASURES, INC., a public corporation organized and existing under the laws of the State of Utah, (hereinafter referred to as "ANT") by its representatives MICHAEL A. SYLVER and ROBERT S. QUALEY IS AMENDED AS FOLLOWS: PARAGRAPH 3(c) SHALL BE AMENDED TO READ: "Further, LICENSOR shall obtain, in consideration for their contribution to this agreement, 5,610,000 shares of stock in AMAZON NATURAL TREASURES, INC. AMAZON NATURAL TREASURES, INC. LORIPAR, LTD. By: Michael A. Sylver, President By: Domingos Loricchio EX-10.8 8 CONSULTING AGREEMENT 1 EXHIBIT 10.8 AGREEMENT FOR CONSULTING SERVICES This agreement is entered into by and between Amazon Natural Treasures, Inc., a Utah Corporation and Dr. Domingos Loricchio (hereinafter referred to as Company) and RPD, LLC, a California Limited Liability Company (hereinafter referred to as RPD) this 16th day of September 1996. RECITALS Company owns the proprietary rights to certain phytotherapy products which provide remedies for a wide variety of ailments both physical and emotional. Company harvests raw material from the Brazilian rain forest, which it then uses in proprietary combinations to formulate marketable products for consumption. RPD is a business consulting firm which has expertise that Company deems extremely valuable and is desirous of utilizing in the marketing of its products. NOW THEREFORE, in consideration of their mutual promises and other consideration as hereinafter set forth, the parties agree as follows: 1. The recitals are incorporated into the agreement hereat in full. 2. Upon Company's formal request for assistance, RPD agrees to provide to Company strategic business advice and consultation subject to RPD's availability and time restrictions. Company is not obligated to follow the advice of RPD but may use it as Company sees fit. 3. Upon Company's formal request for assistance, Company agrees to compensate RPD for such strategic business advice and consultation, unless provided pursuant to section 4 and its subparts, according to the following: A. RPD shall be reimbursed by Company for all expenses incurred in participating in Company business, including without limitation travel, hotel, transportation, meals away from home, supplies, phone, and the like. Payment is due within 10 days of receipt of such invoice by Company. B. Company shall compensate RPD for time spent on Company business at the rate of $2,000.00 per day in addition to the foregoing. Said daily compensation shall be paid weekly. 4. Company is also desirous of having RPD market its products. In the event Company reaches an agreement in any form with any of the sources introduced to Company by RPD, or if RPD 2 2 is able to negotiate a contract for Company with any source to market, sell, license, distribute, or deliver under royalty any of Company's products, RPD shall be compensated according to the following excluding Nature Way: A. Upon signing of a contract by Company pursuant to paragraph 4 above which will provide the company at least $1,000,000.00 in gross revenues, or in the event RPD secures funding for the company in an amount of at least $1,000,000.00 pursuant to paragraph 4.B below, Company shall grant to RPD an option to buy up to 500,000 shares of Company's restricted stock at a price of $.05 per share. This option shall remain open for a period of one year from the date of this agreement. RPD may exercise said option stating the number of shares to be purchased. Upon payment for the stock, the Company will effect the delivery of said shares in accordance with normal delivery procedures. B. In the event that RPD secures funding from any source except by way of a loan for Company, RPD shall be paid from said funds $200,000.00 or 10% of the gross amount of the monies paid to Company whichever is higher. In no event shall the money paid to RPD under this paragraph exceed 25% of the funding procured by RPD and paid to Company. All funds due hereunder shall be paid to RPD within 15 days of the receipt of said funding by Company. C. For all transactions in which RPD procures a buyer for, or participates in the purchase of Company's products, RPD shall be paid 15% of the gross receipts paid to Company for the sale of any product by the Company or for the receipt by the Company of any fee for the license of the product, use of the product, or payment of a royalty for the product unless paid pursuant to paragraph 4.B above. All funds due hereunder shall be paid to RPD within 15 days of receipt of said monies by Company. 5. Company agrees to cooperate with RPD and together use their best efforts to bring about a contract with any acceptable company introduced by RPD to Company as a potential purchaser or user of Company's products. In the event the Company acts independently of RPD in reaching an agreement with any of RPD's sources, Company shall be responsible for payment to RPD for all monies which would otherwise be due under the compensation package outlined above as if the Company had entered into an agreement with the prospective purchaser under the direction of RPD. In any negotiation, by a source introduced by RPD, RPD acknowledges that the Company will set and require certain minimum quantities be purchased to maintain an exclusive arrangement by said source and that Company's product's prices will incorporate the monies paid to RPD under the provisions as stated in paragraph 4.C. 3 3 6. Company maintains sole discretion in furnishing to RPD, or any of his referred sources, any and all proprietary information including: documents, materials, date, technical assistance, product samples, and formulas. No proprietary information will be given to RPD or any referred source without the written permission of the Company. Any written permission will stipulate the conditions under which the proprietary information will be given and will include any monetary compensation that the Company deems appropriate. Prior to receiving any of Company's proprietary information, RPD shall sign an agreement of confidentiality in Company's usual form. RPD shall not disclose any proprietary information of Company to third parties without the prior approval of Company. 7. From time to time RPD may procure a prospective purchaser who will require an exclusive agreement with the Company to package, market, sell or distribute Company's product. In such event Company agrees to provide such exclusivity and will execute any and all documents required to effectuate such exclusive agreements, provided said agreement is not in violation of the last sentence of paragraph 5. 8. This agreement shall remain in effect for a period of one year and may thereafter be renewed by the parties. All obligations to make payment under the compensation package to RPD once commenced shall continue for as long as the relationship/agreement under which payment is being made continues without any time limitation. For example, if RPD is being paid 15% of monies received by Company under a licensing agreement procured through RPD, RPD shall continue to be paid for as long as the licensing agreement and/or the business relationship between Company and licensee/purchaser exists. 9. Any obligation of the Company to pay RPD for any compensation accrued to RPD by virtue of paragraph 3 and 4 above shall survive the termination of this agreement. 10. Both parties recognize that each will in the course of doing business receive from the other certain proprietary and confidential information which is not available to the general public. In that event each agrees to keep such imparted information confidential and proprietary. 11. In receiving the advice and consultation of RPD, Company acknowledges that with regard to any corporate decision, the Company retains the right to conduct its own independent research, rely on its own independent sources and accepts the ultimate responsibility for all its decisions in this regard. 12. This agreement shall be binding upon and inure to the benefit of the successors and assigns of the respective parties. 4 4 13. All notices required by this agreement shall be sent to a party at the following respective address: RPD 215 S. Hickory St. Suite 220 Escondido, Ca. 92025 Company Amazon Natural Treasures, Inc. 6020 S. Spencer St., Suite B-7 Las Vegas, Nv. 89119 14. In the event of a dispute over the terms or enforcement of this agreement, the parties agree that the site of the dispute shall be the domicile of the defendant. The prevailing party in such dispute shall be entitled to reasonable attorneys fees and costs including the cost of expert witness fees. 15. Nothing in this agreement shall be construed to create a partnership, joint venture or an employment relationship between RPD and Company. 16. All provisions of this agreement are and shall be defined to be Severable, and if any provision of this agreement shall be deemed to be invalid as coronary to law or public policy, sauce provision shall be deemed to be severed from this agreement, and the remaining prove signs shall attain in full force and effect. 17. Neither party to this agreement shall be liable to the other for loss or damage arising out of any delay or failure by such party in performing its obligations hereunder, if such delay or failure was the unavoidable consequence of any act of God, exercise of governmental power, strike or other labor disturbance, war, revolution, embargo, insurrection, operation of military forces, or other event or condition beyond the control of such party; provided that such party (1) notifies the other party of such inability to perform and the reasons thereof with reasonable promptness; and (2) performs its obligations hereunder as soon as circumstances permit. 18. This agreement may be sent via fax to both parties and signed as such. A party's signature on such faxed copy may be required to the other via fax and used as if it were the original signature. 5 5 19. This constitutes the entire agreement between the parties relating to the, subject matter herein unless modified in writing and signed by both parties. RPD, LLC Amazon Natural Treasures, Inc. Richard P. Dubrule, /s/ Michael Sylver, President ------------------- President /s/ Dr. Domingos Loricchio -------------------------- EX-10.9 9 EMPLOYMENT AGREEMENT 1 EXHIBIT 10.9 EMPLOYMENT AGREEMENT Employment Agreement, between AMAZON NATURAL TREASURES, INC. (the "Company") and RUDINE BORGATO (the "Employee"). 1. For good consideration, the Company employs the Employee on the following terms and conditions. 2. Term of Employment: Subject to the provisions for termination set forth below this agreement will begin on November 1, 1996, and cease on October 31, 1998 unless sooner terminated. 3. Salary: The Company shall pay Employee a salary of $36,400.00 per year, for the services of the Employee, payable at regular payroll periods. This amount is the starting pay and may increase periodically by way of merit increase. 4. Duties and Position: The Company hires the Employee in the capacity of Vice President of International Affairs. The Employee's duties may be reasonably modified at the Company's direction from time to time. 5. Employee to Devote Full Time to the Company: The Employee will devote full time, attention, and energies to the business of the Company and during this employment, will not engage in any other business activity, regardless of whether such activity is pursued for profit, gain, or other pecuniary advantage. Employee is not prohibited from making personal investments in any other businesses provided those investments do not require active involvement in the operation of said companies. 6. Confidentiality of Proprietary Information: Employee agrees, during or after the term of this employment, not to reveal confidential information, or trade secrets to any person, firm, corporation, or entity. Should Employee reveal or threaten to reveal this information, the Company shall be entitled to an injunction restraining the Employee from disclosing same, or from rendering any services to any entity to whom said information has been or is threatened to be disclosed. The right to secure an injunction is not exclusive, and the Company may pursue any other remedies it has against the Employee for a breach or threatened breach of this condition, including the recovery of damages from the Employee. 7. Reimbursement of Expenses: The Employee may incur reasonable expenses for furthering the Company's business, including expenses for entertainment, travel, and similar items. The Company shall reimburse Employee for all business expenses after the Employee presents an itemized account of expenditures, pursuant to Company policy. 2 2 8. Health Insurance: The Employee will be entitled to Health Insurance coverage for himself only as of his employment date. Extra Health Insurance coverage for his family will be made available at the Employee's sole expense. Until Insurance coverage is made available to all employees, the Employee will receive up to $103.00 monthly to fund a COBRA health plan that covers himself only from his former employer. 9. Vacation: The Employee shall be entitled to a yearly vacation of two weeks at full pay. 10. Disability: If Employee cannot perform the duties because of illness or incapacity for a period of more than four weeks, the compensation otherwise due during said illness or incapacity will be reduced by thirty percent (30%). The Employee's full compensation will be reinstated upon return to work. However, if the Employee is absent form work for any reason for a continuous period of over three months, the Company may terminate the Employee's employment, and the Company's obligations under this agreement will cease on that date. 11. Termination of Agreement: The Employee may be terminated only for "cause," as defined below. The type of action which would be the basis for a determination that "cause" exists to terminate your employment is the following: a) Your conviction of a felony b) Your conviction of a misdemeanor involving moral turpitude. c) Embezzlement of our corporate funds. d) Repeated acts displaying inadequate performance for the job position. d) Gross misconduct, defined as follows: 1) Unexcused absences or consistently being late without cause. 2) Being unable or impaired to perform your duties because of your overindulgence in drugs or alcohol. 3) Your refusal to perform your job functions, including the required travel. 4) Referring clients to competing companies 5) Committing acts that sabotage our company. 6) Incurring corporate indebtedness above and beyond normal business expenses, without the consent of your supervisor. 7) Repeated acts of Insubordination to Corporate superiors. 3 3 If the Employee is terminated for "cause," the Company may initiate termination immediately and without any prior notice to the Employee. Additionally, the Company will not pay the Employee any severance pay or cash out any accrued benefits. Without cause, the Employee may terminate employment upon thirty days' written notice to the Company. Employee may be required to perform his/her duties and will be paid the regular salary to date of termination but shall not receive a severance allowance. Notwithstanding anything to the contrary contained in this agreement, the Company may terminate the Employee's employment upon thirty days' notice to the Employee should any of the following events occur: a) The sale of substantially all of the Company's assets to a single purchaser or group of associated purchasers; or b) The sale, exchange, or other disposition, in one transaction of the majority of the Company's outstanding corporate shares; or c) The Company's decision to terminate its business and liquidate its assets; d) The merger or consolidation of the Company with another company. e) Bankruptcy or Chapter 11 Reorganization. In the event of the transfer of ownership or merger with another company, the Company, at its whim, may elect to keep the Employee in a substantially same job function and compensation or elect to terminate the Employee. In the event of termination under these conditions, the new or merged Company will pay to the Employee a one-year severance allowance. 12. Death Benefit: Should Employee die during the term of employment, the Company shall pay to Employee's estate any compensation due through the end of the month in which death occurred. 13. Restriction on Post Employment Competition: For a period of three (3) years after the end of employment, the Employee shall not control, consult to or be employed by any business similar to that conducted by the Company, either by soliciting any of its accounts or by operating within Employer's general trading area. 14. Assistance in Litigation: Employee shall upon reasonable notice, furnish such information and proper assistance to the Company as it may reasonably required in connection with any litigation in which it is, or may become, a party either during or after employment. 4 4 15. Effect of Prior Agreements: This agreement supersedes any prior agreement between the Company or any predecessor of the Company and the Employee, except that this agreement shall not affect or operate to reduce any benefit or compensation inuring to the Employee of a kind elsewhere provided and not expressly provided in this agreement. 16. Settlement by Arbitration: Any claim or controversy that arises out of or relates to this agreement, or the breach of it, shall be settled by arbitration in accordance with the rules of the American Arbitration Association. Judgment upon the award rendered may be entered in any court with jurisdiction. 17. Limited Effect of Waiver by Company. Should Company waive breach of any provision of this agreement by the Employee, that waiver will not operate or be construed as a waiver of further breach by the Employee. 18. Severability: If, for any reason, any provision of this agreement is held invalid, all other provisions of this agreement shall remain in effect. If this agreement is held invalid or cannot be enforced, then to the full extent permitted by law any prior agreement between the Company (or any predecessor thereof) and the Employee shall be deemed reinstated as if this agreement had not been executed. 19. Assumption of Agreement by Company's Successors and Assignees: The Company's rights and obligations under this agreement will inure to the benefit and be binding upon the Company's successors and assignees. 20. Oral Modifications Not Binding: This instrument is the entire agreement of the Company and the Employee. Oral changes shall have no effect. It may be altered only by a written agreement signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. Signed this 31st day of October, 1996. /s/ Michael Sylver /s/ Rudine Borgato - ------------------ ------------------ Company Employee EX-10.10 10 RETAIL MERCHANDISE PURCHASE AND SALES AGREEMENT 1 EXHIBIT 10.10 RETAIL MERCHANDISE PURCHASE AND SALES AGREEMENT SELLER: AMAZON NATURAL TREASURES, INC. a corporation organized and existing under the laws of the State of Utah having offices at 4011 W. Oquendo Ave., Suite C, Las Vegas, Nevada 89118 PURCHASER: DR. RANDALL W. ROBIRD, CHIROPRACTIC PHYSICIAN, INDIVIDUALLY AND DBA APPLIED HEALTH DYNAMICS To Dr. Robirds: This letter agreement ("Agreement") constitutes the understanding and agreement by and between AMAZON NATURAL TREASURES, INC. a corporation organized and existing under the laws of Utah having offices at 4011 W. Oquendo Ave., Suite C, Las Vegas, Nevada 89118, (hereinafter referred to as the "Seller") and DR. RANDALL W. ROBIRDS, CHIROPRACTIC PHYSICIAN, INDIVIDUALLY AND DBA APPLIED HEALTH DYNAMICS, having offices at the Chiropractic Specialty Center, 1201 N. Decatur #109, Las Vegas, Nevada 89108 (hereinafter referred to as the "Purchaser"), whereby Seller will sell to Purchaser, and Purchaser will purchase from Seller, all of the products of every kind and nature offered for sale by the Seller in the marketing of its products for Twenty Percent (20%) less than the suggested retail price at the time of purchase of the product by Purchaser from Seller. Purchaser agrees that he will sell said products for the suggested retail price then in effect. In consideration of the premises and the mutual covenants and conditions herein contained, the Seller hereby agrees with you as follows: 1. Agreement to Sell and Purchase the Products. The Purchaser agrees to purchase from Seller, and Seller agrees to sell to the Purchaser, upon the terms and conditions hereinafter set forth, the Products for the purchase price of Twenty Percent less than the suggested retail price then in effect on the date of purchase of product by Purchaser payable by check or wire transfer of immediately available funds on said date. 2. General. This letter agreement shall bind and inure to the benefit of the Purchaser, the Seller and their respective successors and assigns. The terms and provisions of this letter agreement may not be modified or amended, or any of the provisions hereof waived except, in the case of modification and amendment, pursuant to the written consent of the parties to this letter agreement, and, in the case of waiver, pursuant to a 2 2 writing by the party so waiving. Section headings in this letter agreement are for convenience of reference only and shall not be considered a part of or affect the construction or interpretation of any provision of this letter agreement. The invalidity or unenforceability of any term or provision of this letter agreement shall not impair or affect the remainder of this letter agreement, and the remaining terms and provisions hereof shall not be invalidated but shall remain in full force and effect. This letter agreement shall be governed by and construed in accordance with the laws of Nevada and any action, claim or proceeding brought hereunder shall be commenced exclusively in the federal or state courts located in such State. 3. Confidentiality. (a) Purchaser recognizes that trade secrets and other proprietary information of Seller may be conveyed to Purchaser pursuant to this Agreement, and Purchaser agrees to keep such information in confidence and not to disclose it during or within Ten (10) years after the term of this Agreement to third parties other than Purchasers Affiliates that shall be bound by confidentiality restrictions as set forth herein. (b) The restrictions set forth in subparagraph (a) of this paragraph shall not apply to any information (i) well-known and in the public domain at the time of disclosure; (ii) known to Purchaser at the time it was disclosed to it by Seller as shown by documentation establishing such prior knowledge; (iii) disclosed with the prior written approval of Seller; and (iv) rightfully disclosed to Purchaser by a third party other than a Seller Affiliate. 4. Relationship. Purchaser and Seller shall act as principals in all respects hereunder, and nothing herein shall be construed to constitute either as the agent, partner, or joint venturer of the other. 5. Trademark. Purchaser recognizes that the name and registered trademark "AMAZON NATURAL TREASURES, INC." ("Trademark"), has become, by reason of the excellence of the products it identifies and its continued use in commerce, a recognized symbol of quality and is of unique and exceptional value. Accordingly: (a) Purchaser acknowledges that Seller has the exclusive ownership and right to use the Trademark in the distribution and sale of Products and Purchaser will never contest such ownership and right. 3 3 (b) Neither Purchaser nor any Affiliate will use the Trademark as a part of its corporate name without the prior written consent of Seller, which consent Seller may deny or may grant on such terms and conditions as Seller may from time to time prescribe and which Seller may withdraw at any time, all in the absolute discretion of Seller. (c) Any particular use of the Trademark by Purchaser will be discontinued immediately if, in the exercise of its sole judgment, Seller deems such use inconsistent with the reputation and standing of Seller, or with the Seller's business, advertising or public relations policies. 6. Pricing. The Purchaser shall pay to Seller, for purchase of all the Seller's products, Eighty Percent (80%) of the then existing Seller suggested retail price at the time of purchase. Further, Purchaser will not sell product for a price less than the suggested retail price. 7. Miscellaneous. (a) Nothing contained in this Agreement shall be construed as (i) a warranty or representation as to the validity or scope of any patent, efficacy, or claim for the products; (ii) an agreement to bring or prosecute actions or suits against third parties for infringement, or conferring any rights to bring or prosecute actions against third parties for infringement; (iii) conferring any rights to use in advertising, publicity, or otherwise, any trademark, trade name or names, or any contraction, abbreviation, or simulation thereof, of Seller except as provided herein; (iv) conferring by implication, estopped, or otherwise, upon Purchaser any license or other right in or to any patent, trademark, copyright or know-how. (b) No delay or failure of either party in exercising any right hereunder shall affect such right, nor shall any single or partial exercise of any right preclude any further exercise thereof. No modification, amendment, addition, or waiver, of any of this Agreement shall be effective unless set forth in a writing signed by Seller and Purchaser which specifically states that such writing is to be a modification, amendment, addition, or waiver, and then only in that specific instance and for which given. (c) This Agreement contains the entire and complete understanding of the parties with respect to the subject matter and merges all prior and contemporaneous understandings. (d) This Agreement may not be assigned by Purchaser without the prior written consent of Seller, which shall not be unreasonably withheld; this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and sublicensees. 4 4 (e) No remedy conferred herein is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. (f) Each of the parties hereto shall make, do or cause to be done, such further acts and things, and execute, acknowledge, and deliver, such instruments and documents as may be necessary to effectuate the purposes and intent of this Agreement. (g) The invalidity, partial failure of consideration, or unenforceability, of any particular provision of this Agreement shall not affect the validity or enforceability hereof. (h) This Agreement shall be governed by the laws of the State of Nevada. Please confirm your agreement with the foregoing by signing this letter agreement in the space provided below and returning an executed copy to the attention of the undersigned. Very truly yours, Amazon Natural Treasures, Inc. BY: /s/ Michael A. Sylver, President -------------------------------- 12-10-96 ACCEPTED AND AGREED TO, and intending to be legally bound as of the date first above written: Dr. Randall W. Robirds dba Applied Health Dynamics BY: /s/ Randall W. Robirds ---------------------- EX-24.1 11 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 24.1 [SCHVANEVELDT AND COMPANY LETTERHEAD] Consent of Darrell T. Schvaneveldt Independent Auditor I consent to the use in this Form 10-KSB, of our report dated December 31, 1996, on the financial statements of Amazon Natural Treasures, Inc., dated April 27, 1997, included herein and to the reference made to me. SCHVANEVELDT & COMPANY Salt Lake City, Utah June 27, 1997 EX-27 12 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT DECEMBER 31, 1996 (AUDITED) AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE 12 MONTHS ENDING DEC. 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 1,390 0 2,000 0 38,149 41,539 69,435 (12,475) 106,193 69,128 40,000 0 0 24,664 (27,023) 106,193 34,975 34,975 16,727 (260,206) 0 0 0 (238,781) 0 0 0 94 0 (238,687) (.03) (.03)
-----END PRIVACY-ENHANCED MESSAGE-----